Recently, with the continuous escalation of the epidemic in Shanghai and around the world, the possibility of delaying the repayment of housing loans has caused a heated discussion on the Internet, becoming a hot topic in Weibo searches. Many netizens have called major banks to apply for a loan extension on the grounds of being locked up at home, unable to resume work, and having no income. Does this application have a legal basis and can it be supported? This article studies this issue, hoping to be helpful to the mortgage community under the epidemic.

On April 7, 2022, the five major banks of industry, agriculture, China, construction, and transportation responded to the issue of delayed loan repayment, providing service support to individual housing loan customers affected by the epidemic, including delaying repayment time, extending loan terms, and adjusting billing plans. As a member of the mortgage community, the author immediately called the bank customer service and received a response that repayment of the loan cannot be postponed. If delayed, it will be recorded as overdue, affecting credit investigation. It is understood that many homeowners have received similar responses from banks. So, is the epidemic a defense for delaying loan repayment? Can it be supported by the court? What about the relevant legal provisions?

On April 18, 2022, the Shanghai Higher People's Court issued the Fourth Series of Questions and Answers on the Application of Law in Cases Involving the COVID-19, which stipulates that it is generally not appropriate to mitigate or exempt the liability for repayment of arrears on the ground that the epidemic is force majeure for credit cards, personal housing loans and other financial loans, financial leasing, factoring, pawning, small loans and other contracts with monetary benefits. "If a financial institution or other market entity makes a commitment to grant debt relief or deferred repayment to relevant debtors affected by the epidemic situation through notification or announcement, it can be considered as a change to the contract content.".

If the debtor claims to postpone the repayment of arrears or reduce the liquidated damages, although the epidemic situation is usually not an obstacle to the performance of the contract due to objective reasons in the context of the widespread use of electronic payment, if the borrower is unable to repay the arrears on time due to objective circumstances such as participating in the prevention and control of medical assistance, being hospitalized with COVID-19 infection, being sealed, controlled and isolated, it constitutes force majeure, The provisions of Articles 180 and 590 of the Civil Code of the People's Republic of China can be applied, and the repayment obligation should be fulfilled in a reasonable period after the relevant circumstances are relieved. If the epidemic situation has a significant impact on the debtor's personal income or corporate revenue, resulting in the inability to repay debts on time, the people's court may organize negotiations between the parties in relevant cases to urge financial institutions to appropriately adjust credit repayment arrangements such as credit cards and housing mortgage loans, and reasonably extend the repayment period in accordance with the credit policies and relevant requirements of financial regulatory and provident fund management departments on epidemic prevention and control, Avoid "withdrawal" and "cut-off" behaviors such as accelerated loan maturity or early termination of contracts, and effectively prevent financial market risks.

As early as 2020, the Supreme People's Court issued the Guiding Opinions of the Supreme People's Court on Several Issues Concerning the Proper Trial of Civil Cases Involving the COVID-19 in accordance with the Law (II), which stipulates in Article 10 that isolation of observers In the case of personal loan repayment disputes involving housing mortgages, credit cards, and other personal loan repayment disputes involving personnel involved in epidemic prevention and control work and those temporarily losing their income sources due to the impact of the epidemic or epidemic prevention and control measures, the people's court shall, based on the actual situation of the case, change the repayment period in accordance with the principle of fairness.

According to the above provisions, we can see that financial loan contracts signed by individuals and banks are not de facto impossible to perform due to their monetary obligations. Therefore, in principle, the epidemic situation will not affect the objective performance of the contract. Therefore, the court generally does not support the plea that the epidemic situation is force majeure and requests for reduction or exemption of housing loans.

However, for special personnel affected by the epidemic, if there is evidence to prove that they have temporarily lost their source of income due to the epidemic or the impact of epidemic control measures, the court will refer to the above provisions and determine at its discretion that the epidemic constitutes force majeure, which can be extended. The author summarized the financial cases in Shanghai and even the whole country since 2020 as follows:

1、 Individuals must be special personnel affected by the epidemic (including personnel participating in medical assistance and prevention and control, inpatients infected with the epidemic, and those in quarantine).

Provide: hospitalization certificate, diagnosis certificate, isolation certificate issued by the hospital, certificate issued by the work unit of the personnel participating in the epidemic prevention and control work, etc.

2、 Individuals have no income (including operating income, salary income, etc.).

Provide: proof of income before the epidemic, proof that the unit did not pay or reduce remuneration during the epidemic, proof that the epidemic has caused the store or related industries to be unable to operate normally (it can be a government document, a store closure notice or notice posted by the neighborhood committee, etc.).

For this evidence, the court generally defines it as individuals who have income under normal circumstances, such as individual businesses and farmers, but temporarily lose their income sources due to the impact of the epidemic. Civil servants, teachers, retirees, and employees of enterprises and institutions are generally not supported.

Take the dispute over the financial loan contract between Bank of China Limited Changle Sub-branch and Liu Jinzhong (2020) L0725 Minchu No. 3743 as an example:

The court held that the defendant's vocational department teacher did not meet the grace conditions stipulated by law, so it did not accept the defendant's argument that the repayment was delayed due to the epidemic.

3、 Personal lack of income is caused by the epidemic, which has a direct causal relationship with lack of income.

Provide: direct evidence of income reduction caused by the epidemic (such as notice of inability to operate, proof of inability to work due to home isolation, proof of inability to work or inability to work for other family members, child support, education costs, etc.)

Take the dispute case of financial loan contract between Zhang Pengbo and Volkswagen Amounts (China) Co., Ltd. on (2022) Jing 74 Min Zhong No. 16 as an example:

The court held that the defendant stated that his resignation was due to the fact that the company did not need so many people, and that his failure to find a job was due to physical disability. Zhang Pengbo failed to provide sufficient evidence to prove that the overdue repayment was caused by the epidemic, so the court of first instance could not accept his argument that force majeure did not constitute a breach of contract.

4、 The delay occurred after the outbreak of the epidemic.

The court's request for a loan extension occurred after the impact of the epidemic. If an individual has delayed before the epidemic, even if the epidemic does affect income, the court will not support it.
Take the (2020) Hu 0101 Min Chu No. 16540 financial loan case of Industrial and Commercial Bank of China Limited Shanghai Huangpu Sub-branch and Zhou Qi, Zhou Rongming, etc. as an example:
The court held that the late repayment of the defendant occurred before the COVID-19 and continued to the day after the COVID-19 epidemic was effectively controlled for one year, and that the defendant was not a specific person or occupation, such as the hospitalization treatment of COVID-19 infection. Therefore, there was no legal basis for the application of force majeure, and this argument was not supported by the hospital.

Finally, the author would like to say that the current epidemic has had a very significant impact on enterprises and individuals. As a family of housing loans, in the face of the economic pressure caused by the epidemic, we should open up resources, reduce expenditure, try our best to raise funds, and repay the loans in a timely manner; For those who do not have income due to the epidemic and cannot repay the loan on time, due to preparing corresponding materials in advance, contacting the bank, determining the deferred repayment period, and actively performing their repayment obligations after the epidemic ends, they cannot blindly justify force majeure without any evidence. The author also hopes that banks, as financial institutions, will actively respond to national policies in the spirit of watching and helping each other, combining the specific circumstances of borrowers, and extend the repayment period for individuals who are indeed in difficulties, creating a more mutually beneficial and healthy financial environment.