MORTGAGES & COVID-19

We’re in uncharted waters… I’ve done my best to include as much information as possible below. (LAST UPDATE April 2)

1. All About Mortgage Payment Deferrals

2. Purchases, Refinancing, & Transfers

a) Are Financial Services Essential Services?
b) Can I Meet with My Lawyer/Notary?
c) What Does This Mean for Closings?

3. New Government Financial Programs

Information on New Federal and Provincial Programs

4. Economic & Financial Side-Effects

Provided by DLC’s Economist Dr. Sherry Cooper.

Please let us know how we can help you or someone you care about, or if we can answer any of your questions!

1. All About Mortgage Payment Deferrals

Q: What Does Payment Deferral Mean?
A) You don’t have to pay your mortgage payment – interest is added to your mortgage.

Please note that payment deferrals are on a case-by-case basis and at this time, borrowers are not automatically eligible.

Lenders will be working with their clients to cope with the economic fallout of the virus. For Canada’s 6 big banks, lenders have stated that they would allow up to 6 months of deferrals of mortgage payments.

Other national lenders (First National, RMG, Lendwise, Home Trust etc.) and Credit Unions, are also allowing clients to miss payments or defer payments. There is no set allowance yet.

Will it Hurt my Credit Score?
There is a CBC article going around about the potential for credit scores being bruised with deferred payments.

However, if you get permission to defer payments, there will be no hit to your credit score!

Please be sure to pay all mortgage payments going forward unless specifically noted by your lender.

Should I Defer Payments?
If you need to then yes, you should defer. If not, then try to hold on for a few more weeks/months.

Please note: when you defer payments, the lender will take the interest that would have been paid and add it to your monthly mortgage balance. This means that you’re going to be paying interest upon compounded interest. In the end, your balance at maturity will be higher, and you will have paid less off of your principal balance.

However, this is a small price to pay to feel more financially secure in your home. 

How do I Defer Payments?
There are 3 ways to defer payments:

1. Call Your Lender
2. Message/Email Your Lender
3. Walk to a Branch (only for banks/credit union)
   *Lender Info to the right or below

Please remember that payment deferrals are done on a case-by-case basis.

Right now, lenders are being inundated with calls and requests for, among other things, payment relief on mortgages.

From anecdotal evidence from clients who contact me, there are long (extremely long) wait times when calling their lenders for information. The lenders say “talk to your bank” but my advice is to wait a few days to even a week or more to contact them. This is a fluid situation and more time will allow for better service and new developments to take place.

Other Ways Lenders/Brokers Can Help!
Unfortunately lenders do not allow brokers to help with payment deferrals. However, depending on your lender and insurer (if applicable) there may be other options available to you, such as:

• Re-amortization of the loan
• Capitalization of outstanding interest & costs
• Restructure mortgage
• Other special payment arrangements
• Deferment of Payments

Also, if your mortgage is insured, CMHC, Canada Guaranty, and Genworth have assistance programs to help their lenders and you in these times.

More Links:
CMHC COVID-19 Mortgage Payment Deferrals
Canada Guaranty’s COVID-19 Update
Government of Canada COVID-19 Website
BC Government COVID-19 Website

Lender Phone Numbers and COVID-19 Websites

2. Purchases, Refinancing & Transfers

If you are currently in the process of purchasing or selling a home, or you are refinancing or transferring a mortgage, I’ve taken the liberty of gathering information surrounding real estate during this COVID-19 situation.

Client Meetings and Conveyancing
Due to the focus on self-isolation and preventing further spread of COVID-19, we are holding remote meetings via Google Hangouts, Zoom, and Skype. Also, pure old telephone works as well :). However, lawyers/notaries currently require in-person meetings to sign mortgage paperwork. If you do meet in-person, don’t shake hands, sit as far apart as possible and be sure to wash your hands before and after leaving any unfamiliar environments.

Please note: if you have a closing in the next month, contact you lawyer or notary. Make sure that your solicitor can complete your transaction.

If your solicitor cannot complete your transaction, I have 5 lawyers/notaries who are willing, efficient, and able to meet.

Land Title Office Open – For Now
Currently, there are no plans to close the land title office. This may change, but currently, the land title office may be working with reduced staff and will likely prioritize services required for closings.

What Does This Mean for Closings
If either the land title office or the banks close, then real estate transactions will not be able to proceed, and you would need to seek extensions wherever possible. The good news is that everyone is in the same situation! The bad news is that there is no “right” in most re-sale agreements to insist on an extension, however, most people are understanding and you will have to rely on their goodness as well as common law principles to extend the transaction.

If you get stuck here, first talk to your Realtor and then decide on a route forward. Lawyers may need to get involved.

3. New Government Financing Programs

Federal Support | BC Provincial Support

March 25, 2020: $2,000 per affected person!! CBC’s What You Need To Know.

More: In addition to helping homeowners manage their finances through deferred mortgage payments and adjustments, the Canadian Government has also come to the aid of families who may be struggling currently.

To help those currently struggling, the following measures are being taken or have already been implemented:

• Income Tax Payments: The Canada Revenue Agency will allow all taxpayers to defer payments for any income tax amounts that are owing between March 18, 2020 and September 2020 until August 31, 2020. No interest or penalties will accumulate on these amounts during this period.

Taxpayers who are required to remit quarterly instalments may benefit from up to 5 months of tax deferral.

• Income Tax Filing: Income tax return filing has been extended one month from April 30, 2020 until June 1, 2020.

If you receive and rely on the GST credit or the Canada Child Benefit, it is still ideal to file sooner to ensure that the entitlements for the 2020-2021 benefit year are not delayed.

In addition, the Canada Revenue Agency is adapting their Outreach Program in order to better support individuals during COVID-19. This service allows the CRA to offer assistance to ensure individuals understand their tax obligations and to help them obtain the benefits and credits to which they are entitled.

Emergency Funds During COVID-19 including but not limited to:

• GST Credit: $400 for single adults, $600 for couples
• Child Tax Benefit Top-Up: An additional $300 per child
  • The above two may be replaced with the $2,000 per person.
• 10% wage subsidy for small to medium sized businesses for employees to not lay off employee; $25,000 per employer
• BC Emergency Benefit of $1,000 for those who lost jobs due to COVID-19
• BC Hydro may grant up to $600 to pay hydro
• ICBC 90 day deferment

And much more…

Additional Support – Because We care…

Employee Assistance Program (EAP): This dedicated program is providing the following:

• 24/7 confidential access to professional support to help employees manage stress, anxiety, grief, financial concerns, and much more.
• Employees and managers can connect to get support by phone, video, or chat anytime, anywhere.
• Vast library of online resources for coping with trauma, building resiliency, self-care, managing change, and more.
• Manager consultations to support leaders in dealing with sensitive workplace situations.

Click here to visit their website and learn more.

First Access: This program provides global support for unique needs and for organizations who are not EAP clients. Some of the features they offer are:

• Counselling and traumatic event support to address unique needs worldwide
• Allows organizations – even those without a formal EAP in place – to access support services, as needed, to ensure timely and effective issue resolution.

Click here to visit their website and learn more.

4. Economic & Financial Side Effects

From: Dominion Lending Centres – COVID-19 Update

Since being labeled a pandemic per the World Health Organization (W.H.O.), the effects of COVID-19 have begun to ripple through the world’s economy – including Canada – and causing a number of different effects. To help keep you up to date on what is going on financially, we have compiled a list of recent announcements by the Ministry of Finance, the Bank of Canada, and OSFI:

• Minister Morneau announced a new Business Credit Availability Program, adding $10 billion of additional support financing, through Business Development Bank of Canada and Export Development Canada, to support Canadian Businesses. Click here for more.
• The Bank of Canada lowered the overnight rate from 125 to 75 bps, to reduce the interest cost burden for businesses and consumers alike. The bank also increased its Government of Canada bond buyback program. Click here for more.
• OSFI reduced the Domestic Stability Buffer from 2.25% to 1%, thereby freeing up $300 Billion additional lending capacity for Domestic Systemically Important Banks (D-SIBS). Click here for more.

In addition, Dominion Lending Centres in-house Chief Economic Advisor, Dr. Sherry Cooper, has been providing in-depth information on this situation as it evolves.

You can find her latest articles on the situation below:

• March 6 – Bank of Canada rate cut and subsequent Canadian mortgage rate drop
• March 9 – Global Markets in Turmoil as Oil Plunges, Propelling Yields to Record Lows
• March 13 – https://dominionlending.ca/news/tour-de-force-boc-cuts-again-osfi-eases-more-coming/ Check out the related CTV Interview here.
• March 16 – Stock and Bond Yields Plunge after Sunday Fed Cut
• March 27 – Bank of Canada Cuts Rates 50 bps to 0.25%

THE STRESS TEST
In light of this growing situation, OSFI has announced that it is suspending all consultations, including those regarding changes to the proposed B-20 benchmark rate. In addition, the Minister of Finance postponed the announced April 6th qualification change for insured mortgages. In short, until further notice, the Bank of Canada posted a 5-year rate will continue to be used for mortgage qualification.

If you are in need of a great Vancouver mortgage broker, click here.