Laura Thibeault : Archived blog posts for : 2020

Information Regarding Mortgage Payment Deferral

Posted on March 26, 2020 by Laura Thibeault, Your Peninsula REALTOR®

This general Information relating to Deferred Mortgage Payment Programs was provided by Lynn McLellan, Dreyer Group Mortgages with Verico I hope it's of some help in understanding the situation a bit better. For more in-depth knowledge, contact your lender or mortgage professional.

1. Deferred mortgage payments are discretionary.

Lenders maintain the legal right to timely repayment of their mortgages and mortgage payment deferral programs are offered at their sole discretion and each lender has different policies on how they handle these requests. Note: These programs are generally restricted to "institutional" lenders only. Private mortgages do not qualify.

2. No lender is going to forgive your mortgage payment.

A deferred payment program allows you to roll a defined number of mortgage payments into your mortgage, however, you are still expected to ultimately pay all of the money you owe, with interest.

3. True financial hardship must be demonstrated.

These programs are for customers who are genuinely struggling to make their next mortgage payment. They may have lost their job(s) and/or a portion of their income and they do not have the cash reserves necessary to draw on. If you are not in this group, you are not likely to be eligible. However, if you do make the decision to request a payment deferral, please be prepared to submit a detailed breakdown of your personal assets, current income and expenses.

4. If you do not currently fall into this distressed category, please do not call your lender at this time.

Lender phonelines are overloaded right now with many calls being from customers who are worried but are not in a situation as per #3 above. If you are still receiving your normal income and have enough money to make your next mortgage payment, please delay a call to your lender until you are in that situation. Or better yet, contact the mortgage professional you originally worked with when you obtained your mortgage. They will be happy to review all of your options with you!

5. Deferring mortgage payments will not hurt your credit score.

A lender-approved deferment is not a missed payment and it will not appear on your credit bureau report as such. Lenders are also typically offering to waive any fees associated with these types of programs during the Covid-19 crisis.

6. Deferred Payment Programs are typically capped at six months.

Deferring the first payment will be easier than deferring the second one, and so on. Right now, six months is about the longest deferment you should expect to receive, but no lenders will do this all at once. Most of them will require that you reach out with a request for each individual payment that you are going to miss.

7. Communication is key.

If you are going to miss your mortgage payment, contact your lender first! Be honest with them about your circumstances and have a plan for how you are going to get back on track. If you are about to miss a payment and cannot get through on the phone lines, send your lender an email. Lenders may waive NSF fees if you miss a payment but can demonstrate that you attempted to notify them in advance.

8. A mortgage deferred payment program is for your mortgage payment only.

Property tax installments and insurance premiums are entirely separate from these programs and must continue to be paid. If municipalities and insurance programs offer similiar programs (which most municipalities are currently doing), they should be contacted separately.

9. Other options may be available.

In addition to rolling missed payments back into your mortgage for a specified period of time, lenders also have the ability to refinance your mortgage to pay out other debt (subject to qualification), restore your original amortization (which lowers your payment amount), hold a payment (during a temporary suspension of income), or offer you a reduced payment for a specific time. We recommend that you contact your mortgage professional to review these other options. Note: Interest-only payments are usually not available under these programs.

10. Rental property investors may also be eligible.

Property investors with tenants who have stopped making their rent payments will also be considered; however, they will be assessed by the same rigorous standards as noted in #3 above. Note: Some provincial governments have introduced tenant relief programs. Rental-property owners can also encourage their tenants who have been adversely impacted by Covid-19 to apply for these programs if available.

Please remember that these are challenging times for not only customers but for lenders themselves. They are all working extremely hard to try to provide all their customers with first class service and to help those borrowers who are being adversely impacted by Covid-19. It may take a significant amount of time to reach a customer service representative at your particular lender, so when you do finally get a live person on the other end of the phone, remember that they are doing their best in difficult times and treat them with the respect they deserve.

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Concerned About Your Strata Insurance?

Posted on March 13, 2020 by Laura Thibeault, Your Peninsula REALTOR®

Here's a portion of what the Insurance Brokers Association of BC had on their website regarding recent changes in the insurance scene for Strata Corporations:

STRATA INSURANCE RATES ARE RISING

Over the course of 2019, strata corporations across Canada either received notice of a premium and/or deductible increase on renewal of the building insurance policies, or were advised that they should budget for increases on their next renewal.

In BC's Lower Mainland region, where an estimated half of its total 2.7million residents live in strata-titled property, these increases are having a widespread impact. Some renewals have reportedly increased anywhere from 50% to 300% and the deductibles to cover claims have also increased substantially, from $25,000 per claim to as high as $250,000 and $500,000; at least one building has had its deductible increased to $750,000.

What do Strata Insurance Policies typically cover?

Owners of individual units in the strata building all own a proportionate share of the common property. To help ensure that all owners' equity is protected, the Strata Property Act requires strata buildings to be insured for full replacement value of all common property, common assets and fixtures. This includes the original construction. Insurance valuations must be based on recent appraisals.

Becasue of the ownership structure of stratas and their commercial-grade systems (plumbing, boilers, elec-trical, heating and ventilation) strata buildings are insured with a commercial property insurance policy, which is modified for strata property.

Strata units owners insure their contents, plus upgrades made to the unit, under a "condo" homeowners' policy. These policies include 2 crucial coverages: a) liability insurance to cover damages from losses that origiante in the unit and extend to the common areas or other units, and b) coverage for a portion of the strata building's deductible in the event of a major claim.

How does this impact owners of strata units in BC?

If your strata corporation is faced with a substantial increase in insurance rates, the cost will be reflected in your annual budget that determines your annual strata fees. If the deductible is dramatically increased it means that any claims under that deductible are not covered by insurance and, subject to your bylaws, each owner is likely responsible for the cost to repair common property.

So coverage for owner liability is more important than ever. Unit owners will want condo homeowner insurance that covers their liability in the event of a claim for damages to their unit, as well as the cost of a deductible or the risk of being sued by other owners if they cause a claim.

WHAT CAN YOUR STRATA DO TO LIMIT THE RISK?

Strata Councils:

1) Be aware that being able to demonstrate long-term stability and a proactive approach to building maintenance will put your building in the best light for risk assessment. In these current market conditions, switching insurance brokerages or insurers may not be in your Strata's long-term best interests.

2) Review your Strata's Depreciation Report to ensure your Strata is meeting regulatory requirements, and that the Report's recommendations are reflected in the building's maintenance and repair plan for items that pose a risk such as roofing, water linese, and drainage systems.

3) If the Strata Corporation is faced with a change in insurance, dramatic increases in cost and deductibles, or the possibility of no coverage, immediately give notice to all owners regarding the changes. Early disclosure helps owners understand the situation & work together to find a solution. Provide the new summary of insurance as soon as it has been renewed so owners can amend their unit coverage accordingly in a timely manner.

4) If your building fails to obtain insurance, contact a lawyer to identify potential liabilies and risks for owners and council members and what next steps you should consider.

5) Repair access or building issues that may risk an injury. Address broken sidewalks, or security issues.

6) Work with owners to manage these common water damage risks:

a) Ensure owners have access to the water shut-offs in their units so they can quickly shut off water

b) Verify all units with washing machines have upgraded their hoses to braided steel.

c) Remind all owners that soft water in Lower Mainland means they can use less soap or with later model appliances, they can use high-efficiency soap. Excess soap suds can build up and block pipes.

d) Regulate or discuss owner activities such as smoking, barbeques on balconies, balcony gas heaters, insuite hot water tanks, and storage of flammable materials.

7) Update your bylaws. Bylaws that present a risk to human rights complaints also increase your risk. Comply with the Strata Property Act and enforce your bylaws.

All Owners:

1) The Strata Council and all owners should work closely with your insurance broker. Invite your broker to your Annual General Meeting to explain the changes to building's insurance.

2) It is imperative that you as a unit owner have property condo insurance for your unit. Your Strata Corp-oration is required to provide all owners with details of all building insurance policies and warranties in effect. Be sure you understand your Strata Building's coverage, limits, and deductibles, and how the Strata and/or your Strata Bylaws may apportion or assign responsibility for deductibe or under-the-deductible losses. Relay those conditions to your insurance broker, who will explain your coverages and options.

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