CMHC and flood affected areas
CMHC affirms mortgage loan insurance in flood affected areas
CMHC has confirmed it will provide mortgage loan insurance in all parts of Alberta and western Canada.
It will consider applications for properties that were affected by the floods, provided the lender discloses this information to CMHC and, where necessary, confirms that remedial action has been, or will be taken to address flood-related damages.
CMHC states it has not introduced any new policies for underwriting mortgage financing applications. CMHC assesses mortgage loan insurance applications submitted by the lender based on specific risk factors associated with the application.
Consistent with current CMHC policy / standard underwriting criteria, lenders are required to advise CMHC of any known housing or property deficiencies and / or unique characteristics, and act prudently in the initiation and administration of the loan.
The corporation’s policy requires lenders to ensure that adequate property insurance is in place to protect against loss or damage by fire and other insurable perils. Mortgage loan insurance is to indemnify lenders against losses due to borrower default and is not insurance to cover property damage.
CMHC issued a statement, saying it recognizes that homeowners impacted by the flooding may experience some financial hardship as they rebuild or repair their homes. CMHC encourages homeowners with CMHC insured mortgages to contact their financial institution at the first signs of financial difficulty to discuss their specific situation.
CMHC provides lenders with a series of default management tools which can be used to assist borrowers experiencing difficulty meeting mortgage obligations. These include authority to approve adding up to a maximum of $20,000 to the loan for arrears of principal, interest, taxes, condo fees and utilities, without prior consultation with CMHC.
CREB® members and their clients are encouraged to visit the Alberta Municipal Affairs disaster recovery website, the Federal Government “Get Prepared” website and CMHC’s website where useful information can be found to assist those impacted.