MortgageBroker mbabc.ca fall 2014 | 23
defaultinsurance
closes before the purchase of the new
property, how long do the borrowers have to
port the mortgage insurance premium? Are
the borrowers eligible for a premium credit
(new full purchase premium less premium
credit) or would a top-up portability
premium be applicable? Your insurer
representative can assist you with estimated
premium calculations and advise which
option and port structure is most beneficial
for your customer.
Helping borrowers stay in
their homes
We all enjoy hearing from past customers,
except in one scenario: A borrower you have
previously assisted with mortgage financing
calls in a panic advising they are having
unexpected financial difficulties and are not
going to be able to pay their mortgage. Maybe
their difficulties result from a personal injury,
death of a partner, loss of job, or another
traumatic life event. Reassure your customer
it was very wise of them to reach out to you.
ere are options available and you can put
them in touch with the proper channels to
explore their options further and hopefully
find a solution.
All three mortgage insurance providers
have dedicated departments to manage
mortgage defaults. All also have special
programs, commonly referred to as workout
solutions, which are designed to assist
borrowers experiencing short-term financial
distress. e goal is always to help as many
borrowers stay in their homes as possible.
e first step is to find the contact inform-
ation for the mortgage default department at
the borrower's lending institution. e next
step is to encourage the borrower to contact
the lender as soon as possible. At this point
the lender will document the borrower's file
and move to next steps. Next steps include
the lender advising the mortgage insurer
of early delinquency. In some cases the
lender may ask the insurer for a consult of a
particular workout solution. Some lenders
manage without insurer intervention via
pre-determined and prescribed methods.
Other lenders prefer complete insurer
intervention where the insurer deals directly
with the borrower experiencing difficulty.
Regardless of the process at the borrowers
lending institution, these are the most
common solutions available:
• Capitalization of mortgage payments:
Suitable where the mortgage has equity
available to allow the mortgage payment(s)
to be capitalized onto the mortgage and paid
over the remaining amortization period.
• Special capitalization of other expenses:
is solution looks at the potential to
capitalize expenses other than the mortgage
payments (i.e. property tax arrears, condo
fee arrears, or a major repair the borrower
can't afford).
More information
For more information on mortgage default
insurance contact your local insurer
representative. e following websites are
useful resources.
CMHC: www.everythingyouneed.ca;
Genworth Canada: www.genworth.ca;
Canada Guaranty: www.canadaguaranty.ca.
•
