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FCAC Proposes Mortgage Relief For Vulnerable Canadian Homeowners


Canada’s Financial Consumer Agency (FCAC), which takes care of the financial entities regulated by the federal government, has proposed new guidelines to allow lenders to offer relief to homeowners who are finding it hard to pay mortgages with variable rates. The relief measures will include amortization period extension on these loans so that homeowners can move many payments back on the mortgage, elongating the time in which they have to pay the loan pack without any penalties. The maximum amortization period in Canada is 25-30 years. This will be extended with the implementation of relief measures. In its draft proposal, FCAC laid down three principles for FRFIs to follow while offering relief measures: Fairness: Consumers should be treated with the same care given their circumstances and financial requirements. As per FCAC fairness includes: not taking prepayment penalties in the event of customers with fixed payment variable interest rate mortgages make lump sum payments in order to avoid amortizations in the negative; waiving off of the internal fee in wake of the relief measures; making sure interest is not charged if relief measures lead to negative amortization; and finally making sure credit scores of customers are not negatively impacted f they avail the relief measures. Appropriateness: FRFIS must ensure that the relief measures are appropriate for customers given their circumstances and financial requirements. In order to do so the following information should be given to the customers in a clear manner: the outstanding amount owed on the original mortgage before relief measures are pressed in; the result of relief measures on the final cost of servicing the mortgage; the effect of mortgage relief on the original amortization period; the new amount to be paid along with its due date & frequency; the new interest rate and whether it is fixed or variable or others; and any fee that needs to be paid to a third party for changing mortgage agreement. Accessibility: FRFIs would give consumers access to mortgage relief measures proactively, given their circumstances and financial requirements. These measures must be “easily” accessible. They must proactively contact their customers and provide them with information about the relief measures so that they can take timely decisions.


If you are a homeowner who has any doubts, questions, or concerns about your upcoming mortgage payments, reach out to us at LendX Financial in Brampton, Greater Toronto Area.

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