My previous BLOG POST introduced a retrospective review of mortgage remedies during the Covid-19 pandemic. This post is a continuation of that theme.
During March and through to June, financial institutions took a very passive, consumer friendly approach to mortgage enforcement and debt collection, by imposing a self-declared moratorium on mortgage remedies. This was not only good public relations, but good common sense as well. With OFSI’s (the Office of the Superintendent of Financial Institutions, Canada’s bank regulators) revision of the rules dealing with mortgage defaults, non-performing deferred mortgage loans no longer had a negative impact on a financial institutions' capitalization. CMHC, Canada’s largest mortgage insurer, also had instructed financial institutions to stop all mortgage enforcement on insured loans, without exception. Bottom line was that no institutional mortgage lender wanted to be seen to be taking any mortgage remedy steps at all with their insured or their non-insured, conventional mortgage loans.
In my institutional practice, I was instructed to institute a complete moratorium on all mortgage remedy proceedings immediately after the March lock down was announced. And if any mortgagor/customer contacted me, I was to send a pre-scripted email offering a sympathetic ear for their financial woes and a payment deferral if requested. The order of the day was to speak softly and not carry any stick at all.
By the end of June and early July, as lock-down restrictions were easing across the province, so, too, was the compete mortgage enforcement hiatus easing. While some institutions permitted notices of sale to be issued, and statements of claim to be served, CMHC maintained a strict hands-off approach on insured mortgages. But one also has to remember that the Courts were virtually shut down during the first few pandemic months, except for urgent matters. And for the most part, mortgage remedies were just not considered to be urgent – and rightfully so.
By September, however, mortgage remedies were opening up just enough to allow recovery work to continue so long as no one interfered with the owner/mortgagor's possession of the mortgaged property. Even CMHC has started to allow insured lenders to restart mortgage remedies gently, with permission to become a mortgagee-in-possession of residential rental property, and to sell that property, so long as the tenant’s rights are respected.
It goes without saying that on a go forward basis, each institution will formulate its own policies and procedures to deal with its non-insured mortgages in default. And just as the second wave of the pandemic seems to be taking a foothold across most of the country, so, too, should lenders’ mortgage enforcement policies ebb and flow with the times. It is trite to say, “we shall see what we shall see”.
The next blog post will continue this review of post lock-down mortgage remedies - and focus on private mortgages. And as always, this blog is intended for information purposes only. It is not legal advice and cannot be relied on as such. Nor is it a substitute for hiring your own legal counsel, who will be an essential member of your mortgage default and mortgage remedy team. And lastly, this blog is just my opinion. I reserve the right to change my mind. And I reserve the right to be wrong.
Be well and stay healthy.