In the Fall Economic Statement (FES), the Liberal government unveiled an initiative it calls the Canadian Mortgage Charter.
According to the statement, the charter builds on “existing guidance and expectations” regarding how financial institutions are expected to treat borrowers.
Deputy Prime Minister and Finance Minister Chrystia Freeland said Tuesday the charter is “one of the most important things” in the FES.
“I really recognize that with interest rates having gone up very quickly, there are many, many Canadians who are concerned about their mortgages going up. They are concerned about being able to afford to stay in their own homes,” Freeland said. “What we’re saying today is we understand this is a challenging situation and we are here to help.”
So what exactly is the Canadian Mortgage Charter, who does it aim to help, what rules does it lay out and how are its expectations enforced?
Is the Canadian Mortgage Charter a law?
No. The Canadian Mortgage Charter [CMC] is not a law and there are no plans to pass legislation enshrining it in law.
A Department of Finance official speaking on background told CBC News the best way to think of the charter is as a list of “rules and expectations” banks are expected to follow.
The only place the CMC rules have been or will be published, the official said, is in the Fall Economic Statement.
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What does the charter say?
The charter contains six guidelines regarding how banks are expected to treat “vulnerable borrowers” under financial strain. Under the charter, banks are expected to:
Allow temporary extensions on the amortization period for mortgage holders.
Waive fees and costs that would have otherwise been charged for mortgage relief measures.
Exempt insured mortgage holders from re-qualifying under the stress test when switching lenders at the time of a mortgage renewal.
Require banks to reach out to homeowners four to six months in advance of their mortgage renewal to inform them of affordability options.
Allow borrowers to make lump sum payments to avoid negative amortization or sell their principal residence without incurring prepayment penalties.
Waive interest on interest when mortgage relief measures result in mortgage payments that fail to cover interest payments on a loan.
Are any of these rules new?
The Finance official told CBC News that most of the measures existed already, but may have been unclear or difficult for consumers to find. Putting them in one place, the official said, makes it easier for vulnerable borrowers to learn what their options are.
One new rule is the requirement that banks proactively reach out to borrowers four to six months before their mortgages are up for renewal.
The other new addition is the requirement to give insured borrowers a pass on the stress test when changing lenders at the time of their mortgage renewal.
Who is a ‘vulnerable borrower’?
The mortgage charter does not define “vulnerable borrower.” The FCAC guidelines define a “consumer at risk” as someone “with an existing residential mortgage loan on their principal residence who [is] experiencing severe financial stress, as a result of exceptional circumstances, and [is] at risk of mortgage default.”
When banks reach out to all borrowers four to six months before their mortgages are up, borrowers can explain their unique financial situations to lenders and the two parties can work through their options. Banks do not independently decide who is at risk.
The Canadian Bankers Association (CBA) uses data from the major banks to determine the number of mortgages that are in arrears each month going back to January 1995.
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A mortgage in arrears is defined by the CBA as one that has not been paid for at least three months. According to CBA data, there were 5,065,516 mortgages in Canada as of Sept. 30 2023 and 0.16 per cent, or 8,140, were in arrears.
That percentage is up from 0.14 per cent in August, 2022, which was the lowest percentage of arrears since January 1995, when it was 0.50 per cent.
The CBA’s mortgages in arrears stats include data provided by 11 CBA members, but the CBA says credit unions and private mortgage companies also offer mortgages in Canada that are not captured by the arrears totals.
How are the rules and guidelines enforced?
The Finance official told CBC News that borrowers who are not offered the affordability measures outlined in the mortgage charter can file a complaint on the FCAC website.
The FCAC website says it investigates complaints involving federally regulated financial institutions, including banks, federal credit unions, authorized foreign banks, insurance companies and trust and loan companies.
The FCAC website says that it uses information gleaned from its investigations to “identify and address situations” but does not say what measures are used. The FCAC says the “numbers and types” of complaints it receives are reported to Parliament.
The Canadian Mortgage Charter says the federal government closely monitors financial institutions’ “implementation of and compliance with relief measures, including the FCAC’s guideline,” but does not say what enforcement measures are applied.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
