Canada’s federal mortgage insurer said it is not expecting to shoulder “significant” losses from the wildfires in Fort McMurray, Alta.
Canada Mortgage and Housing Corp., which backstops most of the country’s mortgage market, said only 10 per cent of its insured loans in Fort McMurray are in areas with serious damage or complete losses.
The bulk of its insured loans are in neighbourhoods with some fire damage and 13 per cent are in areas where the conditions are still being determined, the agency said.
More important, the Crown corporation stressed its insurance does not provide coverage for force majeure events such as the wildfires and said homeowners are required to have regular insurance to protect against fire damage to their houses.
“CMHC’s potential loss is therefore limited to claims resulting from the indirect economic consequences of the event such as a decline in property value,” the agency said in a statement. “Claim losses to CMHC are not expected to be significant.”
The federal housing agency said it has insured about 8,400 loans worth $3.7-billion in Fort McMurray and the surrounding area affected by the fires in northern Alberta.
Home buyers are normally required to have insurance to protect against a mortgage default if they make a down payment of less than 20 per cent. CMHC is the country’s largest mortgage-default insurer and is backstopped by Ottawa.
The agency said it has provided banks with flexibility to help homeowners who have suffered suffered damages because of wildfires. The agency listed options such as payment deferrals and mortgage reamortizations.Report Typo/Error