By Erica Alini | Global News
When flooding ravaged parts of southern Alberta in 2013, banks and other lenders took notice.
“We would be asked on every deal, ‘Is it in the flood zone?’” Mike Boyle, president of Calgary-based The Mortgage Group, told Global News.
Lenders didn’t want to get involved with addresses that turned out to be in the disaster areas, he recalled.
Six years later, with the flood a “distant memory,” that’s no longer an issue, according to Boyle. But he worries about homeowners in regions like southeastern Ontario and Quebec, where rivers seem to be overflowing with alarming regularity.
“You can’t get a mortgage if you can’t get insurance,” he said.
Speaking from the Ottawa-Gatineau area, which is experiencing its second major flood in the span of 24 months, licensed insolvency trustee John Haralovich shares the same concern.
“We have seen lenders not agree to renew the mortgage,” said Haralovich, a senior vice-president at debt consultancy firm MNP.
Those have been rare cases so far, he said, but that could change.
“In 2017, they said (the flood) was a once-in-100-year occurrence, and two years later, it’s happened again,” he said.
Homeowners who discover they can’t continue their insurance coverage may also hear from banks that they won’t keep servicing their mortgage once it comes up for renewal, he added. With no insurance to protect the collateral, mortgages on homes in flood-prone areas may become too risky for mainstream lenders, he said.
Several experts who spoke to Global News are concerned that a growing number of Canadians may find themselves facing this issue after the latest round of spring flooding.