# 2011-119 - Delays at Initial Authority Level, Home Equity Assistance Program (HEAP), Integrated Relocation Program...

Delays at Initial Authority Level, Home Equity Assistance Program (HEAP), Integrated Relocation Program (CF IRP), Mortgage Default Insurance (MDI)

Case Summary

F&R Date: 2012–02–29

The grievor co-owned her principal residence with a non-CF member. At the time of her posting, a real estate appraisal placed the value of the home at less than the mortgage amount still owing on the home. The grievor sold her half of the home to her co-owner for the sum of one dollar after which the co-owner assumed full liability for the entire amount of the mortgage outstanding.

The Director Compensation and Benefits Administration (DCBA) determined that the grievor had sold her half of the home for just one dollar and had therefore sold it for far less than the 95% of appraised market value required under article 8.2.13 of the Canadian Forces Integrated Relocation Program (CF IRP).

In denying the home equity assistance (HEA), the DCBA stated that the grievor had sold her $381,000 home for just $1 and therefore at a loss of $380,999. The DCBA found that the circumstances of the sale did not meet the intent of article 8.2.13 of the CF IRP.

The Board disagreed, finding that article 8.2.13 expressed no “intent” and that it was sufficient simply to incur a loss when selling a home to be entitled to a reimbursement of HEA. The Board also found that the grievor had, in fact, sold her half of the home to her co-owner for exactly half of the remaining mortgage plus $1 and so calculated the grievor’s real selling price to be $188,000 plus $1. Given that her half of the purchase cost had been $190,500, the Board found that the grievor had an eligible loss of $2,400 on the sale of her home and was entitled to receive 80% of this loss as an HEA benefit from the core envelope.

In denying the grievor mortgage loan insurance (MLI) benefits, the DCBA stated that there was no way of calculating the equity that the grievor had transferred to the new residence. The Board disagreed, finding that after the grievor’s sale, the resulting equity was exactly $1. The Board based this finding on a plain definition of the word “equity”, meaning the value of a mortgaged property after deduction of charges against it – specifically the grievor’s half of the remaining mortgage. The Board concluded that the minimum down payment required from the grievor in buying her new residence would have exceeded the $1 in equity resulting from the sale of the old residence. Accordingly, the Board found that the grievor was entitled to MLI benefits from the core envelope.

In denying the grievor’s request for storage in transit (SIT) fees, the DCBA cited CF IRP article 9.1.05 and stated that the grievor had no home to sell and had not secured accommodation at her new place of duty, nor had she planned a door-to-door move. The Board disagreed, finding that the grievor did sell her home and had in fact secured accommodations. The Board therefore found that, in accordance with article 9.1.04 of the CF IRP, the grievor was entitled to the payment of SIT fees from the core envelope for those days when interim lodgings, meals and miscellaneous expenses were approved.

Finally, the Board examined the grievor’s claim for capital improvements. The Board found that the grievor appeared to have some capital improvements that would qualify for reimbursement and noted that there were funds remaining in her custom envelope. Upon the Board’s request, the grievor submitted original receipts for the capital improvements and the Board concluded that the grievor’s claim should be reassessed by an appropriate authority to properly determine her capital improvement entitlement.

Accordingly, the Board recommended that the Chief of the Defence staff :

  • uphold the grievance;
  • direct the reimbursement of HEA, MLI and SIT from the grievor’s core envelope; and
  • direct a review and reassessment of the grievor’s file to determine her entitlement to capital improvement reimbursement.

CDS Decision Summary

CDS Decision Date: 2012–11–13

The CDS agreed with the Board's recommendation to grant the grievance. The CDS agreed with the Board's recommendation that the grievor be reimbursed for the HEA since the grievor sold her portion of the ownership of the residence to her roomate for her 50% liability in the mortgage, which amount had to be validated by the bank, plus $1. The grievor will be also be reimbursed her MLI expenses, given that she transferred the equity from the sale, at least $1, on her new residence. The CDS also agreed with the Board's recommendation that the grievor's claim regarding the capital improvement be reassessed, but the calculation must be based on 50% of all eligible receipts, not only on the grievor's portion of the receipts. After conducting the necessary investigation, the CDS agreed that the grievor was entitled to the reimbursement of SIT expenses from the core funding after he had properly determined that the grievor's ILM&M was properly authorized.

Finally, the CDS endorsed the Board' systemic recommendation regarding the significant backlog at DGCB, and he agreed that the grievors be provided with more accurate expectations and information on their grievance.

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