# 2015-078 - Mortgage Breaking Penalties, Reimbursement of Mortgage Early Repayment Penalties

Mortgage Breaking Penalties, Reimbursement of Mortgage Early Repayment Penalties

Case Summary

F&R Date: 2015–05–27

Following a posting in 2013 to a new place of duty in which the grievor was not authorized to purchase a replacement residence, the grievor incurred a Mortgage Early Repayment Penalty (MERP) with respect to selling his residence at origin. The grievor had purchased his residence at origin in 2010 when the MERP was reimbursable. However, in 2012 the Canadian Forces Integrated Relocation Program (CF IRP) was amended to remove all benefits related to the reimbursement of a MERP. Accordingly, the grievor was not reimbursed for his 2013 MERP expenses. He contended that he was forced to incur the MERP expenses through no fault of his own and sought to have it reimbursed.

The Initial Authority (IA) acknowledged that this was a systemic issue that causes a distinct disadvantage to those members who are restricted from purchasing a residence at their new place of duty. However, the IA denied the grievance, finding that the CF IRP is a Treasury Board (TB) approved policy and that no provisions exist that would permit reimbursement.

The Committee agreed with the IA that the existing policy had been properly applied to the grievor's case and that he was not eligible for reimbursement of his MERP expense. The Committee also noted the acknowledgement by the IA that the effects of the 2012 CF IRP policy change on the grievor were unintended and inequitable. The Committee found that the grievor had been duly diligent in his actions and had relied, to his ultimate detriment, on the provisions of the pre-2012 CF IRP in effect when he negotiated his mortgage in a manner which would have permitted reimbursement of the MERP. Furthermore, the Committee noted that the National Joint Council and the Royal Canadian Mounted Police both continue to provide partial reimbursement of MERP expenses, leaving CAF members at a distinct disadvantage as compared to other federal employees. While the CF IRP is a TB approved policy, the CAF can nonetheless exert influence to effect policy change. The Committee recommended that the CAF actively seek TB approval of the changes necessary to correct the injustice acknowledged by the IA.

CDS Decision Summary

CDS Decision Date: 2015–12–15

The FA agreed with the Committee's findings and recommendation that the grievance be denied. The FA reiterated that in a recent decision, the CDS directed the Chief of Military Personnel to engage TB at the earliest opportunity to restore the MERP provision removed from CBI 208 for those CAF members who are expressly prohibited from purchasing a residence on posting or find themselves in a position where they are unable to purchase a residence at destination. However, the FA advised the grievor that the change to benefits such as the MERP are rarely, if ever, retroactive, and consequently, if it is approved, it may not remedy this grievance.

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