Reimbursement of Mortgage Early Repayment Penalties

Topic

Reimbursement of Mortgage Early Repayment Penalties

Case number

• 2015-078 (F&R Date: 2015–05–27)

Description

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 originally purchased his residence in 2010 when the MERP was reimbursable and had ensured that it was portable in order to avoid future MERP expenses. 

However, in 2012 the Canadian Forces Integrated Relocation Program was amended to remove all benefits related to the reimbursement of a MERP.  Accordingly, the grievor was not reimbursed for his 2013 MERP expenses even though he contended that he was forced to incur the MERP expenses through no fault of his own.

The Committee agreed with the Initial Authority who acknowledged that not reimbursing the MERP for members prohibited from purchasing a residence at their new place of duty was a systemic issue.  However, the Committee also found that failure to reimburse MERP expenses was unfair not only for those members prohibited from purchasing a replacement residence on posting but also for those who were unable or unwilling to purchase a replacement residence at their new place of duty for financial or other valid reasons. 

Recommendation

The Committee recommended the following:

•    the retroactive reinsertion of reimbursement of the MERP into the CF IRP;
•    a review of all MERP claims denied since the September 2012 amendment to the CF IRP took effect; and,
•    should the first two recommendations not be accepted, at a minimum, the ability to pay a MERP from the personalized envelope be restored.

Final Authority Decision

The FA agreed with the Committee's finding that members like the grievor were aggrieved by the CBI policy amendment and he 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 that since changes to benefits such as the MERP are rarely, if ever, retroactive, a remedy for the grievor and others actually in the same situation may not be possible .