Catastrophic Equity Loss Protection Policy Required
Topic
Catastrophic Equity Loss Protection Policy Required
Case number
- 2019-302 (F&R date: 2020-05-06)
Description
Several grievances have recently been received at the Committee, all seeking reimbursement for catastrophic home equity losses much greater than the maximum reimbursable under the revised Canadian Forces Integrated Relocation Program (CFIRP) Home Equity Assistance (HEA) policy that came into effect on 19 April 2018. The revised CFIRP HEA policy deleted the previous option for Canadian Armed Forces (CAF) members to apply to the Treasury Board Secretariat (TBS) for 100% reimbursement of equity losses suffered when selling a home in a depressed market area. Under the new CFIRP HEA policy, the grievors receive a maximum of $30,000 from their Core envelope and limited amounts from other funding envelopes. Despite receiving the maximum HEA reimbursement available under the present HEA policy, these grievors, who had suffered catastrophic equity losses, remained out of pocket $50,000, $60,000, $70,000, and even $96,000 out of pocket.
The Committee found that it was morally unacceptable for CAF members to suffer such large equity losses solely because the CAF had relocated them. The Committee reiterated its long-standing opinion, shared by the CAF Ombudsman and by the office of the Chief of the Defence Staff, that the previous version of the CFIRP HEA benefit was woefully inadequate, and noted that deleting the benefit had not improved it. The Committee acknowledged that increasing the maximum reimbursable HEA amount from the core envelope to $30,000 from $15,000 was a step in the right direction. Likewise the Committee recognized that a maximum HEA amount of $30,000 may be sufficient to cover the needs of 95% of all CAF families that are relocated. However, the Committee found that the current HEA policy did nothing to protect the remaining five percent of CAF members and their families from catastrophic equity losses incurred when they are ordered to relocate from an area suffering from a down housing market.
The Committee observed that Canada's Defence Policy - Strong, Secure, Engaged - makes a commitment to provide a comprehensive suite of initiatives to ensure CAF families thrive, underpinned by a sense of compassion and responsibility. Likewise, the Committee noted that the National Joint Council Integrated Relocation Program states that the intent of the government concerning relocation is that the relocation be accomplished with minimum detrimental effect on employees and their families. The Committee concluded that some CAF members and their families were suffering severe detrimental harm from catastrophic equity losses incurred on relocation. As a result, the Committee found that there was an urgent need for the CAF, in conjunction with the TBS, to rapidly develop a catastrophic loss protection policy for inclusion within the CFIRP HEA policy.
Recommendation
The Committee recommended that the Final Authority direct the Chief of Military Personnel (CMP) to immediately engage the TBS to develop a catastrophic equity loss policy that would reimburse CAF members who suffer equity losses greater than $30,000.
Pending the development and implementation of such policy to the CFIRP HEA benefit, the Committee recommended that CMP be directed to support all CAF member claims seeking 100% reimbursement of catastrophic loss of equity over $30,000 to TBS for approval under the CFIRP, article 2.1.01. It is recommended that such policy continue until the catastrophic loss of equity provision has been incorporated into the CFIRP.