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“However, the Company expects that a subset of insured mortgages with payment deferrals will likely end up in default after the deferral period ends,” Genworth said in its latest financial disclosures. “As a result, the Company and its lenders have plans in place to increase loss mitigation activities to address the increase in reported delinquencies that is expected starting in the fourth quarter of this year.”
CMHC and the other mortgage-default insurers may not currently be planning on a blanket extension of the six-month deferral period, but borrowers could still postpone payments for up to four months with a pre-existing default-management tool for lenders.
Genworth Canada also said it believed the deferrals “are an effective loss mitigation strategy in the COVID-19 environment.”
Canada Guaranty in a Marchupdateto lenders said its six-month deferral program “does not remove the existing ability to defer up to four months throughout the life of the mortgage.”
It also said, “In the event a homeowner requires additional assistance or requires additional payments for future hardships, Canada Guaranty will review each request on an individual basis.”
Genworth Canada and Canada Guaranty did not respond to questions from the Post.
There are several other default-management tools, such as a special payment arrangement, meaning a deferral may not be an insurer’s first choice.
The default-management playbook gives an example of a borrower whose employer has permanently shut down, wiping out their income, but who may have other employment opportunities. In this case, the playbook said that a payment deferral of up to four months is “conditionally recommended,” although lenders “are to apply extra due diligence when assessing the feasibility of this tool on a case-by-case basis.”