More HEA policy issues to come:
Perhaps I have missed something, but the CBI (below) indicates that only a 10% loss is now required (effective 1 Sept 2012) to get 90% HEA out of core. However, the new and improved CF IRP policy (below) states that a 20% loss may trigger 100% HEA from core. Looks like the two policies are out of synch. I thought my HEA application is a nightmare, now soldiers have to face two different criteria at two different levels? Good luck. If any one can shed some light on this, I'd love to find out what is going on with this policy mismatch.
The following info is from the recent version of the CBI 208.97 published 1 Sept 2012
http://cmp-cpm.forces.mil.ca/dgcb/cbi/engraph/cbi_chapter-208_e.asp?sidesection=6
208.97(2) (Application) This instruction applies in respect of the sale of a principal residence by an officer or non-commissioned member where, as determined by the Chief of the Defence Staff, the housing prices at the member’s place of duty have
decreased by 10% or more between the date of purchase and the date of sale of the principal residence.
208.97(3) (Sale price lower than adjusted purchase price) An officer or non-commissioned member who is moved at public expense other than locally and sells a principal residence shall be
reimbursed 90% of the difference between the sale price and the adjusted purchase price, when the sale price is lower than the adjusted purchase price.
208.97(4) (Sale price lower than current market value) Despite paragraph (3), when the sale price is also lower than the current market value, the Chief of the Defence Staff may limit reimbursement to 90% of the ifference between the current market value and the adjusted purchase price.
208.97(5) (Appraisal) For the purpose of this instruction, the current market value and the value of eligible home improvements shall be determined on the basis of three appraisals by licensed property appraisers appointed by the Chief of the Defence Staff.
208.97(6) (Under financial hardship) Despite paragraphs (2), (3) and (4), the Chief of the Defence Staff may approve reimbursement to an officer or non-commissioned member in any case that does not meet the criteria of this instruction when the Chief of the Defence Staff considers that the member would suffer undue financial hardship.
The 1 Sept 2012 CF IRP policy at
http://www.cmp-cpm.forces.gc.ca/dgcb-dgras/pd/rel-rei/aps-paa-2011/chapter-chapitre-08-eng.asp#art-08-03-03 is as follows:
8.2.13 Home Equity Assistance (HEA)
As per the HEA calculation criteria listed below, CF members who sell their home at a loss are entitled to reimbursement for up to 100% of the difference between the original purchase price and the sale price from specific funding envelopes as follows:
Core benefit
80% of the loss, to a maximum of $15,000; and
100% of the loss, in places designated as depressed market areas by Treasury Board Secretariat (TBS).
Custom benefit
In excess of core entitlement.
Personalized benefit
When all custom funds have been expended.
HEA calculation criteria
Properties selling for less than 95% of the market value require DCBA approval prior to qualifying for this benefit. Market value is to be based on the appraisal provided by CFIRP.
Capital improvements shall not be included in the calculation of HEA but may be claimed separately as per art 8.2.10.
Any reductions of the sale price based upon deferred maintenance shall not be included when calculating HEA.
The original purchase price for new home construction consists of costs:
identified in the Building Agreement, and
for initial landscaping which occurs within one year of occupancy (when not identified in the Building Agreement).
Depressed market, as established by Treasury Board Secretariat, is defined as a
community where the housing market has dropped more than 20%.
Depressed market status may be evaluated when:
A CF member and the Realtor build a case for depressed market status by submitting the following documentation to DCBA through the CF Relocation Coordinator for review, DCBA will forward it to IRP Program Authority at Treasury Board Secretariat:
Personal introduction including an outline of changes in the local economy evident during the time at origin.
All pertinent information with respect to the purchase of the subject property. This would include the original purchase agreement, the current appraisal report, list of the capital improvements made to the property and the related costs. Also, the appraised value when originally purchased and any property assessments since the time of purchase. Regarding cost of construction, this will require submission of original receipts to confirm the original purchase price, if a building contract was not used. Capital improvements must be supported by original receipts only.
General and specific information on the geographic location and local economic state; i.e. the circumstances that may be happening in the surrounding areas such as mill closures, unemployment rate, school closures. Include relative newspaper articles, memos, and objective evidence of market decline. Also, include sale date, date offer received, listing date list price, lowered list price and any home equity loss paid.
For real estate information:
Letter from Realtor expressing his/her professional opinion of the overall decline in the market since time of purchase;
Copies of comparable sales (similar type homes) that were concluded within the past 6 to 12 months;
Number of current listings in various price ranges and number of days on the market;
Number of sales (year-to-date) in various price ranges and number of days on the market;
Number of sales during previous 2 years in various price ranges and number of days on the market;
Number of foreclosures (year-to-date) and same for previous 2 years; and
Current vacancy rates, and similar information from previous years.
NOTE: All items must be labelled with a table of contents.
More on the definition of community in a future posting.