Canada Mortgage and Housing Corp. and the country's biggest lenders are launching a campaign aimed at heading off an increase in mortgage defaults.
They will urge mortgage holders to approach their lenders about easing the terms of their mortgages before financial problems get out of hand.
The campaign is a reaction to a rising number of mortgage defaults in this country - though the problem is minuscule compared to what's going on in the U.S..
According to the latest figures from the Canadian Bankers Association, as of last October .29 per cent of Canadian mortgages were in arrears, up from 0.26 per cent a year earlier. To be in arrears, mortgage payments must be 90 days late.
The Canadian situation stands in stark contrast to the U.S., where Washington has introduced a $75-billion mortgage bailout that offers lenders incentives to modify existing loan agreements and standardizes the terms for loan modifications. As many as 6 million U.S. homeowners are at risk of defaulting on their mortgages in the next few years.
Canada wants to nip the problem in the bud. Borrowers are being encouraged to talk to their lenders to find alternatives such as skipping payments, tacking late payments onto the balance of the loan, extending the term or amortization amount or locking into a fixed rate.