Mr. Speaker, I rise today to update Members on home ownership clients that have direct mortgages with the NWT Housing Corporation and steps we are taking to work in partnership with these clients to ensure they are able to provide their families with affordable, adequate and suitable housing, while meeting their responsibilities as homeowners.
There are about 400 homeowners who have their mortgages directly with the NWT Housing Corporation. Unfortunately, Mr. Speaker, many of them have struggled to reduce their loan balances and a significant amount of arrears have accumulated. The accumulation of these arrears are shared between the NWT Housing Corporation and the homeowner, and many factors such as homeowners not making timely and regular payments, the design of the programs locking in an interest rate for the life of the mortgage, and the NWT Housing Corporation being slow to take action to work with homeowners who had fallen behind in their payments have led to this situation.
I am pleased to announce today that NWT Housing Corporation will be contacting each of these clients over the coming weeks to inform them of a revised approach to their mortgage balance. The new approach is more consistent with current home ownership supports, gives these clients an opportunity for a fresh start and will hopefully lead to them to work in partnership with the NWT Housing Corporation to be successful homeowners.
The revised approach will significantly reduce their mortgage balance in most cases and provide a
fresh start in terms of arrears. The clients will be offered repayment options that will make home ownership affordable and provide predictable payments which will allow them to better plan for their family’s needs.
For example, under the old mortgage program, where clients were charged as much as 12 percent interest on an annual basis, we have a client who borrowed $145,000 in 1996 who now owes $223,000, despite having paid nearly $50,000 towards their mortgage over the years. Under the new approach, which takes into account our current subsidy approach and makes adjustments for direct payments and modest interest rates, this family will owe $35,000. Depending on how fast they want to pay off the $35,000, mortgage payments will be between $240 and $430 a month.
Mr. Speaker, I want to be clear that this is not about forgiving past debt. This is about giving residents a fresh start. The new approach uses our current approach to home ownership and applies it to these existing mortgage clients. This results in the reduced mortgage balances but, most importantly, this step represents considerable effort on behalf of the NWT Housing Corporation to improve the circumstances for these clients. Those clients that have made serious efforts to keep up with their mortgages will see lower outstanding mortgage amounts than those clients who have not kept up with their mortgages. We estimate that there will be 20 clients that will no longer have a mortgage with the NWTHC because they have kept up with their obligations.
We believe if the clients take advantage of this opportunity and live up to their responsibilities, this will help reduce core housing need. It will improve housing affordability and encourage homeowners to make investments in repairs and upkeep of their homes.
As I’ve said in this House many times, we also need to strengthen our overall collection efforts. While the new approach will give clients the opportunity to get back in good standing, we cannot and will not allow our clients to again accumulate large amounts of arrears. We will act before clients get into circumstances where they would have difficulty getting their head back above water. We are always willing to work with clients who want to get themselves out of any difficulties, but we will also take steps for those who don’t want to work with us. That will include actions like garnishees of wages, use of collection agencies, reporting of bad debts to credit bureaus, and foreclosures.
Mr. Speaker, the NWT Housing Corporation’s strategic plan identified improving home ownership supports as a strategic priority. Today’s action is a step in that direction and I look forward to continuing to work with Members and the Standing Committee on Social Programs as we continue to advance the priorities of the 17th Legislative Assembly. Thank you, Mr. Speaker.
Thank you, Mr. McLeod. The honourable Minister of Transportation, Mr. Ramsay.
