A number of affected homeowners who spoke to CBC News say they’ve been told by their banks or credit unions their loan applications — home equity, mortgage refinancing and new lines of credit — have been declined or put on hold with no clear timeline because they cannot get their properties appraised.
The organization representing Canada’s appraisers says they take their direction from the banks.
“I just lost faith in everything,” says Marcel Ackermann, whose home in the Sumas Prairie was severely damaged by the flooding. “Let’s just kick us when we’re down.”
The lower half of the house Ackermann, his wife and son lived in has been ripped down to the studs since the floods. His two barns were nearly swallowed by the water. He needed the loan to help with repairs.
When the Ackermanns approached their bank, RBC, at the end of November, Ackermann says he was assured a line of credit wouldn’t be a problem. They would be eligible for a short-term loan in two weeks and more money a month later.
But the promised amount kept shrinking. Five weeks later, he says, they were declined altogether.
Their financial adviser suggested home equity financing instead — borrowing against their home and their 20 hectares of farmland — but that was declined as well.
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Ackermann says he and his wife own a number of assets including a farm and welding business, have excellent credit and pay their bills on time, leaving them confused as to why they weren’t eligible.
Just months before the flood, a neighbouring eight-hectare property was sold for more than $2 million, according to B.C. Assessment.
Ackermann suspects his home is now seen as a risky property.
“When you have assets that they’re not going to let you borrow against them … land is land, the water’s gone,” he said.
“I find it quite ridiculous that they’re not going to [see] that the value is going to bounce back and we’re not asking to borrow a ton of money.”
Ackermann says his banker told him the bank couldn’t send appraisers to his property following the floods. Without appraisals, they weren’t able to lend him any money.
To start work on the rebuild, they’ve had to rely on the kindness of family, friends and Good Samaritans while burning through their savings.
‘Doesn’t add up’
Two other families in the Sumas Prairie who spoke with CBC News were given similar responses to their loan applications.
Richard Meyer tried to refinance his 4.5-hectare property and home but was told by Envision Financial they were unable to send appraisers until the soil on his farm was tested for contaminants that could affect the property’s value.
He says they gave him no specific timeline but guessed it could take three to six months.
Given the prices of homes in Abbotsford and what he owes on his mortgage, he says he can’t understand why he wasn’t even given a line of credit.
“It doesn’t add up … even if the value of the land did come down a little bit, there’s no way it should be should be even a concern,” Meyer says.
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Another resident, Lindsay Kay, called it “disheartening and discouraging” to hear her bank, CIBC, decline her refinancing application.
She says she was given “the run around” for weeks and finally her mortgage broker told her lenders had suspended appraisals in the area and the bank had concerns about soil contamination and future value.
Banks assessing risk
The B.C. president of the organization representing appraisers says she isn’t aware of any directive to suspend appraisals in the area. They take their direction from banks as part of the lending process, she says.
“It has to be driven as a terms of reference from the lender — this is the flow of the spoke in the wheel,” said Edwina Nearhood, president of the B.C. branch of the Appraisal Institute of Canada.
She said appraisers may not have been able to enter the area safely initially, but now she suspects it may be a matter of banks putting processes on hold to assess their risk.
No one was available from RBC, Envision Financial or CIBC for an interview.
In a statement, RBC said it is assessing each client’s needs based on their circumstances and they are “continuing to look at what viable options might exist to help.”
Envision Financial, a division of First West Credit Union, also sent a statement.
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It says in part that staff proactively made calls to 600 members in the area to offer assistance and it has not stopped providing mortgages to those affected.
“As with all our mortgage applications in our trade areas, we will continue to practise regular due diligence through the approval process, which includes having properties appraised.”
In CIBC’s statement, the bank says it recognizes industry-wide delays in the area and they’re “committed to helping clients through this process.”
Flood risk mitigation strategies
Property values tend to decrease dramatically immediately following floods as buyers and lenders get nervous, according to engineer and flood management consultant Tamsin Lyle, who researches the issue.
In the case of homes in the Sumas Prairie, she suspects banks are putting on the brakes while doing their due diligence before lending out any more money.
“I think it’s this sort of in-your-face realization that this is potentially a bad investment,” Lyle says.
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Nearhood, however, says from the demand she’s seen for properties in the Fraser Valley, she foresees values rising despite flood damages.
“In my experience in 30 years, the values seem to kind of pause and then three, six, 12 months later, the markets becomes cautiously active again.”
In the meantime, Lyle recommends homeowners rebuild using flood resilient techniques to mitigate future risk.
She suggests simple fixes such as choosing tile over carpeting or hardwood, moving electrical outlets up higher and installing devices such as flood gates.