The Department of National Defence has doubled the amount of compensation members can receive when they have to relocate, but admits it still has no way to help those who suffer "catastrophic" financial losses.
About 12,000 members of the Canadian Armed Forces are ordered to move each year. The federal Home Equity Assistance program now offers people up to $30,000 to cover losses when their house fetches less than they've put into it. Previously, the Treasury Board capped it at $15,000.
Lt.-Col. Brook Bangsboll, director of compensation and benefits administration at DND, said that higher limit will cover 95 per cent of the cases.
"Certain locations around Canada seemed to have a trend — Cold Lake is a good example, or Gagetown — where sometimes you could make money on the sale of a house, but oftentimes you could lose money, through no fault of the member," he said.
Bangsboll said personnel who bought houses around CFB Cold Lake in Alberta sometimes made $60,000 through a sale, while another in the same area could lose $50,000. "Anything that is outside of that $30,000 — $70,000, $80,000, $90,000 — is catastrophic to a member," he said.
'Depressed market' policy never worked
Prior to the April 19 changes, those members could turn to a policy that was supposed to compensate members who suffered those big losses due to a depressed real-estate market.
"But that policy was really ineffective," Bangsboll said. "We did not have any luck getting any of our files approved by Treasury Board based on the depressed market. In the two years I've been in the job, not a single one was ever approved."
Over the years, DND has heard from members who said they weren't happy with the compensation. Bangsboll said changing Treasury Board policies takes a lot of time and work.
They've scrapped the depressed markets policy and will now try using a caveat that lets them apply to the Treasury Board on a case-by-case basis for members who lose more than $30,000. That method has not yet been tried.
'We do not have a solution'
Bangsboll said Jonathan Vance, the chief of defence staff, wants to find a way to resolve those major losses. "At this point, we do not have a solution," Bangsboll said.
Bangsboll said they'll be watching carefully as the new policy is used during DND's main moving season, from the start of June to the end of August. "That's when people are actually packing up their houses and moving across the country," he said.
DND could suggest further policy amendments in the fall.
DND also changed the policy on early mortgage repayment penalties, which used to be paid by members.
"It was inappropriate. Now, the Crown will cover that cost, because we're ordering them to move," Bangsboll said.
They've also extended to 10 days the amount of interim housing coverage DND will pay when personnel are unable to move directly from one home to the next.
Retired member lost $85K
Retired Canadian Forces member Neil Dodsworth was one of those who suffered catastrophic losses when he had to move from Morinville, Alta., to Kingston, Ont., a decade ago.
"I lost roughly $85,000, which is a big chunk of change. Our life would have been different right now if that hadn't happened," he said.
He applied to the previous Home Equity Assistance program and thought it would ensure he lost no money, but he only got $15,000. He applied under the depressed markets provisions, but had that claim rejected. He had launched a lawsuit to get compensation, but eventually dropped it.
Dodsworth said getting $30,000 instead of $15,000 would have helped. "If they would have made that change at that time, it would have helped us, and most likely other families," he said.
He said further changes are needed for the five per cent of cases where the member is ordered to move and loses more than $30,000. He's disappointed that the changes don't apply retroactively.
"If you go into a house and you put $35,000 down, at the end of the day, when you have to move away again, you should be able to get that $35,000 back. You should at least leave there with the money you had to purchase the home," Dodsworth said.