Class actions have been launched against CIBC Mortgages Inc. regarding its practices for calculating prepayment penalties on mortgages entered into since 2005.
The Notice of Claim alleges that CIBC applied terms and conditions to certain mortgage contracts to allow it unfettered discretion for calculation of mortgage prepayment penalties. It is further alleged that the quantification of prepayment penalties applied by CIBC are in breach of the mortgage contracts.
Kieran Bridge, a Vancouver lawyer, describes the purpose of the proceeding as “We believe that through this lawsuit CIBC’s practices with respect to how they calculate mortgage prepayment penalties will be found to be unenforceable. In this case, as with all of these types of cases, we are concerned about whether Canadians are being treated fairly and lawfully.”
The action applies to CIBC mortgages as well mortgages through related entities such as Firstline Mortgages in the mortgage broker channel and President’s Choice Financial.
Fixed rate mortgages typically carry a pre-payment penalty which is either 3 months interest penalty or an Interest Rate Differential whichever is higher. There is typically no IRD penalty on Variable Rate Mortgages.