Wednesday, August 6, 2014

"Class-action lawsuit targets CIBC mortgage penalties"

At least 52,200 British Columbians will be entitled to refund cheques from the Canadian Imperial Bank of Commerce (CIBC) if a recently certified class-action lawsuit succeeds, according to one of the lawyers involved in the case. The representative plaintiff in the case is Victoria resident Erin Sherry, who wanted out of a CIBC (TSX:CM) mortgage when her marriage dissolved.

The bank hit her with $47,869 in fees because she was only two years into a 10-year mortgage and interest rates had fallen between the time Sherry had committed to the mortgage and when she wanted to break it.
Her argument to get out of paying those fees is twofold, her lawyer, Kieran Bridge, told Business in Vancouver. Her first argument is that the language in the mortgage document from CIBC's CIBC Mortgage Inc. subsidiary was so vague that it rendered the contract legally unenforceable.

Bridge, principal at Kieran A.G. Bridge Law Corp., pointed out that CIBC has since changed wording in its mortgages, possibly indicating that even the bank realized that the wording was too vague. If Justice Jeanne Watchuk, who certified Sherry's class action on June 30, disagrees and rules that CIBC's mortgage contracts are valid, Sherry has another argument.

“The mathematical formula that the bank used is improper,” Bridge said. “If an appropriate formula was used then the penalty would have been less.”
All those who obtained mortgages with CIBC Mortgage Inc., through its FirstLine Mortgages and President's Choice brands, after mid-2005 are automatically part of the class action unless they choose to opt out.