Desjardins no longer offering mortgages for houses in some flood zones

Desjardins Group announced that it will no longer offer mortgages for houses in certain flood zones, which includes homes with a five per cent of being flooded each year.

The effect of the federation of credit unions' decision impacts many residents in the Montreal area.

Macons Street in Pierrefonds on the West Island is sunny and dry now, but it's listed as one of the flood zones.

"We've only been flooded once in 50 years," said resident Rene Leblanc.

As of February, Desjardins implemented a new practice governing risk in flood-prone areas.

"The impacts of climate change, including water damage, are growing in importance and causing substantial damage," Desjardins said in a statement. "Desjardins wants to support its members and customers while taking into account these changes and the risks they may represent."

"This could have dire effects on citizens that live there and have lived there for decades," said Pierrefonds-Roxboro Mayor Jim Beis. "If ever they want to sell their home, for example, the prospective buyer could not get a mortage from this institutuion."

Leblanc is worried about the example Desjardins is setting.

"Desjardins is a leading financial institution in the province of Quebec both from an insurance point of view and a banking point of view," said the resident of more than 40 years. "Are others going to follow suit? When a leader does something, you can assume there will be a domino effect."

Insurance companies have also raised their premiums for residents in certain areas.

"Insurance companies have already decided it would be difficult for folks that live in flood areas, for example, to reinsure their homes," said Beis.

The reality is that homes could lose value.

"How much money that we potentially stand to lose?" asked Pierrefonds resident Tim Coochey. "Or we can't sell because nobody can get a mortgage or insurance."

To make matters even worse, municipal taxes are increasing as home values are going down.

"This is really troubling, and I can only imagine the anxiety it's causing the folks living in these areas," said Beis.

Desjardins said the new rules affect fewer than five per cent of its mortgage clients, but for those affected, they now have even more to worry about than spring flooding.