Inheritances, bankruptcy at stake for Erie Shore Dr. residents

Four months ago, this house on Erie Shore Drive stood tall, until waves and storms blew the backdoor open and caved in the wall. Jason Church, owner of JTC Construction, who has been helping residents reinforce their homes for the past six months, said this will be the first house to go underwater. The house debris floating in the water can cause potential risks to nearby boats.

By Jenna Cocullo

Rick Barnier has memories of his wife sitting on a wooden outdoor swing, facing Lake Erie, rocking back and forth as she recounted stories to their two young grandchildren.

Now, Barnier, 69, believes those are the last of the memories he and his wife will make at their Erie Shore Drive home.

He and his wife are among the hundreds of residents who were told to evacuate their homes on Erie Shore Drive by March 9, following a motion passed by the Chatham-Kent council to shut down the road due to an unstable dike.

“(The municipality’s) plan is to fill the road with clay to raise it, do you actually think they are going to build us a new road to access our houses? They say it’s a temporary closure but it’s not,” Barnier said.

The couple has owned the land for more than 50 years and have permanently lived on the property for almost two decades. Although they are one of the lucky residents who have their mortgages paid off, Barnier said they just lost an important asset to pass down to their children.

“This was their inheritance and their memories,” he said.

Homeowners and volunteers spend their final hours, before the eviction deadline on the weekend, protecting their houses from flooding by reinforcing their break walls.

Resident Sonya Knipfel, said her insurance will most likely be invalidated and she stripped her house down on Saturday, assuming she would lose it forever.

“I don’t care how much money you have in life, $325,000 is a lot to lose, even if your mortgage is paid off,” she said.

Several other residents along the road, who asked not have their names disclosed, said they were facing bankruptcy, two confirming that they had already lost their insurance.

Insurance expert Eric Gaudrault said that homeowners should call their insurance as soon as possible as there is a very real risk of losing everything, although it is not a blanket reality for everyone.

“The important thing that people need to realize is not every policy is the same. There are general guidelines that may apply, but it could vary. They need to have a conversation with their own providers,” he said.

Gaudrault explained that closing down the road would have an impact on first responders’ access to the properties which becomes a material change and a risk to insurance firms who provide coverage based on services provided to that area.

The other issue facing property owners is a vacant premise, with no intent to come back for a year, triggers a material change in the year.

“Basically, if there’s a fire, the municipality is letting it burn to the ground and there is no one there to even notice it catching fire – companies don’t like that. They’ll have to go to middle markets which will cost more to insure their homes or they can get no coverage at all,” he explained.

“It varies; every property and homeowner is different. A homeowner with previous claims or issues may not get coverage but someone with a perfect record could get coverage at an expensive rate.”

While some residents are hoping to slip under the radar of their insurance providers, Gaudrault said a misrepresentation of what is going on is the last thing they want.

“The true end result is that it is complicated and everyone has to talk to insurance companies otherwise they can find themselves in hot water.”

Robb Nelson, a mortgage broker and private lender, said once a homeowner is no longer insured, their banks can call back a mortgage.

Nelson said if homeowners get their mortgages called back they are “out of options.” The mortgage would be due immediately and the residents would most likely have to declare bankruptcy.

“I hate to say it that way. But they would have to sell the property to people who can pay cash. But it won’t be insurable, so that is unlikely to happen,” he said.

Nelson said homeowners may be able to get a registered line of credit, unsecured, to pay back their mortgage, although 99 per cent of the time they can only borrow up to $100,000.

“If the mortgage is insured by the Canada Mortgage and Housing Corporation (CMHC) or Genworth, they guarantee the bank the money and the insurer can sue the homeowner for any losses that were incurred. That is recorded to their credit bureau that they defaulted and they can’t get another one,” Nelson said.

In a statement, CMHC officials said they offer “tools and mortgage payment flexibilities for homeowners” and encourage borrowers with CMHC-insured mortgages to contact their financial institution at the first signs of financial difficulty to discuss their situation.

Last Monday’s council motion included a directive to staff to look into buying out the homeowners, however, Coun. Trevor Thompson said without provincial or federal funding, he does not know if that will come to pass.

“The feds as well as the province need to step up. It would have to be a team effort,” he said.

Chad Martin helps fill sandbags at the entrance of Erie Shore Drive as volunteers truck them down the road to houses in need.

In a statement, the Ministry of Municipal Affairs and Housing (MMAH) said that they have two disaster recovery assistance programs to help out municipalities:

“The Municipal Disaster Recovery Assistance program helps municipalities that have sustained emergency response costs, or damage to essential property or infrastructure, as a result of a natural disaster.

“ The Disaster Recovery Assistance for Ontarians program provides financial assistance to individuals, small businesses, farmers and not-for-profit organizations that have experienced damage to or loss of essential property as a result of a natural disaster.

“These programs are not a substitute for insurance. Our disaster recovery programs are claims-based and designed to support the recovery of municipalities and Ontarians after emergency response to a natural disaster is complete and the threat to a community is no longer present,” the ministry stated.

Erie Shore resident and long-time hockey player, Melissa Ogden has taken matters into her own hands by starting an online petition asking residents to allocate the $18.5 million set aside by the municipality for a possible new hockey arena in Chatham to put toward paying out the residents of Erie Shore Drive.

“That is almost $200,000 per family. I get that hockey is important but this would be enough money to get the families started, with some left over to help fix the road,” Ogden said.

Jack Brown, president of the Chatham-Kent Cyclones, said if that were the only solution to helping out the Erie Shore Drive residents, it would be a no brainer.

“”I think at the end of the day, the priority is for the community. As much as we want an arena, we have to prioritize our needs first. As good community members, the onus is on us to do the right, but that’s just my thoughts on it.”

However, Thompson said he does not think that solution would work, saying he heard from some residents that they do not want to spend taxpayer dollars on bailing out the homeowners.

“I appreciate people looking around but unfortunately it is never easy, that is how we got to this position. Even in the 11th hour, it is not as easy as it appears on paper,” he said.

“This will be our legacy to finally try and deal and tackle this issue of decades.”

Municipal graphic showing the potential impacted area should the Erie Shore dike fail.


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