Alberta is the only Canadian province to offer non-recourse residential mortgages where owners can hand keys back to their lender and walk away without further liability. Because these are traditional mortgages with a 20%+ down payment, they are not insured by the Canada Mortgage and Housing Corporation (CMHC), which leaves risk of loss with the lender. As job losses rise, less people are coming to Alberta and more are looking to leave. All of this is adding downward pressure to home prices that were badly inflated during the 2001-11 commodities boom. Fort McMurray and the luxury market in Calgary have already seen prices drop 20% from the highs of 2014 and counting. See: Jingle mail raises ugly head in Alberta.
Jingle mail — the act of walking away from an underwater mortgage by mailing your keys back to the bank — is a peculiarity of the Alberta residential market and an act of desperation. However, a combination of high debt and lost jobs make it an option in a province going through a significant economic reckoning.
“Jingle mail, or strategic defaults, weaken the housing market and increase loan losses among Canada’s banks.”
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