CMHC Updates: Ashdown Capital’s Continued Excellence in Financing Solutions

CMHC Updates: Ashdown Capital’s Continued Excellence in Financing Solutions

At Ashdown Capital, we consistently deliver for our clients by navigating market changes and accessing the best solutions.

We have strong expertise within our group navigating and facilitating financing for developers, borrowers, and investors under various CMHC programs. On June 4th, CMHC announced changes to their Multi-unit Mortgage Loan Insurance Program that we are excited to share, allowing us to continue delivering exceptional results for our clients!

Summary of CMHC Changes:

Amortization Extension:

  • The maximum amortization period under MLI Standard has been extended from 40 years to 50 years for new construction projects upon placement of the term loan.
    • This will allow developers to qualify for larger CMHC-insured construction loans at the outset as the take-out will be based on the longer amortization.
  • Additionally, re-amortization will be used as a default management tool at loan renewal, up to 50 years for MLI Standard and 55 years for MLI Select.
  • Effective Date: June 19, 2024

Removal of Restrictions on Equity Refinancing:

  • The special interim measures from 2020 that limited the use of insured refinance proceeds have been removed. Now, equity can be repatriated without constraints.
    • For the past few years, developers had to prove the funds from an equity take-out were going towards other rental projects.
  • Effective Date: June 4, 2024

Energy Efficiency Point Changes on MLI Select:

  • Energy efficiency outcomes will now receive fewer points under the MLI Select scorecard. This change affects projects that previously benefitted from higher points based on BC’s Step Code 3+.
  • If you only target Energy Efficiency, the 50 points will result in higher premiums and being capped at a 40-year amortization, so will require affordability and/or accessibility to receive a full MLI Select scorecard and most aggressive financing metrics.
  • Effective Date: June 19, 2024

Refinancing Non-Approved Lenders:

  • CMHC has reintroduced the ability to refinance existing properties financed by non-approved lenders, allowing for more flexibility in refinancing options.
    • Prior to this change, any existing financing had to be with a CMHC-approved lender (banks, credit unions, etc.) to qualify for a CMHC-insured loan.
  • Effective Date: June 4, 2024

Removal of Blurred Lines Between Brokers and Approved Lenders:

  • Previously, brokers were able to submit applications directly through to CMHC to obtain a Certificate of Insurance (“COI”) and then shop that COI to multiple Approved Lenders.
  • Brokers now must get term sheets from Approved Lenders before getting the COI for the client.
    • Our priority is always to secure the best deal for our clients. This change will not affect that. We still work directly with the lender on the clients’ behalf and assist with the required documentation to obtain the COI from CMHC. We provide guidance and feedback on the level of financing available under the programs. Going forward, we will do this before submitting the COI request, providing clients with better visibility on the terms and conditions supported by Approved Lenders and ensuring the lender is in place to fund once the COI is approved by CMHC. This ensures we can offer the most competitive rates and terms available.
  • Only Approved Lenders can now submit multi-unit MLI applications directly to CMHC.
    • Previously, some Approved Lenders with their own funds also had internal brokers that would shop their COI to other lenders if they couldn’t fund internally.
  • Effective Date: September 3, 2024

These changes bring substantial benefits to developers and borrowers by offering extended terms and greater flexibility in equity usage. Our approach remains unaffected by the operational changes, ensuring that we can continue to provide you with the best possible financing solutions.

Please feel free to reach out if you have any questions or if you’d like to discuss how these changes might specifically impact your projects.

Written by Andrew Still, George Coton, Tyson Pollack, and Ryan Turner.