On June 4, 2024, CMHC issued significant updates to their Multi-Unit Mortgage Loan Insurance Programs. The major changes are as follows:

1. Update to Refinance Criteria: Effective June 4, 2024, CMHC has removed the measures restricting the use of refinance proceeds. This includes:

  • Any lender can now be in place prior to refinance.
  • There are no restrictions on the use of refinance proceeds, allowing property owners more flexibility to improve properties, refinance existing encumbrances, or convert equity into cash.

This change will enhance flexibility in refinances, boost profit margins with renovations, and allow for more free-flowing capital in the multifamily sector.

2. MLI Select Scoring for Energy Efficiency: Effective June 19, 2024, the points obtainable through energy efficiency in the MLI Select program will be reduced, reserving maximum benefits for projects that offer some level of affordability.

3. Amortizations Increasing for MLI Standard (Market) Program: Effective June 19, 2024, CMHC is extending the maximum amortization for new construction projects in the MLI Standard (Market) Program to 50 years. This will allow for higher leverage and lower mortgage payments, making the standard program more attractive.

4. Changes to the Approved Correspondent Program: Effective September 3, 2024, only approved lenders can submit CMHC multi-unit applications directly. This will result in the submitting lender keeping more the approvals obtained. Regarding the better terms and rates that lenders currently offer brokers as much of the work is already done when the file reaches them. We expect this lower pricing structure to continue especially for experienced brokerages with strong CMHC and lender relationships. Experienced brokers will continue to provide comprehensive loan packages, and seamless lender integration that will ensure expedited processing of the borrowers’ transaction as all the due diligence to determine borrowers’ best options are all mitigated and calculated prior to submission.

The value proposition of mortgage brokerages handling CMHC loans remains strong:

  • Speed: Mortgage brokers will prepare loan packages more quickly than lenders, who face increasing administrative burdens.
  • Knowledge of Lenders: High-volume brokerage teams have detailed knowledge of each lender’s terms, flexibilities, and processes, ensuring effective guidance for borrowers.
  • Loan Structuring & Guidance: Experienced brokers ensure loans are tailored to meet borrower needs and are set up for success.
  • Reduced Time & Effort: Brokers alleviate administrative burdens for both borrowers and lenders during loan application preparation.
  • Certainty of Execution: Unbiased mortgage brokers focused on borrower interests ensure loans fund as required.
  • Provide Best options: The broker will ensure that the best tools, terms and conditions from all the most motivated lenders will be brought to you, so that the borrower chooses the terms and condition that best meet their objectives

5. Other Changes:

  • Greater flexibility for the classification as new construction for projects replacing fully demolished residential structures and in the case of phased construction on a site containing an existing residential building (effective June 4, 2024).
  • Extension of mortgage re-amortization only as a default management tool, up to 55 years for MLI Select, (effective June 19, 2024).
  • Acceptance of applications with known site contamination for construction financing. MLI approvals will be conditional on confirmation of site clean-up prior to the first advance. (effective June 4, 2024).

In Closing:

MCommercial, the most nominated brokerage in Canada is here to answer any questions or concerns you may have.

We look forward to your call and helping you navigate the current market opportunities.

As always, we remain committed to your success.