No Bridge to CMHC

Today we'll breakdown CMHCs recent policy change. Big Implications. Let's dive in.

October 20th, 2023

Read Time: 3 minutes

Here's how it typically works:

CMHC makes a bold proclamation without much guidance.

Then everyone reads the tea leaves to interpret their message.

Lenders have some idea, but the complete picture doesn't emerge until CMHC approves or rejects your application.

Well - last month CMHC made an announcement with HUGE implications for the multifamily community.

Today we'll attempt to read the tea leaves.

(We'll also brag about a recent landmark sale, and a new listing our team's excited about.)

Let's dive in.

(did someone forward you this email? Sign up [here](http://www.onmultifamily.com)).

DEAL ANNOUNCEMENT

We're pleased to announce another successful sale. Colliers led a landmark disposition of a 7 building, 403 bed student housing portfolio in Waterloo ($49,700,000). Congrats to our happy vendor. Congrats to our happy buyer who is now the largest student housing co-op in North America. For more information - please contact [Dayma Itamunoala](https://www.linkedin.com/in/dayma/).

CMHC's Big News

CMHC - Canada's largest mortgage insurer - doesn't broadcast its policy changes.

Instead, they update their "approved lenders" list. So if you haven't heard this news yet, you're not alone.

But here's what we know so far:

CMHC will only offer takeout financing for bridge loans if the bridge lender is CMHC-approved.

All bridge loans now have to be in place for a minimum of 24 months (unless the submission to CMHC was made prior to the closing date of the acquisition).

To be more clear - I'll use an example.

In the past - you buy an old apartment building with short-term financing. You might use a private lender in the short term to fix up the building and raise the rents. In 18 months, you plan to receive long-term takeout financing from CMHC so you can take some of your equity out and move on.

Now you can't do that - unless your original bridge lender was CMHC-approved. You also can't refinance to CMHC until after year 2.

Essentially, you'll be fine if your original loan was through a major bank, or the big boys like First National, Kingsett, Peakhill etc.

However, if your bridge loan is through a mortgage investment corp (MIC), private lender, or alternative institution - it may be time to call them.

(more below our new listing in [Bracebridge](https://www.collierscanada.com/en-ca/properties/129-alice-street/can-129-alice-street-bracebridge-ontario-bracebridge-ontario-canada/can2013760)).

NEW TO MARKET

[Download Brochure](https://listingsprod.blob.core.windows.net/ourlistings-can/2350ff0b-bacb-4880-acfc-6c9cbebc164b/01b2c665-d92a-4106-97dd-717283a0cac5)

[Sign Online NDA (additional info)](https://apps.colliers.com/DigitalDocs/Accept/1bccb48a-426a-4526-a4fd-af70476c9354)

Path Forward & Outstanding Questions

To chart the path forward, it's important to understand CMHC's intent.

They're invoking this rule change to stifle renovictions and apartment flippers. Fair enough.

And - generally - if you're investing in the spirit that CMHC promotes, there's wiggle room in their policies. So don't panic.

But here's where we're still lacking clarity.

Do these decisions take effect immediately across the board?

Most importantly - are those with VTBs (vendor takeback mortgages) affected? Because technically your VTB is just a private mortgage from an unapproved lender.

More to come on this I'm sure.

But as one of my good friends says, "CMHC is an enigma Dayma". Gotta love it.

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