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Equity Takeout Restrictions
Effective immediately, CMHC has dropped the restrictions on use of equity takeout from a CMHC refinancing. The policy was that equity takeout had to be reinvested in multifamily rental investments and monitored by the lender. This is no longer a requirement.
Additionally, the “24-month rule” restricting when the CMHC refinancing can occur has been removed.
Renovated Buildings and Lease Up
Effective immediately, a renovated apartment building will need to be fully leased before application to CMHC for refinancing. Many times, this will be related to the above section.
MLI Select Scoring System
The Energy Efficiency Criteria point system has been reduced. This is a meaningful change in British Columbia as the previous scoring system allowed all BC Step Code 3 projects to qualify for 100 points (the full MLI Select product). Effective June 19, 2024, the maximum MLI Select points that a project can obtain from Energy Efficiency is 50. Therefore, to achieve 100 points and the full MLI Select program, there will need to be an affordability and/or accessibility component in addition to energy efficiency.
Energy Efficiency Scoring Reductions
Level 1 reduced to 20 points from 30 points.
Level 2 reduced to 35 points from 50 points.
Level 3 reduced to 50 points from 100 points.
Amortization Change
For the CMHC Market insurance product, new construction loans can be underwritten with a 50 year amortization instead of 40. The 75% LTC limit still applies during construction but can step up to 85% once the effective gross income is achieved (leased up). This change will be helpful in select situations.
Approved Lender Correspondents
Effective September 3, 2024, CMHC Correspondents (like Citifund Capital Corp.) will need to broker and place the loan before the file can be submitted to CMHC. Correspondents will then work in concert with their lender partner to submit and obtain the CMHC COI approval. Historically, CMHC correspondents submitted files directly and placed the loan with Approved Lenders at the end of the process. This change will move the lender pricing negotiations to the front of the process instead of the end which is beneficial to borrowers.
Environmental Issues
Sites with known contamination can now make application to allow for projects that are in the process of remediation to apply. Completion of the remediation and satisfactory ESA are required prior to the first advance.
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