Lender offers guide for one type of difficult deal

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Brokers are often frustrated when dealing with underwriting requirements and trying to get a deal done, but one leading lender has shared a helpful list of tips for securing one type of difficult deal.

“Canada’s apartment sector is underpinned to a large extent by loan insurance provided by Canada Mortgage and Housing Corporation (CMHC),” CMLS Financial wrote in its latest Commercial Mortgage Insights report, entitled “Seven Steps To A Successful CMHC Commercial Mortgage Application For Rental Properties”. “This is appropriate since the number one risk faced by apartment owners is regulatory.”

CMLS lays out the seven elements required in every commercial mortgage application. See below for a synopsis of each so that you – and your clients – are always fully prepared.
  1. CMHC application fee
This is an up-front fee of $150 per suite for any building that has 100 suites or less. The price is lowered to $100 per suite in excess of 100.
  1. Property description and photographs
This includes the address of the property, the number of suites and a brief description of the property.
  1. Rent roll
“A current rent roll is mandatory. It must show all suites, tenant names or vacant suites, suite type by bedroom count and base rent per month for each suite,” the report states. “In cases where uncertainty exists in vacancy or rent levels, it may be necessary to provide historic rent rolls.”
  1. Financial statements
Three years’ worth of borrower financial statements is required.
  1. Environmental report
CMHC will not lend on any property that does not meet sufficient environmental standard. The lender rep can advise brokers what exactly is needed for both phase 1 and phase 2 reports.
  1. Sponsorship info
“All loans over 60% of CMHC’s lending value must be supported by guarantees,” the report states. “CMHC requires an accurate description of the property’s ownership structure.”
  1. Due diligence documents
These include a building condition or appraisal report, purchase documents, debt details, copies of the utility, tax and insurance bills, and property management contracts, among others.

To read the report in its entirety, click here
  • alphonse negro on 2014-10-07 2:17:37 PM

    This is all very nice but this is not the typical deal out there..........

  • MP on 2014-10-07 5:59:24 PM

    This is for multi-unit buildings...Why don't they list some residential tips....

  • Jake Abramowicz on 2014-10-07 8:22:09 PM

    Resi is 10x easier to do, I guess that's why they posted this. What kind of tips do you need on residential deals?

  • alphonse negro on 2014-10-08 10:40:01 AM

    Here my 35 years of experience in a few words.
    1) stay very ethical
    2) prepare your clients well in advance so that they have complete documentation for full disclosure ( key word is FULL DISCLOSURE )
    3) take your time to take accurate information, proper spelling of name, address and explain any variances from the credit bureau.
    4) income rules, no income = no mtg unless a conventional mtg and income is in cie name and can be proven for those BFS.

    5) If client has rentals it is the net income showing on the T776 that counts. If there are losses good luck. No one is lending on losses...

    Take the time to build and document your file, accuracy is a big part of the approval combination..

    Wishing everyone across Canada great success!

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