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COVID-19: Loan Payment Deferrals for Indigenous Clients

Support for on and off-reserve clients with CMHC financing.

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Many First Nations and other Indigenous housing providers are facing unique and unprecedented challenges due to the COVID-19 pandemic.

CMHC offers solutions, such as reporting and operating agreement flexibilities and a loan payment deferral initiative, to help alleviate some of the financial impacts on Indigenous clients.

We can provide up to 6 months of loan payment deferral (principal and interest) for housing providers that have a CMHC financed loan in good standing.

Payment deferral for loans with lenders other than CMHC

Is it possible to defer payments on CMHC-insured housing loans?

Yes, lenders are now able to defer payments on a borrower’s CMHC-insured housing loan up to six months without CMHC’s approval.

Contact your lender at the first sign of financial difficulty to discuss your individual circumstances and to confirm if you are eligible for this deferral. Your lender will also outline the terms and conditions for resuming your payments.

What does it mean to differ payments on a housing loan?

A housing loan payment deferral means that the regularly scheduled loan payments will be postponed up to six months. Your outstanding debt will increase if you exercise this option, as interest will continue to accrue during this period. You will still be responsible for repayment of deferred principal and unpaid interest at a later date.

What is required to be able to defer housing loan payments?

You need to call your lender to advise how you are impacted by COVID-19 and discuss options for assistance.

It is recommended to clearly outline how you have been financially impacted by COVID-19. You’ll need to provide supporting information (for example, hardship information related to COVID-19, such as the tenant profile and current and anticipated rent disruptions, a rent roll identifying payment arrears (if available), need for compassionate relief, etc.).

Payment deferral for Section 95 loans with CMHC

What is a loan payment deferral?

The deferral is an agreement between you (the Borrower) and CMHC (the Lender). The agreement typically indicates that you and your lender have agreed to pause your payments for a certain amount of time. It’s a temporary measure to help with cash flow relief when warranted. After the agreement ends, your payments return to normal and the missed payments – including principal and accumulated interest – are repaid.

What does a 'deferred payment' mean for loans secured under Section 95?

A deferred loan payment means that your regularly scheduled loan payments will be paused up to 6 months. The deferred payments are added to the outstanding debt balance and interest will continue to accrue during this period. You will still be responsible for the repayment of deferred principal and unpaid interest.

How do I repay the deferred amounts?

The repayment plan will be developed before the end of the loan deferral period between you and CMHC.

For example, this plan could include:

  • making a lump sum payment, or
  • adding the deferred payments to your loan balance at term renewal, or
  • establishing a modified payment schedule

NOTE: The interest on your loan that hasn’t been paid during the deferral period continues to accrue to the outstanding principal of your loan.

Who can officially make a request for payment deferrals?

The request must be submitted and signed by a representative who has both the financial and legal authority to bind the First Nation. If a payment deferral is approved, a deferral confirmation will be sent to the First Nation.

What is the type of information needed to make a request for payment deferral?

Deferral requests need to be made in writing by email with information explaining the financial impacts related to COVID-19. (For example: revenues disruption, rent arrears, business closure, illness, impacts of caring for others). Revenues, incomes and available funds to offset near term cash needs will have to be communicated as well.

How do I ask CMHC for a loan payment deferral?

If you are experiencing hardship as a result of COVID-19 and need to take advantage of this payment deferral option, call or email us: 1-800-668-2642 / contactcentre@cmhc.ca.

What is the deadline to make a request?

The deadline for making a payment deferral request has been extended from June 30 to September 30, 2020.

When will I hear back from CMHC regarding my payment deferral request?

We will process requests on a first come, first served basis.

Please know that we are putting our best efforts to process all demands as quickly as possible. You will receive an acknowledgement within 48 hours so you can be confident that we have received your request and are working on it.

How will I know if my request is approved?

You will receive a loan deferral confirmation and agreement once you’ve been approved.

In all instances, we will work with you individually to be able to find the best solution.

If you haven’t been approved, we have a series of tools and relief measures for housing providers including deferral of loan payment, capitalization, special payment arrangements, advancing flexibilities, and any combination of tools.

What is the impact of payment deferrals on the Ministerial Loan Guarantee (MLG)?

Indigenous Services Canada (ISC) has confirmed that loans guaranteed by an MLG will continue to be guaranteed if the deferral option is exercised and loan terms/conditions remain the same.

Can payment deferrals be applied to loans already under a special payment arrangement or workout with CMHC?

If an existing special payment arrangement or workout with CMHC is in place and further difficulties have arisen due to COVID-19, we’ll need to do a further assessment. Please contact your Indigenous and Northern Housing Solutions Specialist to determine if payment deferrals could apply.

Payment deferral impact on subsidies

Will payment deferrals affect the flow of subsidy payments?

Subsidy payments won’t be affected if the payment deferral option is exercised. There won’t be any interruption in regular subsidy payments during the deferral period.

Will subsidies be paid on the higher principle and interest (P&I) payment when the deferred payments are capitalized?

For subsidy tied to loan/mortgage payments, subsidy will not be calculated on the capitalization of deferred payments.

In regards to financial statements for Section 95 on-reserve projects, while the deadline for submitting financial statements remains July 31, given the current situation related to COVID-19, CMHC is aware that the documents may not be ready by this date. At this time, should there be delays in the submission of statements, CMHC has made the decision not to suspend subsidy or deem communities ineligible for future Section 95 allocations.

What about suspension of accounts and impact on subsidies in current circumstances?

In most cases, CMHC will no longer initiate suspension of subsidies for accounts in breach of their agreements.

Physical condition reviews and on-site inspections

What is the impact on physical condition reviews and on-site inspections?

On-site progress validation inspections for on-reserve non-profit housing (Section 95) and renovation programs will be limited or, in some cases, temporarily suspended. We are exploring options to advance funds for work in place without an on-site inspection and will provide further directions upon receiving a request.

For Physical Condition Reviews (PCR), the decision to allow contractors, CMHC staff and/or Technical Service Providers (depending on who typically does reviews) is yours. We will not impose any penalty if you decide to postpone these activities to a later date.

How will CMHC process final or progress payments to First Nation clients?

The process will remain the same. Communities receiving funds via electronic funds transfer (EFT) will continue to receive advances this way.

Communities are encouraged to provide banking information to receive advances via EFT. Contact nhsadvances@cmhc-schl.gc.ca for any questions about EFT.

For First Nation clients not set up for EFT advances, you’ll receive funds via cheque. Delays may be incurred due to postal/delivery services impacted by COVID-19.

Agreements management

For housing programs that use income to calculate rental assistance, can government benefits be considered as income?

Any income that is considered taxable income by Canada Revenue Agency (CRA), including the Canada Emergency Relief Benefit (CERB) and Employment Insurance (EI), is considered as income for the purpose of rental assistance calculations, such as rent-geared-to-income (RGI).

How should rental losses (unpaid rent from tenants) be reported on financial statements?

Questions related to the reporting of rental losses on financial statements should be directed to your auditor. Rental losses, however, can only be reported if they are an eligible program expense.

Should rental payments be suspended or continued to be collected from tenants?

As a housing provider, you should continue to collect rental payments from households that can afford to pay their rents. Any instances of rental suspension for those facing financial hardship should be considered on a case-by-case basis.

Matters and decisions to suspend or continue rental payments are between the housing provider and occupant.

CMHC expects that housing providers with a deferral of loan payment will extend support to renters and households facing financial hardship so that their housing needs continue to be met.

Flexibility when submitting documents to CMHC

What flexibilities are there around the submission of documents?

Given the current situation related to COVID-19, CMHC will be flexible regarding the deadline for delivering the requested documents in order to comply with the agreement.

CMHC is aware that the documents may not be ready within the requested timeframe and will not impose any penalty as a result of the delay.

In addition, given the limited access to our offices, we ask that you, if possible, send us the documents by email at the following address:

  • Off-reserve: GE-AM.adm@cmhc.ca
  • On-reserve: AMonreserve-GEsurreserve@cmhc.ca
  • Phase 2 of the Federal Community Housing Initiative: FCHI2-IFLC2@cmhc.ca

For Section 95 on-reserve projects, while the deadline for submitting these financial statements remains July 31, given the current situation, CMHC is aware that the documents may well not be ready by this date. At this time, should there be delays in the submission of statements, CMHC will not to suspend subsidy or deem communities ineligible for future Section 95 allocations.

What if I need assistance unrelated to COVID-19?

If you are facing difficulty with loan obligations or would like to learn more about programs and partners to help you achieve your housing goals, please contact your Indigenous and Northern Housing Solutions Specialist.

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Date Published: June 8, 2020
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