Option 1 : Prepay and Re-Borrow

For borrowers with prepaid equity in their property who are experiencing temporary cash flow problems. The borrower can re-borrow prepaid funds over and above the normal principal reduction. Prepayments may be lump-sum or as a result of an accelerated payment schedule.

The Approved Lender can approve and implement this option subject to a documented borrower interview.

Option 2: Extended Mortgage Payment Deferral

For borrowers who require payment deferral of more than 4 months without having to make any offsetting pre-payments. The deferred amount is to be recovered over a period not to exceed 2 years.

The Approved Lender can approve and implement this option up to a total maximum deferred amount of $10,000 subject to a supporting workout analysis.

Option 3: Extension of Amortization

For a borrower who needs to lower their mortgage payments over the longer term. Approved Lenders can approve home owner extended amortization periods up to the lesser of 40 years from the original Interest Adjustment Date, or the remaining economic life of the property. When the situation improves the borrower can shorten the amortization period at loan renewal, or use prepayment privileges to shorten the amortization.

The Approved Lender can approve and implement this option subject to a documented and substantiated workout analysis.

Option 4: Special Payment Arrangement (Partial payments with a recovery plan)

Any reasonable special payment arrangement may be negotiated to recover payment arrears over the shortest period, provided that the arrangement is within the borrower’s financial ability. The Approved Lender will need to complete an analysis to support the repayment plan. It is recommended that the repayment period not exceed 24 months, and minimum payments are equivalent to a Gross Debt Service Ratio of 30% or 1/12th of the annual taxes, whichever is the greater.

The current balance of the CMHC-insured mortgage registered against the property plus the amount of any deferred principal and interest should not exceed the original purchase price of the property, but the current market value is also a factor to be considered. This tool can be applied only in cases where the borrower is currently employed, unless there are extenuating circumstances.

The Approved Lender can approve and implement this option up to a total maximum deferred amount of $10,000 subject to a documented and substantiated workout analysis. For amounts over $10,000, CMHC authorization is required.

Option 5: Capitalization

For a borrower who has little or no equity in the property, but who has stable income and can demonstrate the ability to repay the outstanding mortgage balance and capitalized amount over the remaining amortization period. Permits the borrower to add arrears of Principal and Interest, unpaid taxes, utility bills, property repair costs to protect the security, and other outstanding charges and arrears which become payable as part of a claim.

The Approved Lender can approve and implement this option up to a total maximum capitalized amount of $20,000 subject to a documented and substantiated workout analysis. For amounts over $20,000, CMHC authorization is required. Capitalization is a technique of last resort and should be used only once during the life of the loan.