CMHC "red flag" solution?

[libertango]

An owner in my small condo complex has been unsuccessfully trying to sell her unit. One of the reasons is that CMHC has red-flagged our building because of our "adults only" bylaw. CMHC policy is to not insure on buldings that have have discriminatory (based on age) bylaws. The problem is that our units are ideal "first-time buyer" units and it is likely that that type of potential buyer would need CMHC approval. So on one hand we don't want to impede the re-sale of any units, but on the other we don't want to change our "adults only" bylaw. (A history of disruptive children in our building forced us to impose the bylaw a few yeares ago) Any discussion or advice on the matter would be greatly appreciated!
Does anyone know if CMHC has loopholes? for example our building is totally not suited for raising children. Thank you so much

[ken0042]

What about the other mortgage insurer? Genworth or whatever it's called- can the buyers get their mortgages insured through them, or are they also re-flagging the building?

[Mike Oxlong]

I ran into this issue with a client that was trying to buy into a similar building a few months ago. She had an issue getting approved through CMHC becausee of the adults only clause as well.

She ended up getting approved through AIG however.

I understand the reason you have the "adults only" rule in your condo. However it does make resale very difficult for tentants as many insurers and lenders will not lend on that type of building.

CMHC will lend on some adults only buildings, a lot depends on the borrower and how strict the age restrictions are.

Have any potential buyers explore getting the mortgage insured through AIG rather than CMHC, that might be a way around it.

[Rathji]

Originally Posted by libertango

An owner in my small condo complex has been unsuccessfully trying to sell her unit. One of the reasons is that CMHC has red-flagged our building because of our "adults only" bylaw. CMHC policy is to not insure on buldings that have have discriminatory (based on age) bylaws. The problem is that our units are ideal "first-time buyer" units and it is likely that that type of potential buyer would need CMHC approval. So on one hand we don't want to impede the re-sale of any units, but on the other we don't want to change our "adults only" bylaw. (A history of disruptive children in our building forced us to impose the bylaw a few yeares ago) Any discussion or advice on the matter would be greatly appreciated!
Does anyone know if CMHC has loopholes? for example our building is totally not suited for raising children. Thank you so much

So a first time buyer in your complex would generally be either a single person or a young couple. Both of these types of people are of the type that a) get married and/or b) have kids. This means that they would immediately be breaking the condos bylaws and be subject to rule of law that is written into the condo boards constitution.

From what I have heard about condo boards if you violate a bylaw they have permission to fine you an arbitrarily tremendous amount or confiscate an internal organ of their choice. Since having kids is a pretty natural (and sometimes unexpected) part of being a human being, I think that putting a couple potential parents in a position where they would be facing huge fines and other problems if they got pregnant, would increase the chances of someone walking away from their mortgage simply because the condom broke 9 months before a housing price downturn.

Doesn't seem like a situation that is suitable for many first time buyers I know.

[Winsor_Pilates]

Genworth and AIG are the best options. But even then, it's difficult for the seller to start advising buyers on where to get mortgage insurance. In most cases, you won't even meet the potential buyers as their agents/brokers will do most of the representation. It's their job to advise their clients, and sellers really shouldn't be stepping in giving advise on how to finance.

I'll take your word on it that this rule is necessary, but from an outside point of view it seems pretty foolish to place it on a building catered for first time home-buyers. You guys really handicapped yourselves in re-sale.

As an agent, I would only take my buyers down that path if they really loved to home, and other condos on the market didn't compare. Otherwise, I'd take them elsewhere, where they can have the comfort of picking from a full range of mortgage products and insurances.

For the mortgage brokers here, are the fees with CMHC, Genworth and AIG the same? Something I've been meaning to find out.

[Mike Oxlong]

Originally Posted by Winsor_Pilates

For the mortgage brokers here, are the fees with CMHC, Genworth and AIG the same? Something I've been meaning to find out.

Yes they are.

[libertango]

There are a lot of 50+ condos out there too...do you think they are CMHC approved or do they have some way of getting around it?

[Deegee]

The seller could always finance 20-25% of the purchase and the lending institution lend the other 75%-80%.

When values climb back up, you could always look at refinancing and paying out the seller in full.

That's one way to avoid CMHC altogether.

[Bring_Back_Shantz]

I've often thought that these types of condo bylaws are exactly the type of thing I want to use to point out just how stupid the Canadian Human Rights Comission is.

If I want to live in a certain building, why are the tennants allowed to exclude me simply because I'm not over 50 years old. Seriously, the CHRC is allowed to persecute people simply because someone is offended, and here is a case of explicit age discrimination that goes completely unchecked. Maybe some day I'll have the time to do this to make a point.

That's all for my thread derailing, please go back to what you were doing.

[Winsor_Pilates]

Originally Posted by Bring_Back_Shantz

I've often thought that these types of condo bylaws are exactly the type of thing I want to use to point out just how stupid the Canadian Human Rights Comission is.

If I want to live in a certain building, why are the tennants allowed to exclude me simply because I'm not over 50 years old. Seriously, the CHRC is allowed to persecute people simply because someone is offended, and here is a case of explicit age discrimination that goes completely unchecked. Maybe some day I'll have the time to do this to make a point.

That's all for my thread derailing, please go back to what you were doing.

There is actually only 1 legally enforceable age restriction in Canada, and I believe it's 50 (or 55). Any other that a strata puts in can be challanged, and likely defeated by the buyers/tennants. It's just most people don't want to bother fighting these things.

[troutman]

Originally Posted by Deegee

The seller could always finance 20-25% of the purchase and the lending institution lend the other 75%-80%.

When values climb back up, you could always look at refinancing and paying out the seller in full.

That's one way to avoid CMHC altogether.

Lenders don't like it if the down-payment is borrowed.

[Deegee]

I can vouch that my company has worked with several people who have borrowed the down payment, and provided the borrower is a strong manager of credit and other things fall in line, this isn't a huge issue.

We don't care if the down payment is borrowed by way of a vendor take back because as long as the we are adequately secured in a first charge position and the person has clean credit and the ability to service the debt then we are quite happy.

I recognize that my organization may have looser lending styles in some regards then perhaps the chartered banks, and with a unique property like that I am sure any lending institution would gear more towards financing 70%-75% then 80%.