Ottawa Real Estate Investors Organization

Folks,

With the recent announcement regarding changes to CMHC towards rentals, I thought I should give folks the heads up as to what's happening from the broker/lender perspective.

Two different lenders sent out warnings this week indicating that CMHC is clamping down hard on rentals at 95%. You must have a credit score of at least 680 and you must have either equity in your home or sufficient assets (i.e. a positive networth or as one lender put it backing in case something goes wrong). CMHC is looking for any reason under the sun NOT to approve the 95% down deals.

My experience this week with folks going to 90% financing has been similar. CMHC has pushed back and has made what I would term unusual requests. I say unusual as normally if the lender I'm dealing with is happy, then CMHC is there to review to make sure nothing is missed.

So far the deals are getting done, but there are certainly delays that were not there previously. The agents I deal with I request they have at least 7 days for financing condition, as 5 has become a real challenge this week.

I'm thinking that CMHC were expecting (and likely already getting) a flood of rental purchases at 5% and they have decided to only take the best of the best.

For those that have done business with me in the past and are about to purchase, don't be surprised if I'm asking for more details and more information in general.

I've never recommended 5% down on rentals as a general rule. I thought the CMHC fee was just too extreme.

As the boy scouts like to say, be prepared. The rental market has already started to see fall out from the announcement.

JRW
John R. Walsh, B.Eng
Mortgage Agent with Mortgage Alliance
Licence Number: M08000603
Founder of O.R.E.I.O. www.oreio.org

jwalsh@mortgagealliance.com

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613-237-7044 x148
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