MLI Select Review and 2023 CMHC Operating Benchmark Updates
Aaron X. Sun
Today CMHC announced a series of changes to underwriting benchmarks for multi-unit properties, the post-approval amendment process, and an update to clarify the MLI Select Program.
Operating Expense Benchmarks
Effective June 19, 2023, underwriting benchmarks for both wood frame and concrete buildings will generally increase in each respective underwriting region in Canada. As the changes are specific to unit counts, region, and building type -- please reach out to one of our experts for details on how this may affect your specific application.
Post Approval Amendment Process
CMHC will no longer be accepting re-submission of files where they have already issued a Certificate of Insurance (COI) on the property (where not advanced), unless the original COI is cancelled prior to re-submission.
Moving forward, CMHC will only be processing changes for minor items post-approval (i.e., typos, amendment to borrower or guarantor names, legal address, loan term, etc) and allow for one significant interest rate change. This will mean that when submitting an application, the selected ceiling rate will need to be carefully considered.
In addition, CMHC has provided clarity that post-approval requests that are deemed to impact the overall risk of the file will require a new application submission. Major changes can include, but are not limited to: changes in social outcomes, changes to revenue/expenses/vacancy and major structural changes.
MLI Select Annual Review
Following CMHC’s first annual review of the MLI Select Program, no changes to the product criteria will be made at this time.
With that said, CMHC does specifically clarify that for MLI Select applications with an affordability component, Consumer Price Index (CPI)/legislation increases are not permitted during the construction period. In addition, once an application is submitted to CMHC, the rent roll cannot be changed.
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