Ever since CMHC’s mortgage payment deferral plan was launched in mid-March, financial institutions have been bombarded with inquiries from multifamily borrowers seeking assistance as they attempt to navigate the financial uncertainties caused by the ongoing COVD-19 outbreak. For homeowners the plan is clearly outlined on CMHC’s website, but what about all those landlords with multiple rental properties in their portfolios, or even a single investment property that isn’t their primary home?

To help apartment owners understand the payment deferral process and determine whether they are eligible, Riley Young, Associate Vice President, Capital Markets at Colliers International, walks us through the plan noting that not all applications will necessarily be met with approval. “It will be on a case-by-case basis,” he warns. “But small, medium and large-sized apartment properties are eligible.”

What does “payment deferral” mean?

Essentially, a mortgage payment deferral in times of difficulty allows borrowers to postpone their scheduled mortgage payments for a defined period of time (in this case, six months). The payments that are deferred are added to the outstanding balance and will accrue interest.

Following the payment deferral period, the lender may adjust the mortgage payment to reflect the increased outstanding mortgage amount at the end of the payment deferral period, or at renewal of the interest rate term. “Tax components of monthly payments will not be eligible for deferral,” he says.

Who has final approval authority on a payment deferral request?

The reason for default and the lender’s assessment of the borrower’s financial capacity to repay the deferred payments will be noted in the lender’s loan file. The final determination for approval of the deferral is left to the lender based on specific guidelines provided by CMHC that all approved lenders must abide by.

Who makes the request to CMHC for the payment deferral?

A borrower must make the payment deferral request through their respective lender representative.

What information is required to request a deferral?

• A written request from the borrower with full justification for the need to have payments deferred, including the requested time frame. This should include the borrower’s plan on how to make up the deferred payments at the end of the deferral period.

• The most recent two months’ rent roll showing the occupancy history of the property, with explanation for missed rental payments on suites in which tenants are in arrears. For example, if a request for a deferral is made on April 5th, rent rolls for March and April would be required.

• Two months’ most recent bank statements for the building operating account to show monthly income received and monthly operating costs.

Young adds that additionally borrowers will need to provide confirmation that there are no other mortgages/charges registered against the property. If there are, details including amount, interest rate, payments and maturity, proof that payments are current, and details of any payment deferral arrangement granted by the applicable lender must be given.

With no end to the pandemic currently in sight, landlords can take some comfort in knowing that the COVID-19 Mortgage Payment Deferral program will be ongoing, meaning they can apply at any time during this outbreak if need be.

Riley Young is the Associate Vice President, Capital Markets at Colliers.