Latest News

Winnipeg Free Press - ONLINE EDITION

Co-op stuck with mortgage deal: feds

By: Staff Writer

Posted: 09/19/2012 8:43 PM | Comments: 0

By Mia Rabson

OTTAWA — The federal government says a Winnipeg housing co-op has to suck it up and stick to the terms of a mortgage deal it signed with the Canada Mortgage and Housing Corporation in 1983.

Housing Minister Diane Finley responded to a question in the House of Commons about the Village Canadien Housing Co-op in St. Vital.

"The case to which the member refers is where these housing co-operatives made a deal with CMHC to get below-market-rate interest rates for fixed, closed mortgages," Finley said. "That means that the rate does not change and individuals agree to that because they get a benefit. Those are the terms that these individuals agreed to and those are the terms that we expect them to honour just as we will honour them."

Village Canadien signed a 50-year mortgage in 1983 with CMHC at a 13.5 per cent interest rate. The rate was much lower than market rates at the time but is far higher than they are today. Village Canadien wants to refinance the mortgage with a Manitoba credit union in order to take advantage of equity and lower interest rates and invest $2.5 million into renovating the 150 units in the complex.

However, the terms of the mortgage don’t allow an early exit from the mortgage and the only way CMHC will allow it to be paid out early is if the co-op pays a penalty equal to the total amount of interest it would have paid until the mortgage expires in 2028. That amounts to a $5.5-million penalty on a mortgage which has $4.5 million outstanding.

Liberal housing critic John McCallum raised the issue during question period Wednesday and said the penalty is crippling the co-op.

"Will the minister re-evaluate these mean-spirited policies and ensure that housing co-ops have the support they need," McCallum asked. "Or is this another Romney moment? Proof the Conservatives think it is not their job to help those people."

McCallum was referring to U.S. Republican presidential hopeful Mitt Romney, who is under fire for saying 47 per cent of Americans feel they are entitled to government handouts and that he doesn’t care about those people.

Nick Sidor, director of corporate affairs for the Cooperative Housing Federation of Canada, said in a statement his organization is counting on Finley to direct CMHC "to develop a fair and reasonable policy on mortgage prepayment."

"A fair and reasonable approach will help facilitate necessary renewal and reinvestment, as well as continuing economic stimulus through new employment," Sidor said.

He has previously noted the government should want to help the co-op because it would get the mortgage off the government’s books and into the private sector and invest $2.5 million back into the Winnipeg economy.

mia.rabson@freepress.mb.ca

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories? Please use the form below and let us know.

* Required

In which story did you find the error? *
Please post the headline of the story or the title of the video with the error.
What was the error? *
Please post exactly what was wrong with the story.
What should we have written?
Please indicate your source for the correct information.
Who else should we interview to improve this story?
Please include any contact information you may have.
Can we contact you in the future for advice on stories about this topic?
Yes

No
First Name: *
Last Name: *
E–mail Address: *
This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.
Phone: *
This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.
Colour:
Are you blue? If you can see this, leave it blank and get some CSS support.
Enter the words that you see: * This is to prevent our forms from being filled out automatically.
You have failed to correctly identify the words in the box above. Please try again.

More Latest News

Undock

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.