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Dear Ms. Finley: I am writing you as the Minister responsible for the Canada Mortgage and Housing Corporation. I am the President of the Wolfville Habitat Co-operative located in Wolfville, Nova Scotia, and we request your intervention in what has become a most serious situation with regard to our treatment at the most senior level of the CMHC. Our story is a long one going back as far as 2006 with a letter on file at the CMHC requesting relief, specifically the refinancing of a 50 year mortgage taken out on two of our buildings in 1977 and 1979 respectively. We have conscientiou sly paid on that mortgage at an 8% interest rate for more than 30 years now, rep aying the original loan more than twice, while realizing only a miniscule reduct ion on the principal of the original mortgage. Meanwhile circumstances have changed dramatically with heating and power costs s kyrocketing in recent years and conventional mortgage interest rates plummeting dramatically. A not-for-profit seniorsâ complex built under the auspices of the Nat ional Housing Act to provide affordable housing for seniors of modest means, the Wolfville Habitat Co-operative has now become an aging complex requiring upgrad es and escalating maintenance. We are left with the dilemma of raising rental ra tes for senior citizens on fixed incomes to service what has become an exorbitan t interest rate in todayâ s real estate market. The purpose of Section 3 of the National Housing Act states: "The purpose of this Act, in relation to financing for housing, is to promote ho using affordability and choice, to facilitate access to, and competition and eff iciency in the provision of, housing finance, to protect the availability of ade quate funding for housing at low cost, and generally to contribute to the well-b eing of the housing sector in the national economy.â (R.S., 1985, c. N-11, s. 3; 1992 , c. 32, s. 6; 1999, c. 27, s. 2.)
I donâ t believe it was the intent of parliament for the CMHC to continue to realize exorbitant profits at the expense of the most vulnerable senior citizens. The wh ole purpose of the Act was to provide affordable housing. Section 61(1) of the National Housing Act envisages just such a situation as th is and states when referring to the CMHC: â 61. (1) The Corporation may make loans and contributions to cooperative associatio ns and to their members in respect of housing projects, make loans to cooperativ
e associations and their members to refinance debt that, in the opinion of the C orporation, relates to a housing project, and forgive amounts owing on those loa ns. Terms and conditions (2) The Corporation may determine the terms and conditions on which it makes a l oan or contribution or forgives an amount under subsection (1), including, witho ut limiting the generality of the foregoing, (a) conditions with respect to the operation or occupancy of the housing project ; and (b) restrictions on the disposal, leasing or charging of the project or any part of it or interest in it.â (R.S., 1985, c. N-11, s. 61; 1999, c. 27, s. 9.) More recently, with the support of the Nova Scotia government, specifically the Minister of Community Services, the Honourable Denise Peterson-Rafuse, the Minis ter responsible for administrating the CMHC program in Nova Scotia, we were able to obtain support for our application for relief from CMHC. We also received s upport from the office of the Honourable Peter MacKay, and through his office we re able to track the history of our file and previous application before the CMH C. To our dismay we found out our original application for refinancing was simp ly lost or ignored by CMHC when one person left and it was not picked up by whoe ver replaced them. Clearly, the matter had not been properly addressed. After many phone calls and discussions with various individuals, we, the Wolfvil le Habitat Co-operative, were finally able to receive a letter from CMHC, dated August 4th, 2011, stating that if we paid a penalty of $121, 115., we could be r eleased from the mortgage. That set in motion the most recent series of events. We consulted a mortgage br okerage house and on August 8th,, 2011, paid an initial processing fee of $1,500 to 1st National, the banking institution that was prepared to grant us a mortga ge at 3.5% on the two Wolfville Habitat Co-operative properties in question. On August 24th, 2011, we paid a requested fee of $6,600. to CMHC required to proces s our application to release us from the mortgage. On December 16th, 2011, we m ade an additional non-refundable payment of $5,000. to 1st National as an admin istrative cost related to title insurance. On December 16thth, 2011, on the und erstanding of 1st National that we had cleared all the many administrative obsta cles presented by CMHC to enable them to insure the new 1st National mortgage, w e paid an additional non-refundable $8,328.00 commitment fee. A fee required to enter into an agreement with 1st National to acquire a mortgage for $1,332,750, an amount to cover the payout of the remainder of our mortgage to CMHC as well a s a $26,000. mortgage insurance premium. On December 13th, 2011, we paid $2,800 a non- refundable payment for an independ ent environmental study that had been requested of us by CMHC as an additional r equirement to enable them to insure the 1st National mortgage, the final step in the process before proceeding to closure on the mortgage with 1st National.
Our lawyer had researched our deeds and prepared the required paperwork, all tha t was left to happen was for our lawyer to receive the final payout document fro m CMHC obtaining the latest mortgage payout statement reflecting/subtracting our interest contributions in the intervening months since the last payout statemen t, together with the prorated penalty. The closing date was scheduled for Monday , January 16th, 2012. On January 12, on Friday at 4:00PM, two weekend days befo
re the closing date on the following Monday, we received an e-mail from CMHC sta ting that our penalty premium would now be $887, 008! Essentially CMHC was now c harging us all the interest CMHC would have received if we had continued to pay the interest at 8% for the remaining years of the 50 year CMHC mortgage!
This, of course, was outrageous and completely unconscionable! We had relied on the penalty document stating the penalty fee would be $121, 115 back on August 4 th to proceed in the first place, to make the new mortgage a practical endeavour . We were now out $24,228. in prepayment fees (not to mention brokerage and lawy er fees still to come) and seemly led down the garden path by CMHC, depleting a significant amount of our Co-operative reserve fund, placing us in extremis in a demonstrable show of bad faith by CMHC.
We demanded an explanation the following Monday and were advised we could ask fo r a review of the decision and subsequently were informed by the office of Minis ter Denise Peterson -Rafuse in Halifax that was taking place. In the intervening 5 weeks and still waiting, we have been informed by various senior CMHC represe ntatives that the original decision to stun us with the penalty premium of $887, 008. came directly from the President of CMHC, the same person now responsible for overseeing the review. We have been assured that CMHC officials directly res ponsible for managing the mortgage payout and penalty division feel that we have not been treated fairly and that CMHC has an obligation to stand by the August 4th penalty premium statement and honour the original agreement. We wait on the decision of the CMHC President.
I ask you, as the Minister responsible for CMHC, to intervene on our behalf and rectify this calamitous situation. As I am sure you can appreciate, this matter has caused tremendous stress for me and the Board of the Co-operative. We have budgets to prepare and our Annual General Meeting is scheduled at the end of th is week. Our original request for relief from the mortgage from CMHC was 6 years ago. This latest process has taken more than 2 years to wind its way to a concl usion and the final few weeks have been a nightmare. We deserve better treatment from the professionals carrying out the government m andate at CMHC. The Wolfville Habitat Co-operative has been an exemplary client of CMHC in our 30 plus year history together and a model organization. It is dif ficult not to perceive this latest decision by the President of CMHC as a punish ment, to set an example of us, for daring to ask for relief from the onerous 50 year mortgage rate, something that we, and other organizations that find themsel ves in this situation, have every right under the legislation to request. I trust you will give the matter the urgent attention it requires.
President Wolfville Habitat Co-operative Apt. 142, 25 Post Road Wolfville, Nova Scotia B4P 2M8 Telephone: (902) 542-1065
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