On-Reserve Housing Loan Program - Splash · 2017-07-20 · On-Reserve Housing Loan Program - ORHLP...

BMO Bank of Montreal’s

On-Reserve Housing Loan Program

Create a housing loan the way you want it

Presented by: Jason M. Cameron BMO Aboriginal Banking

Date: February 4, 2014

2 On-Reserve Housing Loan Program - ORHLP

Agenda

1.  BMO 2.  Aboriginal Banking at BMO 3.  Types of Financing 4.  Our 2 Programs 5.  Overall Structure 6.  Program Details 7.  How to Apply 8.  How to Qualify 9.  How Much Can I Afford?


BMO Bank of Montreal

•  BMO was founded in 1817 in Montréal, and is Canada's oldest bank

•  BMO has over 1,500 bank branches in Canada and the United States

•  Operates through 3 operating groups: 1.  Personal and Commercial Banking (P&C) 2.  Private Client Group (PCG) 3.  BMO Capital Markets


Aboriginal Banking Unit at BMO

The Aboriginal Banking Unit was created in 1992 to serve the unique banking and financing needs of First Nations communities

~ More than 20 years of dedicated service to Aboriginal communities ~

Some milestones: –  Created one of the first on-reserve housing loan programs in Canada

–  The first and only major financial institution involved with First Nations Market Housing Fund

–  Developed a lending directive that clearly outlines how to get beyond the barriers of the Indian Act with regards to lending, particularly with infrastructure loans

–  Continue to provide unique and innovative financing products


Serving Aboriginal Communities

BMO Bank of Montreal®

Aboriginal Branches and Community Banking Outlets

British Columbia 1. Tsahaheh Branch Tseshaht First Nation (Port Alberni) (250) 724-7100 2. Park Royal Branch Squamish Nation (West Vancouver) (604) 668-1277 3. Eagle Landing Branch Squiala First Nation (Chilliwack) (604) 792-1971 4. Westbank Branch Westbank First Nation (Kelowna) (250) 861-1670

Alberta 5. Tsuu T’ina Nation Branch Tsuu T’ina Nation (Tsuu T’ina) (403) 234-1869 6. Siksika Branch Sisksika Nation (Sisksika) (403) 734-3600 Ontario 7. Ohsweken Branch Six Nations of the Grand River (Ohsweken) (519) 445-4733

8. Peace Tree Trade Centre Branch Akwesasne Mohawk Territory (Cornwall Island) (613) 938-5634 Quebec 9. Waskaganish Branch The Crees of Waskaganish First Nation (Waskaganish) (819) 895-2177

10. Wemindji Branch Cree Nation of Wemindji (Wemindji) (819) 978-3588 11. Betsiamites Branch Conseil de Bande de Betsiamites (Betsiamites) (418) 567-9543 Newfoundland & Labrador 12. Nain Community Banking Outlet (Nain, Labrador) Host Branch – Wabush Main Office (709) 282-3231 13. Happy Valley Goose Bay Goose Bay, NL (709) 896-4411 Northwest Territories 14. Fort Smith Branch Fort Smith First Nation (Fort Smith) (867) 872-2001


Other Initiatives

• Sponsorships: –  CCAB (Canadian Council of Aboriginal Businesses)

–  CANDO (Council for the Advancement of Native Development Officers)

–  NATOA (National Aboriginal Trust Officers Association)

–  AFOA (Aboriginal Financial Officers Association)

•  We are also sponsoring our Commercial Account Managers to complete the Certified Aboriginal Financial Management certification throughout Canada

–  Belinda Stronach Foundation (One Laptop Per Child Campaign) –  FAAY (Foundation for the Advancement of Aboriginal Youth)

–  NAAF (National Aboriginal Achievement Foundation) –  DAREArts

• Ron Jamieson Bursary through BMO • PAR Gold recipient


Types of Financing

•  Infrastructure –  Education/Employment/Training Centres –  Administration Buildings –  Health Care Centres –  Social Service Buildings –  Sports/Recreational Facilities –  Elders’ Lodges –  Ambulance/Fire Stations/Police Services

Building –  Sewer/Water projects –  Roads/Bridges

•  Project Financing –  Solar Farms –  Wind Energy

•  Housing –  Housing loans –  Renovation loans –  First Nations Market Housing Fund


At BMO, We Have 2 Programs

On-Reserve Housing Loan Program & On-Reserve Home Renovation Loan Program

Together they:

–  Provide innovative on-reserve housing financing alternatives without government involvement

–  Are designed to reflect the specific requirements of a particular First Nation –  Provide financing for the construction, purchase, &/or renovation of single family

homes on reserve

**Currently we have over 65 programs set up and over $112 million in loans advanced in Canada**


Structure

First Nation


Housing Loan Program Details

Eligible loan purpose: –  Purchase –  Construction –  Renovate (over $25,000) –  Refinancing

Loan Amounts –  Maximum individual limits set by the First

Nation –  Determined by borrower’s ability to repay

Eligible property: –  Single family homes on land held under

a Certificate of Possession –  Lot must be serviced by roads, hydro,

water, septic system

Eligible Borrowers: –  Qualified members of the First Nation –  Must meet BMO’s usual credit

requirements

Down Payments –  Minimum 5% of total project cost /

purchase price

Fees –  Borrower pays any “out-of-pocket”

expenses (e.g. legal fees, inspection fees)


Housing Loan Program Details Continued…

Interest Rates –  Bank of Montreal Homeowner Mortgage

fixed rates less negotiated discount on fixed rates

Construction –  Home to be built to the First Nation’s

usual construction standards –  Home to be fully complete including

landscaping, exterior finish, etc. –  Fixed price contracts required to manage

cost overruns. * Tremendous opportunity for employment

and training for community members.

–  Inspections and loan advances follow established schedule

Prepayment Privileges –  Any amount can be prepaid at any time

without penalty

Term and Amortization –  Any term between 1 – 5 years –  Maximum amortization is 25 years Security

–  First Nation ↔ BMO: guarantee for each loan

–  BMO ↔ Member: Loan agreement & Fire insurance

–  Member ↔ First Nation: Mortgage and transfer of land, and Life & Disability insurance

Insurance Requirements –  Mortgage Life and Accident & Disability

insurance are recommended for all borrowers who are eligible

–  Fire insurance over house to be assigned to BMO


Renovation Loan Program Details

All terms are identical to the Housing Loan Program except for:

Eligible loan purpose: –  Renovate only

Down Payments –  No down payment required

Interest Rates –  Bank of Montreal Fixed Personal

Lending Rates

Loan Amounts –  Between $5,000 and $25,000

Amortization –  $5,000-$10,000: 5 years –  $10,001-$25,000: 10 years


The Process and How to Apply

First Nation 1.  BMO visits First Nation

•  Apply for a housing loan program •  3 years of financial statements •  Average/max cost to build a home

•  Once approved, members are able to apply for individual loans

•  BMO and your designated Personal Banker can now present to members

Individual Member 2.  Applicant visits Housing

•  Confirm ownership of land •  Verify membership

3.  Applicant visits BMO •  Complete a loan application •  Review project

•  Ie: construction / purchase details, proposed general contractor

•  Confirm personal funds to cover down payment

•  Review of non-member spousal agreement (if applicable)

•  BMO advises applicant of results •  If approved, conditional approval sent to

Housing •  Completion / Review of required

preliminary documentation •  Ie: blueprints, cost estimates, permits,

purchase & sale contract


The Process and How to Apply Continued…

Individual Member 4.  Housing approaches Council

–  Recommend to accept loan –  Obtain completed BCR and Guarantee

Agreement –  Send these to BMO

5.  BMO advances funds through the First Nation or Member directly.


How to Qualify

Requirements –  Membership –  5% down payment –  Project meets building code

requirements –  Acceptance and authorization by BMO

How does a lender consider a housing loan request?

–  A lender will assess the capability of a borrower in meeting their financial and credit obligations

–  A lender may assess a person by considering the following:

1.  Character 2.  Capacity

3.  Credit 4.  Capital

5.  Collateral


• A rule of thumb: – Monthly debt payments (loan, credit card, heating and mortgage

payments) should be less than 40%, of monthly gross income. –  If income is earned on-reserve:

Monthly gross income = Total income + 25%

•  To get a more accurate picture of what kind of mortgage you can afford, go the BMO website

– www.bmo.com >> Mortgages >> Select “Tools & Calculators”

or speak with a BMO mortgage specialist.

How Much Can I Afford?


Example - $150,000 Home

Down payment: –  $7,500

Mortgage: –  $142,500

Monthly mortgage payments: –  $823.93*

Example based on 5-yr fixed closed rate of: 5.44%, less 0.50% = 4.94%

See how it feels: –  Save the difference between

your current rent and your potential mortgage amount

• See how comfortable it feels

• Saves for a down payment

•  $300 saved a month means $7,500 in 2 years

Questions?


Contact Us

Jason M. Cameron Director, Aboriginal Banking, Ontario Regional Division

BMO Bank of Montreal 180 Kingston Road East

Ajax, ON L1Z 0C7 Tel: 905-426-6528 Cell: 905-767-4166 Fax: 905-426-5392

Email: [email protected] www.bmo.com/aboriginalbanking

On-Reserve Housing Loan Program - Splash · 2017-07-20 · On-Reserve Housing Loan Program - ORHLP...

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Transcript of On-Reserve Housing Loan Program - Splash · 2017-07-20 · On-Reserve Housing Loan Program - ORHLP...