Thanks to Ottawa, co-op members face Winnipeg winter with original
WINNIPEG, Sept. 13, 2012 /CNW/ - An unfair and exorbitant $5.5 million
mortgage prepayment penalty demanded by Canada Mortgage and Housing
Corporation (CMHC) is stopping a Winnipeg housing co-op from making
needed repairs to its 36-year-old buildings. Village Canadien Co-op
Limited (VCCL) has asked Diane Finley, the federal minister responsible
for CMHC, to instruct CMHC to set a fair and reasonable charge for the
co-op to prepay its mortgage.
VCCL manager David Gawthrop says that CMHC won't let the co-op pay off
its $4.5 million mortgage without paying an extra penalty of $5.5
million, for a total of $10 million. "We are ready to pay a reasonable,
normal prepayment fee," says Gawthrop, "but an additional $5.5 million
in penalties for CMHC is an outrageous and unaffordable demand that
can't be justified."
The penalty CMHC is demanding represents all the interest that would
otherwise be payable on the co-op's mortgage, which goes to 2028 at a
fixed interest rate of 13.25%.
The Co-operative Housing Federation of Canada (CHF Canada) supports
VCCL's view that CMHC's position is a cash grab. According to CHF
Canada's Director of Corporate Affairs Nick Sidor, this penalty
calculation is unfair, and far in excess of any prepayment penalty that
would be charged to the co-operative by any other lender.
"No other lender would charge such an enormous amount," says Sidor. "We
brought this issue to the attention of Minister Finley several months
ago, and she has so far not acted. With a fair prepayment penalty in
place, the co-op would be ready to begin negotiations with a Winnipeg
credit union for a new mortgage loan to finance needed repairs."
On July 11, the board of Metro Vancouver also wrote to Finley, urging
her to direct CMHC to reduce or eliminate excessive prepayment
penalties for social housing providers that want to refinance their
VCCL's volunteer president Linda Ferguson says that co-op members know
that without needed renewal, the co-op's housing will simply
deteriorate. "VCCL is dedicated to providing quality affordable housing
for Winnipeggers, but this $5.5 million CMHC penalty is preventing us
from preserving these valuable homes for future generations. We can't
wait another sixteen years to modernize our buildings, and we shouldn't
The co-op's recent building condition assessment shows that it should
borrow about $2.7 million for new insulation and new windows, which
have not been replaced since the co-op opened in 1976, and for roof
CHF Canada has also told Minister Finley that CMHC's blocking new
lending means that construction jobs and stimulus to local economies
will be lost.
CHF Canada is the national voice of the Canadian co-operative housing
movement. Its members include more than 900 non-profit housing
co-operatives and other organizations across Canada. More than a
quarter of a million Canadians live in housing co-ops, in every
province and territory.
SOURCE: Co-operative Housing Federation of Canada
For further information:
Nick Sidor, Director, Corporate Affairs, 613-297-5139, firstname.lastname@example.org
Linda Ferguson, President, Village Canadien, 204-255-1676
David Gawthrop, General Manager, Village Canadien, 204-257-2501
David Granovsky, Government Relations Co-ordinator, 1-800-465-2752 ext. 222, 613-290-7687, email@example.com
Scott Jackson, Program Manager, National Communications, 1-877-533-2667 ext. 122, firstname.lastname@example.org