Housing Co-Op Blasts Ottawa

Article excerpt

Early mortgage payoff to draw $5.5-M penalty

OTTAWA -- A Winnipeg housing co-operative is calling out the federal government for charging a phenomenal penalty to pay off its mortgage ahead of schedule.

The Village Canadien Housing Co-op in St. Vital took out a mortgage with the Canada Mortgage and Housing Corp. in 1983 at an interest rate of 13.25 per cent. That interest rate has remained constant since, and the co-op has never been able to take advantage of lower mortgage rates. It wants to buy out its current mortgage and get a lower interest rate through a credit union so it can do some renovations.

"We need to do some energy retrofits," said co-op president Linda Ferguson. The 36-year-old units have original windows and weathered insulation, she said.

But CMHC plans to charge the co-op $5.5 million in penalties to pay off the $4.5 million remaining on the mortgage. The penalty amounts to the total interest that would be paid on the mortgage until the mortgage expires in 2028.

Liberal housing critic John McCallum said it is an outrageous amount.

"The terms they're imposing are harsher than a bank," said McCallum (Markham-Unionville). "I think it's reprehensible."

Housing co-ops aim to provide affordable housing by having non-profit, owner-operated housing. Rents and other fees go only for costs and maintenance. Ferguson said $300 from each rent cheque for the 150 units in question goes to pay interest charges each month.

A CMHC spokesman said in an emailed statement CMHC can't do anything about the penalty because the only way it can offer mortgages to housing co-ops at the lowest possible rates is if the co-ops can't get out of the mortgage early.

Charles Sauriol said CMHC's social-housing lending programs operate on a break-even basis. He added this particular project was transferred to provincial jurisdiction in 1998 and the province is responsible for administering the project, including the mortgage. …