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The British Columbia Nak'azdli First Nation has taken a leadership role in creating affordable and adequate housing by signing the first trust agreement under Canada Mortgage and Housing Corporation's (CMHC) On-Reserve Homeownership Loan Insurance Pilot product.
“This Pilot Project will allow qualifying Band members' to apply for independent financing from the banking institution of their own choosing. With the reduced down payments the Band Council may be able to accommodate additional projects,” said Nak'azdli Chief Leonard Thomas.
Since reserve lands cannot be mortgaged, normal mortgage security is replaced by a trust agreement between CMHC and the First Nation. Trustees, who are appointed by both the First Nation and CMHC, oversee the activities of the trust, including the investment of the trust fund.
This pilot project is expected to help First Nations reduce their housing shortages, create jobs through new home construction and provide their families with a means to build equity.
It is also expected to help communities alleviate pressures due to overcrowding, which in turn will make them stronger and more sustainable.
The pilot can help communities by providing a framework that allows families and individuals on reserves to buy the home they desire based on their needs, financial situation and personal taste. It provides homeowner loan insurance to private-sector lenders who, in turn, provide housing loans to First Nations people. Families and individuals benefit in that they get the flexibility of a smaller down payment and a lower interest rate.
Prior to setting up the On-Reserve Homeownership Loan Insurance Pilot, CMHC consulted with several First Nations and lenders to determine the arrangement that would best meet the needs of First Nations.