Index-Linked Mortgage (ILM) Program

Program Objective

To provide assistance for co-operative housing to promote security of tenure for households unable to access homeownership.

Exterior of Humberview housing co-operative

Program Features

  • Unilateral federal program
  • Income-mixing
  • NHA-insured long-term index-linked mortgage loan from private lender for 100 % of eligible project costs
  • Loan amortized over 30-35 years—real (i.e., after inflation) interest rate fixed for full period
  • Mortgage payment adjusted annually by rate of change in CPI, less 200 basis points
  • Annual operating assistance to reduce initial housing charges to a level equivalent to market-rental rates for similar accommodation
  • Subsidy adjusted up or down annually at the same rate as the ILM mortgage payment is adjusted
  • One-time reduction of assistance after year 15, if maximum occupancy charges are less than 85 % of market rental rate for similar accommodation—reduction equal to five % of housing charges, phased in as necessary
  • Co-operative-financed security of tenure fund to assist households whose incomes drop when no rent supplement is available
  • A stabilization fund to assist co-operatives in defined circumstances (lapsed)
  • Rent supplements available for maximum of 50 % of units under separate federal/provincial cost-shared rent supplement program (all provinces and territories)
  • Co-op to use its best efforts to house at least the minimum percentage of assisted households specified in operating agreements (in no case less than 15 %)

CMHC Authority under Operating Agreement

  • Right to register agreement or notice of it on title
  • Right to inspect co-op’s books, records and accounts at any reasonable time on reasonable notice
  • Right to inspect property and require remedial repairs
  • Canada Mortgage and Housing Corporation (CMHC) concurrence required for change in indexed replacement reserve contribution
  • Right to require annual information to assure itself of co-op’s compliance with fundamental purpose and obligations under operating agreement
  • Right to request explanations of information in audited financial statements and, for statistical purposes, other information readily available to co-op
  • CMHC approval required of any contract for management services, other than an employment contract
  • Various remedies in event of breach of operating agreement, including suspension or termination of assistance
  • CMHC approval required for investment of replacement reserve and security of tenure funds outside of eligible investments listed in agreement (does not apply during operating agreement extension)
  • Co-op may not mortgage or encumber property without CMHC’s approval.
  • Co-op may not sell or otherwise dispose of all or part of property without CMHC’s approval of the sale and disposition of proceeds.
  • Co-op may not lend or give away co-op funds, other than reasonable donations, or underwrite obligations of a third party, without CMHC’s approval (restriction does not apply to members’ capital and accumulated surpluses).
  • CMHC approval required for changes to incorporation documents and by-laws that would change co-op’s non-profit status
  • CMHC approval required to adjust the mortgage amortization period or make any prepayment of the ILM

Accountability Framework

  • Operating agreement
  • Annual audited financial statement and information return
  • Co-op fully responsible for operating results

Program Guidelines for ILM Co-ops

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Q&A on the End of the ILM CMHC Operating Agreement - Ontario / PEI

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Q&A for ILM Co-ops Post Year 15

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Tip of the Month

No Vacancy Loss

28% of Agency clients lost no money to vacancies last year. Good, if this means members chose to stay in their units. Bad, if new members moved into units that hadn’t been refreshed.