AR 233/85 ALBERTA MORTGAGE AND HOUSING CORPORATION LOAN REGULATION (Consolidated up to 288/2009)
ALBERTA REGULATION 233/85
Alberta Housing Act
ALBERTA MORTGAGE AND HOUSING CORPORATION LOAN REGULATION
1 In this Regulation,
(a) “amortization period” means the time basis used to calculate the payments of principal and interest required to fully repay a loan; (a.1) “bank” means a bank to which the Bank Act (Canada) applies;
(b) “borrower” means a person to whom a loan is made and includes any person who has assumed or otherwise become liable for that loan;
(b.1) “builder” means a person who, or a partnership or corporate body which, builds housing accommodation for sale or for rent;
(c) “co-operative farm association” means a cooperative incorporated under the Cooperatives Act, which has been established for and whose principal object is the owning and operating of one or more farms;
(c.1) “co-operative housing association” means a cooperative incorporated under the Cooperatives Act which has been established for and whose principal object is the owning and operating of housing projects;
(d) “dormitory housing project” means a building containing sleeping rooms and private or shared sanitary facilities, with or without other essential facilities;
(d.1) “economic life” means the period of time, in the opinion of the Corporation, that a property can be expected to continue to function as it was originally intended;
(e) “farm” means land used for but not restricted to livestock raising, beekeeping, dairying, fruit growing, raising and production of crops, and all tillage of land in the Province of Alberta;
(e.1) “farm corporation” means a private corporation registered in Alberta which has been established for and whose principal object is owning and operating one or more farms;
(f) “farm partnership” means a partnership which has been established for and whose primary purpose is owning and operating one or more farms;
(f.1) “farm residence” means a housing unit situated on a farm which provides living accommodation for a farmer and his family or for a farm employee;
(g) “farmer” means:
(i) an individual whose principal occupation is owning and operating a farm,
(ii) a farm corporation that owns one or more farms,
(iii) a farm partnership that owns one or more farms, and
(iv) a co-operative farm association that owns one or more farms;
(g.1) “gross annual income” means the verifiable annual income of the applicant from all sources but does not include any payment received, or to be received, as social assistance under the Social Development Act or any other legislation of similar nature or passed in substitution therefor;
(h) “gross debt service ratio” means the ratio of the annual charges for property taxes and for mortgage principal and interest in respect of a loan to the estimated gross annual income of the home owner, or an equivalent ratio expressed in terms of property taxes, principal and interest, to basic allowance and earning exemption for social assistance recipients;
(i) “home improvement loan” means a loan for the purpose of financing repairs, alterations and additions to an existing housing unit;
(j) “homeowner” means a person who is an owner of a housing unit and intends to occupy the housing unit;
(k) “home purchaser” means a person who has purchased a housing unit and will occupy the housing unit;
(l) “housing unit” means a unit providing therein interalia, living, sleeping, eating, food preparation, sanitary facilities for one family, with or without other essential facilities shared with other family housing units;
(m) “Indian Band” means an Indian Band as defined in the Indian Act (Canada), as amended;
(n) “lending value” means the estimated value for lending purposes as determined by the Corporation;
(o) “mortgage” means the charge against real property that is received as security for a loan and includes an assignment of the leasehold interest of a lessee;
(p) “mortgage insurance fee” means the fee payable to the Corporation or to another agency for the insurance of a loan;
(q) “multiple family dwelling” means a building containing 2 or more family housing units;
(r) “non-profit organizations” means organizations in which no part of the income is payable to or is otherwise available for the personal benefit of any proprietor, member or shareholder thereof;
(s) “nursing home” means a nursing home operating in accordance with the Nursing Homes Act;
(t) “outbuilding” means a building that is appurtenant to the use of the housing unit as a residence;
(u) “owner” includes the lessee under a lease having a term extending beyond the maturity date of a mortgage thereon for a number of years sufficient in the opinion of the Corporation to provide adequate security;
(v) “progress advance” means the installment of a loan advanced by the Corporation as the construction progresses;
(w) “project” means
(i) a building or group of buildings consisting of one or more housing units, together with any public space, recreational facilities, commercial space and other space appropriate to the complex, or
(ii) an area of land that is being developed for predominantly residential purposes;
(x) “rental” means a housing unit or project which is intended for occupancy by a person or persons other than the owner;
(y) “repairs, alterations and additions” means repairs, alterations or additions to a home or project which are intended to be permanently installed or built in, and are intended for the improvement of the home or project and, without limiting the generality of the foregoing, includes work involving expenditures for any of the following:
(i) alterations or repairs to an exterior or an interior of a home or project, including the addition of one or more rooms, stories or family housing units;
(ii) the repair, alteration or rebuilding of a home or project damaged or destroyed by fire, flood, earth movement or tempest;
(iii) the erection of, or alterations or additions to a garage or outbuilding but excluding the erection of the principal dwelling or any building or work which is not appurtenant to the use of the home or project as a residence;
(iv) the demolition or moving of buildings or parts of buildings;
(v) the purchase, installation, repair or improvement of heating systems including equipment such as stokers, oil burners, wood, coal, gas or electric furnaces and boilers which are a part of the heating system;
(vi) the purchase, installation, repair or improvement of electric light and power systems, including private lighting and power plants and connections to power lines;
(vii) the purchase, installation, repair or improvement of fire control systems, including water heaters, water softeners, sinks, tubs and other plumbing fixtures;
(viii) painting, paper hanging and general decorating including an overall floor covering or carpet made, cut, or prepared to fit a particular room but excluding such removable items as curtains, drapes and rugs;
(ix) the purchase, construction, installation, repair or improvement of a sewage disposal system, or any portion of a sewage system, including septic tanks and connections to public sewers;
(x) any other alterations or repairs approved by the Corporation;
(z) “title” in relation to a loan secured by a mortgage or an assignment of leasehold title, means the entire interest of the lessee.
AR 233/85 s1;70/86;353/91;288/2009
Part 1 General
2 This Part applies to loans pursuant to section 28 of the Act.
AR 233/85 s2
3 An application for a loan shall be made to the Corporation in a form prescribed by the Corporation and shall be accompanied by an application fee in an amount prescribed by the Corporation.
AR 233/85 s3
4 The applicant shall provide the Corporation with such proof of eligibility to receive a loan as the Corporation may require.
AR 233/85 s4
5 The making of a statement in an application for a loan that is false in any material respect, or the use of the proceeds of a loan otherwise than for the purpose specified in the application, shall entitle the Corporation to demand immediate repayment of the then outstanding loan balance as well as any costs incurred by the Corporation, and to take any action to secure repayment which the Corporation deems proper in the circumstances.
AR 233/85 s5
6 To be eligible for a loan, an applicant must show
(a) that he is a registered owner or a person entitled to become a registered owner of an estate in fee simple in the land that is to become the security for a loan,
(b) that he is holder of a registered lease of that land whose term exceeds the amortization period of the proposed loan by at least five years, or
(c) that he has an interest in that land.
AR 233/85 s6
7 The plans and specifications of any housing unit or project must conform to the standards prescribed by the Corporation and the Corporation may prescribe standards to which existing residential buildings must conform in order to qualify for a loan pursuant to this Regulation.
AR 233/85 s7
8(1) The Corporation shall only make a loan if,
(a) in the case of new construction, work has not been carried out beyond the first floor joist or sub-floor stage of construction or other stage of construction equivalent to the first floor joist stage of construction,
(b) in the case of an existing unit, work in respect of which the loan is being applied has not been carried out, and
(c) in the case of an existing structure to be relocated:
(i) the building being purchased is inspected by and meets the Corporation’s standards of construction in all respects,
(ii) the building will be affixed to a foundation or basement constructed in accordance with plans and specifications approved by the Corporation, and
(iii) the building has not been placed on the basement or foundation before the loan is approved.
(2) Notwithstanding subsection (1), the Corporation may make a loan not otherwise permitted pursuant to subsection (1) if the proceeds of the loan are used only
(a) to repay in whole or in part an existing loan made by the Corporation,
(b) to satisfy in whole or in part an existing obligation owed to the Corporation, or
(c) for the purpose of financing repairs, alterations or additions to a property in respect of which the Corporation has another loan outstanding.
(3) Sections 3, 9, 10(3), 11, 13, 15, 18, 22, 28, 35, 36, 55, 56, 64 and 65 do not apply to a loan made pursuant to subsection (2).
AR 233/85 s8;353/91
9 On granting approval of any application for a loan, the Corporation shall advise the applicant of the terms and conditions of the loan to be advanced.
AR 233/85 s9
10(1) When a mortgage is placed or an agreement to repay is entered into pursuant to this Regulation,
(a) the mortgage or agreement to repay shall be for a term determined by the Corporation,
(b) the amount owing under the mortgage or agreement to repay may be repayable by instalments in amounts and at times determined by the Corporation, and
(c) subject to subsections (2) and (3), the amortization period shall be determined by the Corporation.
(2) The amortization period,
(a) in the case of a mortgage or an agreement to repay, shall not be more than 50 years, and
(b) in the case of a renewal or extension of the mortgage or agreement to repay, shall not be more than 50 years from the interest adjustment date as determined pursuant to this Regulation.
(3) Notwithstanding subsection (2), the amortization period shall not exceed the economic life, as determined by the Corporation, of the project or housing unit in respect of which the mortgage is placed, the agreement to repay is entered into or the renewal or extension is made.
AR 233/85 s10;70/86
11(1) The Corporation shall establish a date for the completion of construction as a condition of approval of an application for a loan in respect of a housing unit or project.
(2) If construction is not completed by the date established under subsection (1) the Corporation may reduce the loan by any amount that the Corporation determines and the amount of the loan for the purposes of this Regulation is the amount of the loan so reduced.
AR 233/85 s11
12 The interest rate on all loans shall be determined by the Corporation.
AR 233/85 s12
13 The amount of a loan approved by the Corporation may be increased subsequent to that approval if
(a) the amount of the loan as increased does not exceed the maximum loan allowable under this Regulation,
(b) an application for the increase in the amount of the loan is made before the loan is fully advanced,
(c) where the applicant proposes to change the work from that shown on the plans or specifications approved for the housing unit or project, the application for the increase in the amount of the loan is accompanied by an application fee in an amount prescribed by the Corporation, and
(d) the application for the increase is approved by the Corporation.
AR 233/85 s13
14(1) Every mortgage or agreement to repay shall be
(a) in a form approved by the Corporation, and
(b) executed by the borrower.
(2) A mortgage or an agreement to repay that secures a loan may be varied by the Corporation in those cases where the Corporation considers it advisable to make a change in the terms or conditions of the mortgage or agreement to repay.
(3) Subject to section 10(2) and (3), the Corporation may approve and enter into loan renewals and extensions on those terms or conditions that the Corporation considers advisable in the circumstances.
(4) The Corporation may, as a condition of advancing a loan, require that any or all of the existing encumbrances or charges against the property being mortgaged or secured be discharged out of the proceeds of that loan advance.
AR 233/85 s14;70/86
15(1) There shall be fixed in the mortgage or the agreement to repay
(a) a date for adjustment of interest on the loan, which date, as nearly as may be estimated, shall be not more than 2 months after the completion of construction of the premises or occupation of them, whichever occurs first, and
(b) a date of commencement of combined payments of principal, interest and taxes, if applicable, which
(i) in the case of a loan repayable on a monthly basis, shall be one month after the interest adjustment date, and
(ii) in the case of a loan repayable on a quarterly, semi-annual or annual basis, shall be 3 months, 6 months or one year, as the case may be, after the interest adjustment date.
(2) If completion of construction of the mortgaged or secured premises or occupation occurs prior to the date fixed or if such completion or occupation has not occurred or is unlikely to occur by that date, the Corporation may agree from time to time with the borrower that the dates for repayment of the mortgage moneys and adjustment and computation of interest be amended, but the date for adjustment of interest finally agreed on shall be not later than 2 months after the last estimated date for completion of construction of the mortgaged premises or occupation, whichever occurs first.
AR 233/85 s15
16(1) The Corporation may take any further collateral security that it may require for
(a) the repayment of a loan, or
(b) the satisfaction of any other obligation owed to the Corporation.
(2) The Corporation may
(a) contract for a collateral advantage, or
(b) take an interest in a project in respect of which a loan is made including, without limiting the generality of the foregoing, an interest calculated by reference to any increase in the value of a project after a loan is made.
(3) Where the Corporation
(a) takes collateral security or an interest in a project,
(b) contracts for a collateral advantage, or
(c) accepts payments related to income or receipts from the project,
that action shall not, by itself, constitute the Corporation as a partner, joint venturer or co-venturer with the borrower.
(4) The Corporation may, as it sees fit, release, dispose of or otherwise deal with any further collateral security or any interest in a project in respect of which a loan is made.
AR 233/85 s16;353/91
17(1) The Corporation may, at the expense of the borrower, attend to
(a) the searching of title,
(b) the obtaining of a surveyor’s certificate or sketch, or a certificate obtained pursuant to section 18,
(c) the advancing of the proceeds of the loan,
(d) all legal matters connected within the arranging of the loan and the taking of security for it, and
(e) all things reasonably necessary to protect the security and the priority of advances made,
all in accordance with normal mortgage practice.
(2) Notwithstanding subsection (1), the Corporation shall not be responsible to the borrower for any default in performing the duties imposed on it under this section, whether caused by its negligence or otherwise.
AR 233/85 s17
18(1) The Corporation shall obtain a surveyor’s certificate and sketch showing or reciting the distance from the housing unit or project to the property lines and any apparent encroachments on it.
(2) If it seems in the best interests of the borrower, the Corporation may accept, in lieu of a surveyor’s certificate, a similar certificate from a civil engineer or other competent person approved by the Corporation.
AR 233/85 s18
19 The borrower may, with the approval of the Corporation, consent to the creating of any easement, restriction or encroachment to which the Corporation does not object.
AR 233/85 s19
20 Without limiting the generality of section 19, the Corporation shall not object to
(a) any title that, in the opinion of the Corporation, is marketable in the community in which the property is situated,
(b) any easements, restrictions or encroachments that would not be violated by the reasonable use of the land for residential purposes and the construction on that land of the housing unit, or
(c) defects in title arising out of any change in law after the making of the loan.
AR 233/85 s20
21 In the case of a loan to finance new construction, the Corporation may make progress advances as the construction progresses and as inspections are completed from time to time.
AR 233/85 s21
22 The Corporation when advancing a loan pursuant to section 21, shall retain an amount not less than the estimated cost of completing the construction of the premises for the purpose of ensuring the completion of such construction.
AR 233/85 s22
23 If a loan is not fully advanced or part of the loan has been repaid prior to the advance of the full amount of the loan, the Corporation may reduce the amount of payments but those reduced amounts shall be sufficient to amortize the loan over the amortization period established for the loan as approved.
AR 233/85 s23
24(1) During the period of construction of a housing unit or project, the Corporation shall inspect the housing unit or project or cause it to be inspected to ensure that the work of construction is carried out in reasonable conformity with the approved plans and specifications and the standards of construction prescribed by the Corporation, but the Corporation is not required to provide supervision of the construction of the housing unit or project.
(2) The Corporation shall not be liable to the borrower for any defect in inspection, for failure to inspect or for any departure from the Corporation’s standards or from the approved plans and specifications for the housing unit or project.
AR 233/85 s24
25 When an inspection is made by the Corporation, a report shall be sent to the borrower within 10 days after the inspection listing in detail any departures found on the inspection from the approved plans, specifications or standards prescribed by the Corporation, and indicating the corrections that are required to be made.
AR 233/85 s25
26 If any departure from the plans, specifications or standards is not corrected as required by the Corporation, the Corporation may reduce the loan by any amount it determines and the maximum loan under this Regulation shall be the amount of the loan so reduced.
AR 233/85 s26
27(1) During the period of advancement and repayment of a loan, the borrower shall cause the interest of the Corporation to be protected by insurance, including extended coverage endorsement, in an amount not less than the full replacement value of the improvements or the full insurable value of the property, whichever is the lesser, with the loss payable to “Alberta Mortgage and Housing Corporation, mortgagee, as its interest may appear”.
(2) The borrower shall provide to the Corporation evidence of insurance before a loan advance is made.
(3) If, before the loan has been repaid in full, the mortgaged improvements are damaged and the damage exceeds $5000, the borrower shall notify the Corporation as soon as he has knowledge of the damages, and after the notification all repairs shall be subject to inspection by the Corporation and all repairs shall be completed to the satisfaction of the Corporation.
(4) If any premium on insurance effected pursuant to this section is not paid when due, the borrower shall be considered in default and the premium may be paid by the Corporation and charged to the borrower with interest on it at the same rate as the loan.
AR 233/85 s27
28(1) When the Corporation makes a loan it shall determine and collect from the borrower a mortgage insurance fee of not more than 3.0% of the principal portion of the loan, exclusive of the mortgage insurance fee.
(2) The mortgage insurance fee shall be included in the principal portion of the loan and when mortgage funds are advanced, the fee shall be deducted from those funds at the rate determined in accordance with subsection (1) and applied to that advance.
(3) The Corporation shall establish a mortgage insurance fund and shall pay all mortgage insurance fees into that fund, except when the Corporation has entered into an agreement with a third party who will insure loans made by the Corporation, in which case the mortgage insurance fee or a part of the mortgage insurance fee may be paid to the insurer.
(4) If, as the result of foreclosure proceedings or any other action taken by the Corporation in relation to a loan in default, the Corporation has exhausted its legal rights to recover further payment from the borrower and from all other persons having an interest in the land, and from any third party guaranteeing the loan, and a deficiency exists between the amount advanced, including accrued interest and legal costs, and the amount recovered in respect of the loan, the Corporation shall reimburse itself the amount of that deficiency by transfer to itself of the amount of the deficiency from the mortgage insurance fund.
(5) The Corporation may borrow to meet any temporary deficiency in the mortgage insurance fund and the cost of that borrowing shall be a charge against the future receipts of the fund.
(6) If the amount of the mortgage insurance fund at any time exceeds the losses that the Corporation considers it can reasonably anticipate to be charged against the fund in respect of loans at that time outstanding, the Corporation may transfer the amount of the excess to its income account.
AR 233/85 s28
29(1) Where the Corporation is of the opinion that a revision of some or all of the terms or conditions of a mortgage, agreement to repay or loan agreement will be in the best interests of the Corporation, the Corporation may,
(a) to the extent that the Corporation considers it advisable in the circumstances, and
(b) with the borrower’s approval,
alter or revise the mortgage, agreement to repay or loan agreement.
(2) In carrying out an alteration or a revision to a mortgage, agreement to repay or loan agreement, the Corporation may do one or more of the following:
(a) extend the time for repayment for a period that the Corporation considers advisable in the circumstances without regard to any limitation on the period of time for repayment under section 10;
(b) amend the rate of interest charged on the whole or any part of the loan;
(c) not charge interest on the whole or any part of the loan until the loan becomes due;
(d) adjust the amount of the periodic payments of principal or interest or both as determined by the Corporation;
(e) increase the period of time between periodic payments of principal or interest or both;
(f) decrease the period of time between periodic payments of principal or interest or both;
(g) defer periodic payments of principal or interest or both in whole or in part for any period of time;
(h) capitalize any arrears of interest in whole or in part;
(i) enter into any agreement to compromise the whole or any part of the outstanding balance of the loan as determined by the Corporation;
(j) contract for a collateral advantage or take an interest in a project in respect of which the loan was made including a collateral advantage or an interest calculated by reference to any increase in value of the project after the alteration or revision of the mortgage, agreement to repay or loan agreement;
(k) effect any compromise with or grant any concession to any person;
(l) notwithstanding subsection 32(3), postpone, stay or discontinue any action or proceeding on those terms or conditions that the Corporation considers advisable;
(m) obtain any additional security or covenants;
(n) release any additional security or covenants;
(o) do any other things that the Corporation considers advisable in the circumstances.
(3) Where the Corporation
(a) takes collateral security or an interest in a project, or
(b) contracts for a collateral advantage,
that action shall not, by itself, constitute the Corporation as a partner, joint venturer or co-venturer with the borrower.
AR 233/85 s29;70/86;353/91
30 If a borrower is in default in respect of any payment for a period greater than 30 days, the balance of the loan outstanding shall, at the option of the Corporation, thereupon become due and payable.
AR 233/85 s30
31 If a loan or security for a loan is in default or a loan has become due and payable and remains unpaid, the Corporation may, to the extent that the Corporation considers it advisable in the circumstances, do one or more of the following:
(a) take any steps, whether by legal proceedings or otherwise, against any person to effect collection of the loan or the protection of any security given for the loan;
(b) obtain any additional security or covenants;
(c) realize
(i) on its security, and
(ii) on any covenants or other liabilities,
or on any one or more of them;
(d) alter or revise a loan in accordance with section 29(2);
(d.1) make a new loan pursuant to section 8(2);
(e) take any steps, make any payments and do any thing to protect the Corporation’s loan, security or other interests in respect of any security instrument, obligation or liability that may
(i) take priority over the Corporation’s security, or
(ii) become a liability on the Corporation;
(f) postpone or discontinue any action or proceeding on those terms or conditions that the Corporation considers advisable.
AR 233/85 s31;70/86;353/91
31.1 The limitations in sections 3, 8, 9, 10(3), 11, 13, 15, 18, 22, 28, 35, 36, 55, 56, 64 and 65 do not apply to any action taken with respect to a loan under section 29 or 31.
AR 70/86 s6;353/91
32(1) In this section “sale” means a sale
(a) by judicial sale including, without limitation, sale to the Corporation, or
(b) by any method, other than that referred to in clause (a), that is available to the Corporation.
(2) Without limiting any rights or remedies of the Corporation and subject to subsection (3) of this section and to section 29, if proceedings for sale or foreclosure have been commenced, the Corporation shall apply for
(a) sale or foreclosure, and
(b) possession of the mortgaged property,
at the earliest date that it is entitled to do so by law.
(3) The Corporation may, after proceedings for sale or foreclosure have been commenced but before a final order for sale or foreclosure has been obtained, do one or more of the following:
(a) discontinue the action if costs and all payments in arrears are paid;
(b) postpone or discontinue the action if the borrower has made satisfactory arrangements to remedy the default;
(c) where the Corporation considers it appropriate in the circumstances,
(i) alter or revise the mortgage, agreement to repay or loan agreement pursuant to section 29, or
(ii) make a new loan pursuant to section 8(2).
AR 233/85 s32;70/86;353/91
Part 2 Home Ownership and Rental Loans
33 This part applies only to loans made pursuant to section 28(1)(a) of the Act to:
(a) families or individuals for the purpose of purchasing or constructing a home for their own use, and
(b) builders, developers, and organizations for the purpose of constructing housing accommodation for sale or for rent.
AR 233/85 s33
34 Part 1 applies to loans under this Part.
AR 233/85 s34
35 The maximum amount of loan for
(a) a housing unit constructed or purchased for owner occupancy shall not exceed 95% of the lending value of the housing unit,
(b) a housing unit or project constructed or purchased for rental purposes shall not exceed 90% of the lending value of the housing unit or project where rentals in the unit or project are not partially or totally regulated by the Corporation,
(c) a housing unit or project constructed or purchased for rental purposes shall not exceed 95% of the lending value of the housing unit or project where rentals in the unit or project are partially or totally regulated by the Corporation,
(d) a dormitory housing project, other than a nursing home, shall not exceed 90% of the lending value, and
(e) a nursing home shall not exceed 95% of the lending value.
AR 233/85 s35
36 Subject to section 20, all loans made pursuant to this Part shall be secured by a mortgage registered as a first charge against the title to the property.
AR 233/85 s36
37(1) The Corporation shall use its best efforts to ensure that, when approving a homeowner loan or when approving a purchaser who is to assume a loan made to a builder, the gross debt service ratio in respect of the loan does not exceed 35%.
(2) When approving a loan or when approving a purchaser who is to assume a loan made to a builder, the Corporation may require evidence that the applicant is providing from his own resources an amount represented by either land, cash or qualified labour equal to at least 5% of the value of the housing unit as determined by the Corporation.
(3) When approving a new construction loan to a builder for construction of a housing unit for sale, the Corporation may determine the maximum selling price of the housing unit and may require that the amount of the loan be conditional on the sale of the housing unit to a home purchaser at a price not in excess of the maximum selling price so determined.
(4) If a maximum selling price is determined under subsection (3), the builder shall provide the Corporation with evidence of the selling price in a form prescribed by the Corporation.
(5) In the event the selling price exceeds the maximum selling price, the loan shall be reduced to not more than 90% of the approved loan.
(6) If a builder falsely states the selling price, the Corporation may refuse to make any further loans to that builder or to any company or corporation with which he is directly or indirectly associated, within a period of eighteen months from the date of the false statement.
AR 233/85 s37
38 The Corporation, when advancing a loan made to a builder, shall retain an amount equal to 15% of the loan for the purpose of ensuring that a sale by the builder complies with the requirements of the Corporation and that the mortgaged premises are sold to a home purchaser who is acceptable to the Corporation, meets the Corporation’s qualifications, and has assumed liability under the mortgage.
AR 233/85 s38
39(1) If a builder to whom a loan has been approved to assist in the construction of a housing unit for sale has not sold the unit within 3 months after the date established in the mortgage for adjustment of interest, the Corporation may release to the builder further advances on the loan but in no case shall total advances on that housing unit exceed the maximum loan which could be made for the housing unit if it were a rental housing project.
(2) If the builder has not sold the housing unit within 6 months after the date established in the mortgage for adjustment of interest, the Corporation may deem that the condition that the house be sold to an approved purchaser cannot be fulfilled and the property shall thereafter be re-conveyed as directed by the Corporation.
AR 233/85 s39
40 The Corporation may refuse further loans to a builder who himself, or acting through an agent, sponsors a home-owner applicant or sells a housing project to a purchaser and knows or should reasonably know and fails to disclose to the Corporation that the applicant or purchaser does not meet the requirements of section 37.
AR 233/85 s40
Part 3 Home Improvement Loans
41 This part applies only to home improvement loans made pursuant to section 28(1)(a) of the Act.
AR 233/85 s41
42 Part 1, except sections 10(c), 24 and 27, applies to loans under this Part.
AR 233/85 s42
43 The Corporation shall not make a home improvement loan in an amount that
(a) when added to the amount of existing encumbrances against the property, including taxes, is greater than 95% of the estimated lending value of the completed property, or
(b) is greater than the estimated cost of the home improvement, as determined by the Corporation.
AR 233/85 s43
44(1) All loans shall be secured by way of a promissory note given by the borrower.
(2) In addition to subsection (1), and subject to section 20, if the amortization period of the loan exceeds 5 years, the loan shall be secured by a mortgage registered against the title to the property.
(3) The mortgage referred to in subsection (2) need not be a first charge on the property.
AR 233/85 s44
45 The Corporation shall use its best efforts to ensure that in the case of home improvement loans to homeowners, except farmers, the gross debt service ratio, including payment for all encumbrances registered or to be registered against title to the property and all anticipated annual expenses for property taxes, is not greater than 35%.
AR 233/85 s45
46 A loan made under this section may be amortized for a period of up to 15 years, but in no case shall the amortization period exceed the remaining economic life of the unit.
AR 233/85 s46
47 At the discretion of the Corporation, where more than one home improvement loan is requested by a borrower, a separate application shall be taken for each amount borrowed but, for the purpose of arranging the terms of repayment, the principal amount remaining unpaid on an outstanding loan and the amount of a subsequent loan may be aggregated and revised terms of repayment determined based on the total loan balance then outstanding.
AR 233/85 s47
Part 4 Farm Residence Loans
48 This Part applies only to loans made pursuant to section 28(1)(a) of the Act to farmers to finance
(a) the construction of a new farm residence,
(b) the purchase of a building or structure, whether complete or partially complete, to be used as a farm residence, including amounts for moving and installing the building on the farm, and
(c) the cost of installation of water, heating, electrical and sewage disposal systems in connection with residences constructed or purchased under this section.
AR 233/85 s48
49 Part 1 applies to loans under this Part.
AR 233/85 s49
50 The maximum amount of a loan under this Part shall not be greater than the estimated cost of the construction and installation or the estimated cost of the purchase and associated costs, as determined by the Corporation.
AR 233/85 s50
51(1) All loans made under this Part shall be secured by a promissory note for the amount of the loan, in a form prescribed by the Corporation, duly executed by the borrower and
(a) a mortgage registered against the title to the farm, or part of it, in respect of which the proceeds of the loan are to be expended, or
(b) in the case of a purchase of a farm under an agreement for sale, a mortgage or assignment of the rights and interests of the purchaser, as prescribed by the Corporation.
(2) The security referred to in subsection (1)(a) and (b) need not be a first charge on the property.
AR 233/85 s51
52 A loan may be made under this Part only to a farmer engaged or about to become engaged in the operation of the farm in respect of which the loan is to be made, and
(a) in the case of an individual, when, in the opinion of the Corporation, the experience, ability and character of that individual indicate an ability on his part under normal circumstances to make the installment payments on the loan as and when they become due,
(b) in the case of a farming corporation or a co-operative farm association, when, in the opinion of the Corporation, the experience, ability and character of those shareholders or members, as the case may be, who are principally occupied in the farming operations of the corporation or association, indicate that the farm will be operated successfully and that under normal circumstances the installment payments on the loan can be met as and when they become due, and
(c) in all cases, when
(i) the farmer has, in the opinion of the Corporation, a need for the residence for which the loan is to be made, and
(ii) the value of the security offered is sufficient to adequately secure the loan.
AR 233/85 s52
Part 5 Mobile Home Park Loans
53 This Part applies only to loans made pursuant to section 28(1)(b) of the Act for the purpose of acquiring, developing or servicing mobile home parks.
AR 233/85 s53
54 Part 1 applies to loans under this Part.
AR 233/85 s54
55 The maximum loan amount shall not exceed 85% of the lending value of the mobile home park as determined by the Corporation.
AR 233/85 s55
56 All loans made pursuant to this Part shall be secured by a mortgage registered as a first charge against the title to the property, subject to section 20.
AR 233/85 s56
Part 6 Rural and Native Housing Loans
57 This Part applies only to rural and native housing loans made pursuant to section 28(1)(a) of the Act for the purpose of financing the construction or acquisition of housing for families who
(a) reside in a rural and remote area designated as such by Canada Mortgage and Housing Corporation and the Minister,
(b) are composed of not less than 2 persons,
(c) are living in inadequate housing, and
(d) are approved by the Minister as being eligible for housing assistance.
AR 233/85 s57
58(1) Part 1, except sections 6, 7, 8, 27 and 28, applies to loans under this Part.
(2) Notwithstanding subsection (1), if property insurance is available to the borrower, section 27 applies.
(3) If property insurance is not available to the borrower, the Corporation shall ensure that its interest is protected by the Canada Mortgage and Housing Corporation or the Alberta Mortgage and Housing Corporation or both of them.
AR 233/85 s58
59 The maximum amount of a loan under this Part shall not be greater than the selling or purchase price or total cost of the housing unit.
AR 233/85 s59
60 All loans made pursuant to this Part shall be secured by a mortgage registered as a first charge against the title to the property, subject to section 20.
AR 233/85 s60
61 In approving a loan or when approving a purchaser who is to assume a loan made to a builder, the Corporation may require evidence that the applicant is providing equity from his own resources, represented by either land, cash or qualified labour.
AR 233/85 s61
Part 7 Residential Land Development Loans
62 This Part applies only to loans made pursuant to section 28(1)(b) of the Act for the development of residential land.
AR 233/85 s62
63 Part 1, except sections 8, 10 and 15, applies to loans under this Part.
AR 233/85 s63
64 The maximum amount of a loan under this Part shall not be greater than 90% of the cost of servicing plus the value of the land as determined by the Corporation.
AR 233/85 s64
65 All loans made pursuant to this Part shall be secured by a mortgage registered as a first charge against the title to the property, subject to section 20.
AR 233/85 s65
66 When the Corporation approves an application for a residential land development loan it shall prescribe:
(a) the amount of funds the applicant is eligible to borrow under this Part,
(b) the manner of repayment of the loan,
(c) the security that must be provided with respect to the loan, and
(d) the terms and conditions, in addition to those provided under this Part, under which the loan is being made.
AR 233/85 s66
67 The Corporation may require the borrower to enter into a development agreement with the Corporation regarding the development, servicing and marketing of land in respect of which the loan is being made.
AR 233/85 s67
68(1) The Corporation shall determine at what stages of completion of the development or servicing of the land, as the case may be, that the loan or parts of it shall be advanced.
(2) The Corporation may postpone the making of an advance on a loan if
(a) the progress of development or servicing of the land is delayed, or
(b) applicable legislation in relation to the developing and servicing of the land is not being complied with.
(3) The Corporation may, when advancing a loan, retain an amount not less than the estimated cost of completing the development or servicing of the land, as the case may be, until the development or servicing is completed.
AR 233/85 s68
69(1) If the borrower does not
(a) complete the development or servicing of the land in respect of which the loan was made, or
(b) comply with the terms of a development agreement entered into pursuant to section 67
within the time prescribed by the Corporation for doing so, the Corporation may, in its discretion, purchase any or all of the lots at the lower of their cost price or market price.
(2) The Corporation may, instead of acting under subsection (1), grant an extension of time within which the development or servicing may be completed or the development agreement may be complied with.
AR 233/85 s69
Part 8 Loans to Indian Bands, Co-operative Housing Associations and Non-profit Organizations
70 This Part applies only to loans made pursuant to section 28(1)(a) of the Act to Indian Bands, co-operative housing associations and non-profit organizations for the purpose of acquiring, constructing or improving housing.
AR 233/85 s70
71 Part 1 applies to loans under this Part.
AR 233/85 s71
72 The maximum amount of a loan shall not exceed 100% of the lending value of the property, as determined by the Corporation, for which the loan is given.
AR 233/85 s72
73(1) All loans pursuant to this Part made to Indian Bands shall be evidenced by an agreement to repay in a form prescribed by the Corporation.
(2) All loans pursuant to this Part made to co-operative housing associations and non-profit organizations shall be secured by a mortgage registered as a first charge against the title to the property, subject to section 20.
AR 233/85 s73
74 All loans made to Indian Bands shall be supported by an application in accordance with the Indian Act (Canada) and shall be secured by a guarantee of the Government of Canada.
AR 233/85 s74
75 Loans under this Part, except loans made to Municipal Non-Profit Housing Corporations, shall be insured by the Canada Mortgage and Housing Corporation.
AR 233/85 s75
Part 9 Guaranteed Loans
76(1) The Corporation may guarantee loans made by lending institutions for the purposes enumerated in section 28(1) of the Act.
(2) An application for a loan guarantee under subsection (1) shall be made in writing to the Corporation and shall contain the following information:
(a) the nature and location of the project for which the financial assistance is desired;
(b) the details of the amount of financial assistance required and purposes for which the financial assistance is to be used;
(c) the details of previous attempts made to obtain financing for the project from lending institutions and the results of those attempts;
(d) the name of the lending institutions which are expected to provide the financing if the guarantee requested is approved by the Corporation;
(e) the details of the financial position and projections of future earning capabilities and cash flow of the applicant;
(f) any other information the Corporation requires.
(3) The Corporation may approve a guarantee if it is satisfied that
(a) the application meets the requirements of subsection (2), and
(b) the required financing is unlikely to be available from a lending institution on reasonable terms without a Corporation guarantee.
(4) The Corporation may charge the applicant an amount that is either
(a) not in excess of 1% per year based on the total amount guaranteed by the Corporation, or
(b) not in excess of 1% based on the total amount to be guaranteed by the Corporation.
AR 233/85 s76
77 Repealed AR 161/90 s2.
78(1) A guarantee by the Corporation shall contain the following:
(a) the purposes for which the loan funds are to be employed;
(b) terms of repayment of the loan;
(c) the rate of interest to be charged by the lending institution;
(d) the security to be taken by the lending institution;
(e) a covenant that notification in writing shall be given to the Corporation by the lending institution when the borrower is in default;
(f) a condition that the lending institution shall quarterly, or at any shorter intervals the Corporation specifies, provide a report stating
(i) the amount and date of any advances made in respect of the guaranteed loan,
(ii) the amount and date of any payment received on account of principal or interest in respect of the guaranteed loan;
(iii) any amount due on the last day of each month of the period covered by the report, and
(iv) general comments with respect to the collectibility of the guaranteed loan and any other comments which the lending institution considers relevant;
(g) a condition that the loan shall immediately become due and payable by the borrower to the lending institution if
(i) the borrower is in default of an instalment payable under the guaranteed loan and the default continues for more than 30 days after notice in writing of the default has been given by the lending institution to the borrower and the guarantor,
(ii) the borrower becomes insolvent or bankrupt, or a receiving order is made against the borrower, or the borrower is ordered to be wound up by any court of competent jurisdiction or makes a general assignment for the benefit of creditors or otherwise acknowledges its insolvency, or
(iii) the Corporation has determined the guarantee pursuant to subclause (i);
(h) a condition that the borrower, during the period of his indebtedness to the lending institution, shall
(i) provide annual financial statements to the Corporation,
(ii) obtain the approval of the Corporation prior to obtaining further loans;
(iii) obtain the approval of the Corporation, prior to removing out of the Province of Alberta any assets taken by the lending institution as security;
(i) a condition that the guarantee may be determined by the Corporation on 30 days notice in writing to the lending institution and the borrower if the borrower
(i) has made a material misrepresentation in the borrower’s application under section 76(2),
(ii) fails to provide the required financial statements, or
(iii) otherwise fails to comply with any condition, covenant or requirement of the guarantee.
(2) The security which is taken by the lending institution in respect of a guaranteed loan shall be any security that the Corporation considers appropriate in the individual circumstances and may include fixed and floating charges, personal guarantees, and assignments of insurance.
AR 233/85 s78
79(1) Subject to subsection (2), a lending institution that has made a loan that has been guaranteed under this Part may make a written claim to the Corporation on the guarantee.
(2) Claims under subsection (1) may be made only
(a) on the expiration of 90 days following the date on which the repayment of a loan becomes due and payable under section 78(1)(g), and
(b) if
(i) the borrower is legally bound to the terms of the loan entered into with the lending institution, and
(ii) the lending institution has taken all economically feasible steps to recover all moneys owing under the loan, including realizations on all security held by the lending institution.
AR 233/85 s79
Part 10 Sale of Mortgages
80 In this Part,
(a) “guarantee” means a guarantee referred to in section 82(1);
(b) “mortgage” means a mortgage on real property and includes a chattel mortgage on a mobile home and a collateral chattel mortgage.
AR 161/90 s3
81 Parts 1 to 9 do not apply to the sale of a mortgage by the Corporation notwithstanding that payment of all or a portion of the consideration payable for the purchase of the mortgage may be deferred.
AR 161/90 s3
82(1) Where a person purchases a mortgage from the Corporation, that person may apply in writing to the Corporation for a guarantee guaranteeing the repayment of that mortgage.
(2) An application for a guarantee may be made or included in an offer or agreement to purchase a mortgage.
(3) An application for a guarantee may be made prior to the purchase of the mortgage being completed but the guarantee may only be given once the purchaser has entered into an agreement with the Corporation to acquire the Corporation’s interest in the mortgage.
(4) A guarantee may be given in respect of more than one mortage where a person purchases more than one mortgage.
(5) Parts 1 to 9 do not apply to a guarantee.
AR 161/90 s3
Part 11 Total Amount of Liability
83 The maximum total aggregate liability that the Corporation may incur as a guarantor under Part 3 of the Act is $922 000 000 consisting of not more than
(a) $100 000 000 that may be guaranteed pursuant to Part 9 of this Regulation, and
(b) $822 000 000 that may be guaranteed pursuant to Part 10 of this Regulation.
AR 161/90 s3;293/91
NOTE: For the purposes of actions commenced before the coming into force of AR 70/86, the Loan Regulation shall be read as if AR 70/86 were not enacted.
