Financing Option - Bank of Montreal

BMO Bank of Montreal’s
On-Reserve Housing Loan Program
Create a housing loan the way you want it
Presented by: Jason M. Cameron
BMO Aboriginal Banking
Date: February 4, 2014
Agenda
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BMO
Aboriginal Banking at BMO
Types of Financing
Our 2 Programs
Overall Structure
Program Details
How to Apply
How to Qualify
How Much Can I Afford?
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BMO Bank of Montreal
•  BMO was founded in 1817 in Montréal,
and is Canada's oldest bank
•  BMO has over 1,500 bank branches in
Canada and the United States
•  Operates through 3 operating groups:
1.  Personal and Commercial Banking (P&C)
2.  Private Client Group (PCG)
3.  BMO Capital Markets
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Aboriginal Banking Unit at BMO
The Aboriginal Banking Unit was created in 1992 to serve the unique
banking and financing needs of First Nations communities
~ More than 20 years of dedicated service to Aboriginal communities ~
Some milestones:
–  Created one of the first on-reserve housing loan programs in Canada
–  The first and only major financial institution involved with First Nations Market
Housing Fund
–  Developed a lending directive that clearly outlines how to get beyond the barriers of
the Indian Act with regards to lending, particularly with infrastructure loans
–  Continue to provide unique and innovative financing products
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Serving Aboriginal Communities
BMO Bank of Montreal®
Aboriginal Branches and Community
Banking Outlets
10. Wemindji Branch
Cree Nation of Wemindji (Wemindji)
(819) 978-3588
British Columbia
1. Tsahaheh Branch
Tseshaht First Nation (Port
(250) 724-7100
Alberni)
2. Park Royal Branch
Squamish Nation (West Vancouver)
(604) 668-1277
6. Siksika Branch
Sisksika Nation (Sisksika)
(403) 734-3600
3. Eagle Landing Branch
Squiala First Nation (Chilliwack)
(604) 792-1971
Ontario
7. Ohsweken Branch
4. Westbank Branch
Westbank First Nation (Kelowna)
(250) 861-1670
11. Betsiamites Branch
Conseil de Bande de Betsiamites (Betsiamites)
(418) 567-9543
Alberta
5. Tsuu T’ina Nation Branch
Tsuu T’ina Nation (Tsuu T’ina)
(403) 234-1869
Six Nations of the Grand River
(Ohsweken)
(519) 445-4733
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8. Peace Tree Trade Centre Branch
Akwesasne Mohawk Territory (Cornwall Island)
(613) 938-5634
Quebec
9. Waskaganish Branch
The Crees of Waskaganish First Nation (Waskaganish)
(819) 895-2177
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Newfoundland & Labrador
12. Nain Community Banking Outlet (Nain, Labrador)
Host Branch – Wabush Main Office
(709) 282-3231
13. Happy Valley Goose Bay
Goose Bay, NL
(709) 896-4411
Northwest Territories
14. Fort Smith Branch
Fort Smith First Nation (Fort Smith)
(867) 872-2001
Other Initiatives
•  Sponsorships:
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CCAB (Canadian Council of Aboriginal Businesses)
CANDO (Council for the Advancement of Native Development Officers)
NATOA (National Aboriginal Trust Officers Association)
AFOA (Aboriginal Financial Officers Association)
•  We are also sponsoring our Commercial Account Managers to complete the Certified
Aboriginal Financial Management certification throughout Canada
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Belinda Stronach Foundation (One Laptop Per Child Campaign)
FAAY (Foundation for the Advancement of Aboriginal Youth)
NAAF (National Aboriginal Achievement Foundation)
DAREArts
•  Ron Jamieson Bursary through BMO
•  PAR Gold recipient
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Types of Financing
•  Infrastructure
•  Housing
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Education/Employment/Training Centres
Administration Buildings
Health Care Centres
Social Service Buildings
Sports/Recreational Facilities
Elders’ Lodges
Ambulance/Fire Stations/Police Services
Building
–  Sewer/Water projects
–  Roads/Bridges
–  Housing loans
–  Renovation loans
–  First Nations Market Housing Fund
•  Project Financing
–  Solar Farms
–  Wind Energy
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At BMO, We Have 2 Programs
On-Reserve Housing Loan Program &
On-Reserve Home Renovation Loan Program
Together they:
–  Provide innovative on-reserve housing financing alternatives without government
involvement
–  Are designed to reflect the specific requirements of a particular First Nation
–  Provide financing for the construction, purchase, &/or renovation of single family
homes on reserve
**Currently we have over 65 programs set up and over $112 million in loans advanced in Canada**
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Structure
First Nation
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Housing Loan Program Details
Eligible loan purpose:
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Loan Amounts
Purchase
Construction
Renovate (over $25,000)
Refinancing
–  Maximum individual limits set by the First
Nation
–  Determined by borrower’s ability to repay
Eligible property:
Down Payments
–  Single family homes on land held under
a Certificate of Possession
–  Lot must be serviced by roads, hydro,
water, septic system
–  Minimum 5% of total project cost /
purchase price
Fees
–  Borrower pays any “out-of-pocket”
expenses (e.g. legal fees, inspection
fees)
Eligible Borrowers:
–  Qualified members of the First Nation
–  Must meet BMO’s usual credit
requirements
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Housing Loan Program Details Continued…
Interest Rates
Construction
–  Bank of Montreal Homeowner Mortgage
fixed rates less negotiated discount on
fixed rates
–  Home to be built to the First Nation’s
usual construction standards
–  Home to be fully complete including
landscaping, exterior finish, etc.
–  Fixed price contracts required to manage
cost overruns.
Prepayment Privileges
–  Any amount can be prepaid at any time
without penalty
* Tremendous opportunity for employment
and training for community members.
Term and Amortization
–  Inspections and loan advances follow
established schedule
–  Any term between 1 – 5 years
–  Maximum amortization is 25 years
Security
–  First Nation ↔ BMO:
Insurance Requirements
guarantee for each loan
–  Mortgage Life and Accident & Disability
insurance are recommended for all
borrowers who are eligible
–  Fire insurance over house to be
assigned to BMO
On-Reserve Housing Loan Program - ORHLP
–  BMO ↔ Member:
Loan agreement & Fire insurance
–  Member ↔ First Nation:
Mortgage and transfer of land, and Life &
Disability insurance
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Renovation Loan Program Details
All terms are identical to the Housing Loan Program except for:
Eligible loan purpose:
Down Payments
–  Renovate only
–  No down payment required
Interest Rates
Loan Amounts
–  Bank of Montreal Fixed Personal
Lending Rates
–  Between $5,000 and $25,000
Amortization
–  $5,000-$10,000: 5 years
–  $10,001-$25,000: 10 years
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The Process and How to Apply
First Nation
1.  BMO visits First Nation
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Apply for a housing loan program
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Individual Member
2.  Applicant visits Housing
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3 years of financial statements
Average/max cost to build a home
Confirm ownership of land
Verify membership
3.  Applicant visits BMO
Once approved, members are able to
apply for individual loans
BMO and your designated Personal
Banker can now present to members
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Complete a loan application
Review project
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Confirm personal funds to cover down
payment
Review of non-member spousal
agreement (if applicable)
BMO advises applicant of results
If approved, conditional approval sent to
Housing
Completion / Review of required
preliminary documentation
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Ie: construction / purchase details,
proposed general contractor
Ie: blueprints, cost estimates, permits,
purchase & sale contract
The Process and How to Apply Continued…
Individual Member
4.  Housing approaches Council
–  Recommend to accept loan
–  Obtain completed BCR and Guarantee
Agreement
–  Send these to BMO
5.  BMO advances funds through the
First Nation or Member directly.
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How to Qualify
Requirements
How does a lender consider a housing
loan request?
–  Membership
–  5% down payment
–  Project meets building code
requirements
–  Acceptance and authorization by BMO
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–  A lender will assess the capability of a
borrower in meeting their financial and
credit obligations
–  A lender may assess a person by
considering the following:
1.  Character
2.  Capacity
3.  Credit
4.  Capital
5.  Collateral
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How Much Can I Afford?
•  A rule of thumb:
–  Monthly debt payments (loan, credit card, heating and mortgage
payments) should be less than 40%, of monthly gross income.
–  If income is earned on-reserve:
Monthly gross income = Total income + 25%
•  To get a more accurate picture of what kind of mortgage you can
afford, go the BMO website
–  www.bmo.com >> Mortgages >> Select “Tools & Calculators”
or speak with a BMO mortgage specialist.
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Example - $150,000 Home
Down payment:
–  $7,500
Mortgage:
–  $142,500
Monthly mortgage payments:
–  $823.93*
See how it feels:
–  Save the difference between
your current rent and your
potential mortgage amount
•  See how comfortable it
feels
•  Saves for a down
payment
•  $300 saved a month
means $7,500 in 2 years
Example based on 5-yr fixed closed rate of:
5.44%, less 0.50% = 4.94%
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Questions?
Contact Us
Jason M. Cameron
Director, Aboriginal Banking, Ontario Regional Division
BMO Bank of Montreal
180 Kingston Road East
Ajax, ON L1Z 0C7
Tel: 905-426-6528
Cell: 905-767-4166
Fax: 905-426-5392
Email: [email protected]
www.bmo.com/aboriginalbanking
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