Financial requirements

What is it?

The Mortgage Commitment and/or CMHC Certificate of Insurance (COI) states that the lender may request financial updates from the Borrower annually or when necessary. The First National Mortgage Commitment Letter mandates annual Financial reporting within 120 days of the corporate fiscal year end. If the Borrower is an individual, reporting is mandated each calendar year.

The specific required documents include:

Financial Statements from the Borrower and the Guarantor(s):
- Balance Sheet and supporting schedules
- Detailed statement of Income and Expenditures
- Statement of Change in Cash Flow
Net Worth Statements in the case of an individual Borrower or Guarantor
Operating Statements relating to the property, including:
- Detailed statement of Income
- Expenditures and supporting schedules
Current Rent Roll for the property

In addition to the statements above:

Confirmation that there has been no change of control, amalgamation, merger, reorganization or change of name
Confirmation that no further encumbrances have been registered against the property

Why is it important?

The financial requirements help to ensure that:

Guarantors have filed taxes and are up to date on filing
The lender has visibility into properties that the borrower may have with other lenders that are approaching renewal
Nursing Homes/LTC facilities have been inspected and have up to date licenses

View our other mortgage servicing areas

Undertaking

Post funding, we work with borrowers to meet the specific milestones and obligations outlined in the mortgage contract.

Insurance requirements

On an annual basis, we verify that all insurance requirements outlined in the original loan documents are being met to ensure adequate coverage for the property.

Property tax

For borrowers that choose to pay their own property taxes, we work in collaboration with the tax department to show proof of timely and accurate payment.

Payments, pre-payments and banking changes

If alterations to verified payment dates or banking information need to be made, we work to verify and implement those changes, so information remains current and execution proceeds smoothly.

Mortgage information

For both annual accounting and general mortgage management, we provide three key statements including the Annual Statement, Mortgage Information Statement and Amortization Schedule.

Your commitment letter

The commitment is a contract between First National and the Borrower. First National uses this commitment as the source for all decision making throughout the duration of the mortgage amortization period. The commitment covers everything from payment type (fixed, floating, amortizing, interest only), pre-payment parameters, insurance requirements, type of annual review documents to be collected, undertaking requirements, etc.

Why is it important?

It is important to note that the commitment is attached to the mortgage (rather than the borrower) for the entire amortization period.

If the loan is assumed the current Borrower is replaced by the Purchaser of the property.
If the loan is renewed the terms and conditions of the commitment are extended for a new term in accordance with the renewal agreement.
If the loan is refinanced the terms of the existing commitment is discharged and new terms are registered with the mortgage.