On April 20, 2007, Canada’s Government announced that it would create the $300 million First Nations Market Housing Fund (Fund). This Fund was developed to facilitate and broaden the range of housing options for residents of First Nations communities so that they may have the same housing choices and opportunities as people in non First Nation Communities.
The Fund will build on the work of the Assembly of First Nations and the successes of innovative communities in order to bring more market-based housing to First Nations in a manner that respects reserve lands are communally owned.
There are a number of unique barriers to the existence of home ownership and rental housing markets on-reserve. These barriers are related to factors such as the unique land tenure regime on-reserve, the remote location of many on-reserve communities and limited access to private financing in the form of mortgages or housing loans.
One of the main impediments to market-based housing is a lack of access to financing for housing on-reserve because of the Indian Act provisions which limit seizure of property on-reserve to a First Nations community or its members. As a result mortgage security is not available.
The new Fund will establish a Credit Enhancement Facility. This will help individuals on-reserve and on settlement lands where appropriate, to obtain loans, where their First Nation meets certain criteria, such as a demonstrated ability to manage their finances, loans and housing.
Once the Fund qualifies a First Nation, the First Nation will make an arrangement with a lender or lenders to allow its members to obtain housing loans. The First Nation will guarantee the members’ housing loans.
Once the First Nation has made the arrangement with the lender or lenders, members of that First Nation will be able to apply for a housing loan, in a similar way households do off-reserve, with similar lending terms and conditions. Lenders will review the value of the house, the borrower’s income and the borrower’s ability to repay a loan when their other expenses are considered. Assuming the borrower meets the lender’s criteria, he or she would be approved for a loan.
The Fund will provide a partial financial backing for the Lender. The lender can access the Fund if the borrower fails to repay the loan and the First Nation does not honour its obligation to step in, using its own resources, to remedy the default.
The Fund will also establish a Capacity Development Program which will support the development of eligible First Nations to the stage where they may be able to qualify for the Credit Enhancement Facility. A First Nation who intends to move or expand market-based housing and who applies to the First Nations Market Housing Fund may be eligible for the Capacity Development Program, depending on available resources.
The Fund was established by March 31, 2008 through an indenture of trust which sets out the structure, authorities, limits and basic accountabilities for the Fund. The Fund is intended to be a self-sustaining entity which will deal with First Nations, lenders, loan insurers and others to facilitate market-based housing over the long term.
The Fund is overseen by nine Trustees, including a chairperson, appointed by Ministers and drawn from three groups. Three are from First Nations, and six equally are from the private sector finance community and the federal government community.
Canada Mortgage and Housing Corporation (CMHC) manages the day-to-day activities of the Fund, under the oversight of the Trustees.
The nine Trustees provide governance and leadership, and are stewards of the Fund. The Trustees are responsible for overseeing the Fund’s governance policies and practices and they are responsible for guiding the direction of the Fund to achieve its objectives. As stewards of the Fund, the Trustees oversee the management of the business affairs of the Fund.
The Trustees of the FNMHF represent a broad range of professional and business skills and experience and are committed to assisting First Nations in developing market-based approaches to housing on-reserve. The Trustees represent the Fund’s interests using their diversity of experience.
It is projected that the Fund will assist with the generation of some 25,000 housing units over ten years.