1st Session, 36th Parliament,
46-47-48 Elizabeth II, 1997-98-99

The House of Commons of Canada

BILL C-66

An Act to amend the National Housing Act and the Canada Mortgage and Housing Corporation Act and to make a consequential amendment to another Act

      Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

R.S., c. N-11; R.S., c. 8 (1st Supp.), c. 20 (2nd Supp.), c. 18 (3rd Supp.), c. 25 (4th Supp.); 1991, c. 47; 1992, cc. 1, 32; 1994, c. 35; 1995, c. 47

NATIONAL HOUSING ACT

R.S., c. 20 (2nd Supp.), s. 7, c. 25 (4th Supp.), s. 1(2); 1992, c. 1, s. 142(1) (Sch. V, item 23), c. 32, s. 5; 1994, c. 35, s. 38

1. (1) The definitions ``approved loan'', ``condominium unit'', ``cooperative housing project'', ``cost of construction of a family housing unit'', ``cost of conversion'', ``designated area'', ``farm'', ``Indian'', ``Indian band'', ``lender'', ``lending value'', ``mortgage'', ``multiple-family dwelling'', ``owner'', ``rent reduction fund'' and ``reserve'' in section 2 of the National Housing Act are repealed.

R.S., c. 25 (4th Supp.), s. 1(2); 1992, c. 32, s. 5

(2) The definitions ``approved lender'', ``housing project'', ``insured loan'' and ``rental housing project'' in section 2 of the Act are replaced by the following:

``approved lender''
« prêteur agréé »

``approved lender'' means a person designated as an approved lender by the Corporation under section 5 ;

``housing project''
« ensemble d'habita-
tion »

``housing project'' means

      (a) any building or movable structure, or any part thereof, that is intended for human habitation,

      (b) any property that is intended to be improved, converted or developed to provide housing accommodation or services in support of housing accommodation, or

      (c) any property that is associated with housing accommodation, including, without limiting the generality of the foregoing, land, buildings and movable structures, and public, recreational, commercial, institutional and parking facilities;

``insured loan''
« prêt assuré »

``insured loan'' means a loan that is insured by the Corporation under Part I ;

``rental housing project''
« ensemble d'habitation locatif »

``rental housing project'' means a housing project occupied or intended to be occupied primarily by a person other than the owner;

(3) Section 2 of the Act is amended by adding the following in alphabetical order:

``person''
« personne »

``person'' includes a group of persons, an organization, a municipality or a department or agency of the government of Canada or of a province;

1992, c. 32, s. 6

2. Section 3 of the Act and the heading before it are replaced by the following:

Debts treated as loans

2.1 (1) For the purposes of this Act, a transaction by which a person becomes indebted to a creditor is to be treated as the making of a loan from the creditor to the person.

Persons treated as owner

(2) If the Corporation is of the opinion that the circumstances so warrant, a lessee, a purchaser under an agreement or an occupant may be treated as an owner for the purposes of this Act.

PURPOSE

Purpose

3. The purpose of this Act, in relation to financing for housing, is to promote housing affordability and choice, to facilitate access to, and competition and efficiency in the provision of, housing finance, to protect the availability of adequate funding for housing at low cost, and generally to contribute to the well-being of the housing sector in the national economy.

R.S., c. 8 (1st Supp.) s. 1, c. 20 (2nd Supp.), s. 8, c. 25 (4th Supp.), ss. 2 to 15, 17 to 19; 1992, c. 32, ss. 7 to 24, 26 to 28; 1995, c. 47, s. 1

3. The headings before section 4.1 and sections 4.1 to 21.5 of the Act are replaced by the following:

APPROVED LENDERS

Designation

5. (1) The Corporation may designate any person as an approved lender for the purposes of this Act.

Term of designation

(2) The designation of an approved lender and any renewal of that designation are in force for any period that the Corporation may specify.

Conditions and restrictions

(3) The Corporation may, at any time, establish conditions and restrictions applicable to an approved lender.

Suspension

(4) The Corporation may, at any time, suspend or cancel the designation of an approved lender.

Fees

(5) The Corporation may establish schedules of fees payable by approved lenders in relation to their designation and supervision.

Powers of approved lenders

6. (1) Subject to subsection (2), an approved lender who is subject to the jurisdiction of Parliament may, notwithstanding any restrictions on the power of the lender contained in any other statute or law,

    (a) make loans on such terms and conditions as are provided for by or under this Act;

    (b) acquire from the Corporation any secured obligation in favour of the Corporation that is to be insured or guaranteed by the Corporation after it is acquired;

    (c) dispose of or acquire insured loans together with the security taken in respect of those loans;

    (d) pledge an insured loan with the Corporation or an approved lender to secure the repayment of money borrowed, and borrow money from the Corporation or an approved lender on the security of an insured loan;

    (e) administer an insured loan for and on behalf of the holder of the loan; and

    (f) on such terms and conditions as are specified by the Corporation, act as agent for the Corporation in the exercise of any of the Corporation's powers and functions under Part I and in the making or administering of loans that the Corporation is authorized to make.

Restriction of powers

(2) The Corporation may restrict the powers that an approved lender may exercise under subsection (1).

PART I

HOUSING LOAN INSURANCE, GUARANTEE AND PROTECTION

Definition of ``housing loan''

7. In this Part, ``housing loan'' means a loan that

    (a) relates to a housing project;

    (b) is secured at least in part by security on or affecting a housing project or by an agreement relating to the use, occupancy or disposal of a housing project;

    (c) is made for the purpose of acquiring a financial interest in a person who, directly or indirectly, owns, leases or operates a housing project; or

    (d) is made for the purpose of refinancing a debt that the Corporation is of the opinion relates to a housing project or to a financial interest referred to in paragraph (c).

Insurance of loans

8. (1) The Corporation may provide insurance against risks relating to housing loans.

For whose benefit

(2) For lenders, the purpose of insuring housing loans is to indemnify lenders in the event of default by borrowers. The obligations of borrowers or other persons are not released or discharged by that insurance or indemnification.

Payments by Corporation for completion

9. If the Corporation has insured a loan that has been provided to finance the completion of work relating to, or the supply of materials for, a housing project and the work has not been completed, the materials have not all been supplied or the work or materials have not been fully paid for, the Corporation may make loans or payments for the completion of the work or the supply of the materials or for the satisfaction of claims in respect of the project.

Avoiding or curing defaults

10. (1) The Corporation may make payments to approved lenders or to holders of insured loans, and may make loans or payments to borrowers or their assignees, for the purpose of avoiding or curing, in whole or in part, default under insured loans or facilitating variation of the terms of payment of insured loans, or for any other purposes that the Corporation considers appropriate to protect its interest as an insurer.

Subrogation

(2) If the Corporation makes a payment to an approved lender or holder of an insured loan under subsection (1), the Corporation is subrogated, to the extent of the amount of the payment, to all the rights and interests of the lender or holder in respect of that amount, and may maintain an action in respect of those rights and interests in the name of the lender or holder or in the name of the Corporation. Any money recovered by the lender or holder must first be applied against money owing to the lender or holder on account of the insured loan.

Waiver

(3) The Corporation may waive the right of subrogation referred to in subsection (2).

Maximum total

11. Notwithstanding anything in this Act, the total of the outstanding insured amounts of all insured loans may not exceed the sum of

    (a) one hundred and fifty billion dollars, and

    (b) any additional amounts authorized by Parliament under an appropriation Act or other Act of Parliament on or after April 1, 1997.

Adminis-
tration of housing loans

12. The Corporation may administer a housing loan by agreement with the holder of the loan.

Corporation may lend

13. The Corporation may make a housing loan in any of the following circumstances:

    (a) where the loan would otherwise not be available to the borrower;

    (b) where the Corporation intends to

      (i) make a contribution to the borrower,

      (ii) make another loan, or advances on another loan, to the borrower, or

      (iii) forgive any indebtedness of the borrower to the Corporation; or

    (c) where the Corporation is a party to an agreement respecting the operation of the housing project to which the loan relates.

Guarantee

14. The Corporation may guarantee payment of any or all principal or interest, or both, in respect of securities issued on the basis of housing loans.

Maximum total

15. Notwithstanding anything in this Act, the total of the outstanding guaranteed amounts of principal, for all issues of securities in respect of which guarantees that have been given under section 14 are in force, may not exceed the maximum total amount provided for in section 11.

Interest rate protection

16. The Corporation may provide protection against the effects of changes in interest rates for housing loans.

Dealing in obligations by Corporation

17. The Corporation may

    (a) acquire housing loans or interests in housing loans;

    (b) make loans to the holders of housing loans;

    (c) sell any obligation held by the Corporation and may, under an agreement made with the purchaser, continue to administer the obligation; and

    (d) issue securities based on housing loans.

Reinsurance

18. (1) The Corporation may obtain reinsurance with respect to the risk covered by the Corporation in respect of any insurance, guarantee or other protection provided by the Corporation under this Part.

Payment to Receiver General

(2) The Corporation may pay to the Receiver General amounts determined in accordance with the Corporation's corporate plan approved under section 122 of the Financial Administration Act to compensate Her Majesty for Her exposure to the risks covered under this Part by Her agent the Corporation. Those amounts are, for the Corporation, expenses of carrying on business under this Part.

Terms and conditions

19. The Corporation may

    (a) set the terms and conditions on which it exercises any powers or functions under this Part, including terms and conditions relating to the payment of claims in respect of any insurance, guarantee or other protection provided by the Corporation under this Part; and

    (b) establish schedules of premiums, fees and charges for anything done in the exercise of any powers or functions of the Corporation under this Part.

Agents

20. The Corporation may authorize an approved lender to act as agent for the Corporation in the exercise of any of its powers or functions under this Part, including in a situation involving a loan made or administered by the lender.

Establish-
ment of funds

21. (1) The Corporation must establish and maintain funds to provide for claims, losses, expenditures and costs relating to the conduct of its business under this Part.

Corporate plan

(2) The Corporation's corporate plan required under section 122 of the Financial Administration Act must contain a proposal that the Corporation's profits from the conduct of its business under this Part that are not credited to a fund established under subsection (1) be used for one or more of the following purposes:

    (a) the capitalization of the Corporation's business under this Part;

    (b) the payment of a dividend to the Consolidated Revenue Fund;

    (c) the purposes of this Act or the Canada Mortgage and Housing Corporation Act or any other purpose authorized by Parliament relating to housing; and

    (d) retention.

Implemen-
tation of proposal

(3) The Corporation is authorized to implement a proposal referred to in subsection (2) after the proposal is approved under section 122 of the Financial Administration Act as part of the Corporation's corporate plan.

Non-
application

(4) Section 29 of the Canada Mortgage and Housing Corporation Act does not apply to profits from the conduct of the Corporation's business under this Part.

R.S., c. 25 (4th Supp.), ss. 20, 21; 1991, c. 47, s. 738; 1992, c. 32, ss. 29 to 31

4. The heading ``HOUSING FOR RENTAL PURPOSES AND FINANCIAL PROVISIONS'' before section 22 and sections 22 to 31 of the Act are replaced by the following: