The federal government launched a $300-million housing fund Monday aimed at helping First Nations people buy their own homes on reserves.
Because land on reserves in Canada is owned by band councils, not by individuals, banks have been reluctant to issue mortgages to potential homeowners.
The federal government hopes to deal with the problem with its $300 million First Nations Market Housing Fund, which will be used as collateral to offset the risk to financial institutions of a homeowner defaulting on a mortgage.
Individual band members can work with participating First Nations reserves to get a mortgage.
“The First Nations Housing Market Fund will remove barriers to home financing so people can feel that their hard work is paying off,” Indian and Northern Affairs Minister Chuck Strahl said in Ottawa.
The fund will allow more First Nations people to own their homes on reserves or settlement lands, he said, adding that it’s estimated the fund will help build 25,000 new homes in 10 years.
“Our emerging middle class needs to have access to the same quality of life that other Canadians take for granted,” said Grand Council Chief John Beaucage, the fund’s chairperson.
The first bank to participate in the fund will be the Bank of Montreal. Steve Fay, the bank’s national director of aboriginal banking, said the lender has been working with First Nations to help provide affordable housing for more than a decade and expects other banks to get involved too because the risk is low.
The fund will be overseen by nine trustees, including a chairperson appointed by the ministers of Human Resources and Social Development and Indian and Northern Affairs.
In the short term, the Canada Mortgage and Housing Corp. will manage the fund’s day-to-day activities under the trustees’ oversight, the government said. But the plan is for the fund to become a First Nations-controlled entity in the long term, the government said.