Interest on US mortgage loan paid to Canadian

[jam4413]

Situation: I am a Canadian resident and have made a loan (secured by a mortgage) to my nephew in Massachusetts. He makes monthly P+I payments to me.

Questions: Are the interest payments subject to withholding tax, or are they exempt pursuant to the Canada-US tax treaty? If exempt, do I still need to file a US 1040NR? I assume that if my nephew wants to claim the mortgage interest deduction, I will have to provide him the Form 1098, and also file the lender's version with the IRS. If that's the case will I then need to file a 1040?

And finally, am I going to have to file a Mass return in any event?

Thanks, and any full or partial answers greatly appreciated.