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In 2012, the Ontario Superintendent of Financial Institutions established its new Guidelines for Residential Mortgage Underwriting Practices and Procedures.  This has had a significant impact on our economy as well as the housing market and basic family economies.  Below are resources to assist you in understanding these new lending criteria.  The criteria became enforceable January 1, 2013.  

Believe it or not, if you qualified for a mortgage 3 years ago, for example; under the new guidelines, you may not qualify for a mortgage now.  If you already have a mortgage, you are somewhat grandfathered in.  Call us for a review of your current mortgage if you have any concerns or would like some additional understanding.

All federally regulated financial institutions (FRFIs) are expected to fully comply with the Guideline by the end of fiscal year 2012/13, and where possible, comply with the principles and expectations set out in the Guideline as of the date of its release.

Summary of Principles:

         Principle #1: FRFIs that are engaged in mortgage underwriting and/or purchasing should have a comprehensive, Board-approved Residential Mortgage Underwriting Policy (RMUP) that is linked to the FRFI’s Board-approved risk strategy and risk management framework, and the Board should ensure that it is being complied with.

         Principle #2: FRFIs should perform reasonable due diligence on the borrower to assess the borrower’s identity, background and demonstrated willingness to service its debt obligations on a timely basis.

         Principle #3: FRFIs should adequately assess the borrower’s capacity to service debt on a timely basis including taking steps to verify the borrower’s income and the establishment of appropriate debt serviceability metrics.

         Principle #4: FRFIs should have sound collateral management and appraisal processes for the underlying mortgage properties. Non-amortizing Home Equity Lines of Credit (HELOCs) must be limited to a maximum authorized LTV ratio of less than or equal to 65%.

                  Principle #5: FRFIs should have effective credit and counterparty risk management practices and procedures that support residential mortgage and underwriting and asset portfolio management, including, as appropriate, mortgage insurance. Where a FRFI purchases mortgages that have been originated by a third party, the FRFI should ensure that the underwriting practices of the third party are consistent with its own practices, its RMUP and the Guideline, and not rely solely on the attestation (i.e., a representation and warranty) from the third party.

Link to view the Guidelines from the Office of the Superintendent of Financial Institutions Canada

Link to view Financial Stability Board's FSB Principles for Sound Residential Mortgage Underwriting Practices


Choose a Mortgage Broker Who Understands

If you are looking to refinance your mortgage in the next year or two, or are looking to purchase a home, contact Leslie Fallaise for a full, no obligation review of your mortgage application.  I offer Pre-Approvals that will be continually renewed and monitored on an ongoing basis so that you are prepared when the time comes to complete the mortgaging process.  Mobile Phone Numbers: (705) 878-2774 or (416) 231-2422.  Email: