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ARTICLE · 05 APRIL 2012

New Mortgage Underwriting Expectations For Federally Regulated Financial Institutions

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In recent months, the Minister of Finance, the Hon. Jim Flaherty, and Bank of Canada Governor Mark Carney have expressed concern about the high level of Canadian household debt, which has risen significantly in a prolonged low interest rate environment.

CanadaFinance and Banking
Robert Elliott
Robert Elliott
Caitlin Fell
Caitlin Fell
Marvin Mikhail
Marvin Mikhail
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In recent months, the Minister of Finance, the Hon. Jim Flaherty, and Bank of Canada Governor Mark Carney have expressed concern about the high level of Canadian household debt, which has risen significantly in a prolonged low interest rate environment.

To combat the risk of Canadian consumer indebtedness "evolving into problems for the financial sector", on March 19, 2012 the Office of the Superintendent of Financial Institutions (Canada) (OSFI) released for comment draft Guideline B-20 – Residential Mortgage Underwriting Practices and Procedures (the "Guideline"). This Guideline addressing OSFI's expectations for federally regulated financial institutions (FRFIs) when – in Canada or internationally – they engage in residential mortgage underwriting, the purchase of residential mortgage loan assets and the issuance of mortgage default insurance. OSFI has requested comments on the Guideline by May 1, 2012. Residential mortgage underwriting is a focus not only in

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