Genworth Financial Tightens Guidelines

Genworth-Financial-Canada Genworth Financial, Canada’s 2nd biggest mortgage default insurer, is reportedly making several key changes to its insurance offerings, effective April 18.

The changes will affect new borrowers with less than 20% equity/down-payment, who use a lender that insures with Genworth.

Among other things, Genworth is reportedly:

  • Shelving its high-ratio rental and Credit Assist programs.
  • Lowering its maximum TDS guideline from 44% to 42% for all products
  • Increasing credit score requirements for its Cash-Out Refinance program, from:
    • 650 to 700  (for 90.01-95% LTV applications)
    • 600 to 660  (for 85.01-90% LTV applications)
  • Imposing new credit score minimums for high-rise (4+ floors) condominiums of:
    • 700  (for 90.01-95% LTV applications)
    • 660  (for 85.01-90% LTV applications)

Genworth did not previously have credit score minimums specific to high-rise condos.

  • Increasing credit score requirements for its Business For Self (Alt. A) product, from:
    • 650 to 700  (for 85.01%-90% LTV applications)
    • 650 to 680  (for 80.01%-85% LTV applications)
    • Genworth is eliminating LTV’s over 90% (previously it allowed BFS applicants to borrow up to 95% LTV)

Genworth said it will accept applications for the above programs (under the old guidelines) until April 17.

Collectively, these are significant changes for Genworth. So far, the only explanation we’ve seen from them is that the moves were due to “changes in the Canadian economy and housing markets.”  We’re hoping to get a bit more clarity next week on the “why” factor.

One thing seems clear:  If CMHC keeps it’s own guidelines as-is, Genworth will likely lose additional market share to the country’s number one insurer.

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Sidebar: When evaluating an applicant against the above credit scores, Genworth will “average the scores pulled from both credit bureaus for each borrower, and the recommended score requirement will apply to all borrowers on the application.”

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