New Mortgage Restrictions Approach

Change-Ahead-OSFI-GuidelinesMany of OSFI’s proposed mortgage underwriting guidelines may be coming soon to a bank near you.

An OSFI spokesperson told us on Wednesday, “We are still aiming for a late June (or) early July release.”

At that point, its mortgage underwriting “guidelines” will be final, it says.

The spokesperson added, “The cover letter issued at the same time as the guidance will lay out timelines for implementation of the various elements, and will include a summary of the comments we received.”

OSFI says the guidelines will come into force sometime after they are released, but it didn’t have a timetable yet. We get the sense it won’t be too far down the road.

OSFI also noted that it talks to financial institutions regularly, and told us they are “prepared” for what’s coming.


Rob McLister, CMT

  1. So the comments are just being released as part of the final guidelines? I don’t think they fully grasp the point of comments. Why bother commenting if they won’t actually be considered?
    I support these new regs but that’s pretty arrogant.

  2. I sincerely hope they consider that these new restrictions (i mean “regulations”) are coming at the top of the market. Its already slowing down in most of the country apart from TO, and the risk is very real that these changes will exacerbate the decline.
    In particular, re-qualifying every renewal could be disastrous for many people. If you own a home and become self employed? Denied, no income.
    If you own a home and get laid off, even with a fortune in savings that would allow you to make the payments for several years? Denied, no income.
    If your market declines in value?
    Denied, no equity.
    Hope sanity prevails.

  3. “I sincerely hope they consider that these new restrictions (i mean “regulations”) are coming at the top of the market.”
    So when do you suggest the right time would be?

  4. Interesting question…
    If one allows oneself to become dependent upon ever increasing amounts of crack, then whose fault is it when the crack gets taken away? The person who let you have the crack in the first place, or yourself?
    Perhaps it really is the dealer’s fault. I dunno. But I think one has to accept some personal accountability.

  5. Before the unsustainable increase of course.
    It is ridiculous that borrowed down payments and “skip a payment” schemes were allowed to continue for so long for insured mortgages.
    Too late now of course. Better late than never. That said, I still think the forced re-qualification is crazy.

  6. I suspect that this “requalification” thing was put out there so they could get everyone’s knickers in a knot, then not implement it and show some compromise.
    I wouldn’t worry.

  7. It’s bad for brokers if this idiotic policy causes forced sales and a crashing market. Lower home price means smaller mortgages and fewer refis.

  8. Not sure how all this effects me but was in the stages of selling home and moving to area which would have a lower mortgage. Since moving to Calgary Alberta have acquired four horses and need acres. Was making six figure yearly salary, working on one year severence package and now am told most likely can not get mortgage for new place. Will likely be employed again but need time to evaluate the market. This has already effected me and it is not in place and this is concerning to my present situation.

  9. Hey Wayne,
    If you are still wanting to move forward and are feeling hung up a solution may exist…
    Sounds like you need a bridge to get you through the unemployed period. If you are in a low ratio position… namely at least 20% + equity, your situation would most likely fit a B lender or a MIC fund. Who would most likely look at this file for you and if you pay a rate premium for a fully open pre-payment could look at instituational money after your employment continues.
    Depending on the amount left in your severence your lender may also look at holding a years worth of payments upfront as a payment reserve to mitigate the temporay un-employment and focus on your past doucmentable income stability.
    Just some thoughts on your situation… Check with Rob McLister he might have some other solutions for you!

  10. …as usual, the gov’t is shifting the burden of accountability on the consumers when it should really rest on the greedy bankers.
    Seriously…these policy makers are so out of touch with reality that they are 4 years late into the game.
    When a self inflicted slow down happens…what will change again to win market share? Yup…u got it…policies and rates!

  11. Are you worried about the new
    mortgage rules again?
    not to worry!
    there is a silver lining:
    macro world-wide economic changes
    yet to come in 2012 will likely
    result in the reversal of most of
    these ‘changes’, and also
    spur mortgage rate incentives
    of all types…
    Watch for them in the fall of 2012 !!

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