Genworth Takes its Own Tack on Debt Ratio Policies

underwritingLast week we wrote about how CMHC will be rolling out more conservative debt ratio calculation methods by year-end.

On Friday we learned that Genworth Canada may not be adopting all of those policies, at least not for now.

In an emailed statement to CMT, Genworth Canada‘s Chief Risk Officer, Craig Sweeney said:

The debt ratio guidelines recently announced by CMHC do not apply to Genworth.

We have our own underwriting guidelines and policies that reflect our 18 years of experience underwriting high-ratio loans for mortgage insurance. Our underwriting guidelines are fluid and will evolve over time based on acceptable market practices and our current risk appetite.

There have always been minor differences between how CMHC and Genworth view risk and we expect this to continue going forward.”

As for Canada’s other private insurer, Canada Guaranty, it says it is “currently reviewing the new debt ratio guidelines.”

OSFIThere’s a chance, however, that OSFI (which regulates all three insurers) may eventually require CMHC, Genworth and Canada Guaranty to use similar inputs in their GDS/TDS calculations. We wouldn’t be surprised to see such guidance later this year.

Moreover, the major banks and many smaller lenders will probably operate under one guideline for all insurers—which means they’ll likely follow CMHC’s policies. But there could certainly be exceptions among non-OSFI regulated lenders.

Rob McLister, CMT

  1. with news of household debt being paid down, and no news of higher delinquency, this sounds like a sound decision by GW.

  2. Insurers should always allow for common sense exceptions when warranted. I salute Genworth for not going with the flow on this one.

  3. Take a look around us. Spending is slowing. There is such a thing as being too tight. If we don’t relax the home buying guidelines we may be in for a stalled economy…

  4. Mortgage brokers only lament the changes to guidelines because it takes money out of their pocket. You all claim that you are worried about your clients, but that is not truly the case – people will still rent until they can afford to buy, just as they have always done since the dawn of home ownership.
    15 years ago debt service ratios were required to be at 32/40 – period. The hey days of brokers making an easy buck are gone, adjust your business strategy and stop complaining.

  5. As a broker who cares about my clients’ well being, I take offence to your slanderous and sweeping statement. I’m sure many of my colleagues would agree.
    When you say “you all”, surely you can’t be referring to all brokers?
    If you are painting all brokers with this same brush then your comments are not worth reading.

  6. Simply by reacting to the comment you’ve proven you’ve read them and have wasted your time. I will agree. OBVIOUSLY we (the broker community) care about our bottom-line and our earnings and OBVIOUSLY a tighter market with tighter lending will OBVIOUSLY impair our bottom line. However NOT obviously is that a bad thing for the market itself and NOT obviously do all broker agree/disagree with the changes. Finally, “you brokers” – I’m not offended by this, because it doesn’t take a genius to make these links therefore the writer, Malcolm, has clearly proven that he is far far away from being a genius. Just a hack on the net lamenting he’s full-time employed making $45,000 in a doldrum 9-5 job while I make 5x that as a mortgage agent working half the number of hours but lashing out at “us” brokers.
    Pity, the fool.

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