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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

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