Canada Guaranty Mortgage Insurance Benefits

Archive for 2015

New Minimum Down Payment Parameters Effective February 15, 2016

Minimum Down Payment Parameters Effective February 15, 2016

On December 11, 2015, the Minister of Finance announced a new policy impacting the minimum down payment requirement for government-backed mortgages on properties with a purchase price above $500,000 and less than $1 million. Canada Guaranty believes these guidelines will continue to promote the long-term health and stability of the Canadian housing market and supports the following guidelines.

  • Effective February 15, 2016, the minimum down payment for new insured mortgages will increase from 5 per cent to 10 per cent, for the portion of the house price above $500,000. The 5 per cent minimum down payment requirement remains unchanged for properties up to and including $500,000.
  • The new down payment parameters will also apply to insurance applications received between December 11, 2015 and before February 15, 2016, with a closing date after July 1, 2016.
  • Pre-December 11, 2015 (“old”) parameters continue to apply to applications received between December 11, 2015 and before February 15, 2016, where the closing date falls on or before July 1, 2016, and to applications received by Canada Guaranty on or after December 11, 2015, where a valid purchase and sale agreement was dated before December 11, 2015, regardless of the closing date.

We continue to implement system changes that will ensure applications with the following characteristics are automatically referred for underwriter review:

  • The purchase price is greater than $500,000
  • The closing date is after July 1, 2016
  • The new minimum down payment requirement is not met

For additional reference, information regarding the implementation of these new guidelines, as issued by the Department of Finance, can be found here: http://www.fin.gc.ca/n15/15-088-eng.asp. We remain dedicated to ensuring our partners experience a seamless transition and encourage you to contact a member of our team with any questions.

Thank You,


Mary Putnam | Vice President, Sales and Marketing
Canada Guaranty Mortgage Insurance Company

Telephone 416.640.8936 
Toll Free 866.414.9109 ext. 8936 
E-mail mary.putnam@canadaguaranty.ca

Housing Market Trends


Year-over-Year Percentage Changes (Oct. 2015)
To view additional monthly aggregate house price data for 13 of Canada’s major cities, please visit the Brookfield RPS House Price Index site.

Sales-New Listings (Oct. 2015)

Source: CREA (The Canadian Real Estate Association)

HOUSING MARKET SUMMARY

  • While overall house prices in Canada are up 8% from October 2014, virtually all of the appreciation can be attributed to three cities: Vancouver (+14%), Toronto (+11%) and Hamilton (+11%).
  • Beyond these three cities, house prices remain relatively flat in all other major markets across Canada.
  • Similar trends can be observed at a provincial level, where house price appreciation continues to be strong in BC (+12%) and Ontario (+9%), but relatively flat in all other provinces.
  • From a supply and demand perspective, British Columbia and Ontario are clearly identified as seller’s markets, while the rest of the country is much more balanced.

NOTE: Traditionally, a buyer’s, balanced or seller’s market is defined by the following ranges of sales-to-listings percentages:

< 35% Buyer’s Market (More homes are for sale than there are buyers)
= 36-54% Balanced Market
> 55% Seller’s Market (More buyers available than there are homes for sale)

NOTE: Click on the image of the map to download/print in PDF format.

The Homeownership Solutions Program


Not for Sale Sign

The Homeownership Solutions Program
Helping More Borrowers Stay Homeowners


Designed to help borrowers who are experiencing unforeseen short-term financial difficulty, the Canada Guaranty Homeownership Solutions Program provides lenders with greater flexibility to offer their borrowers assistance while satisfying the lending institution’s requirements and the borrower’s temporary challenges.

For certain situations, lenders have the ability to implement solutions immediately and without approval from Canada Guaranty, as long as the parameters defined are not exceeded. Should the lender desire input from Canada Guaranty, the Loss Management team is always available and ready to work with the lender to assist a borrower in need. When assistance is required on a lender approved workout, or should the solution exceed the lender’s parameters and need Canada Guaranty’s approval, it will be important to provide us with the necessary information so that we can complete our review and recommendations as efficiently as possible. A workout request form is available to our lenders to assist them in providing us with the necessary information and help expedite the process.

Below is an example of an actual borrower who received support and benefitted as a result of the collaborative efforts between their lender and Canada Guaranty.

Reason for Assistance
(Borrower Circumstance)
Lender’s and/or Borrower’s Request Implemented Workout Solution

ILLNESS

The mortgagor (homeowner) is married with five children and is the sole income earner. He had been awaiting a date for lifesaving surgery and was expected to miss six months of work during his recovery. He neither had benefits nor insurance coverage through his employer.

Looking for assistance with mortgage payments during his recovery.

CONCERNS

  • Canada Guaranty’s discussions with the lender and borrower revealed that the mortgage had only been funded a short time, but that the borrowers had done business with our lender partner for a long time and payments had never been an issue. To date, all of the mortgage payments were being maintained. It was also confirmed that once recovered, the borrower would resume his current full-time employment and be able to continue to manage his mortgage.
  • The concern of the borrower and lender was that, while the surgery would happen before year end, a definite surgery date was not yet known. The borrower would be provided seven days’ notice when a date was provided by the hospital.

THE SOLUTION

  • Canada Guaranty provided an exception to support the workout and a pre-approved capitalization for up to six months of mortgage payments. Once the surgery occurred, the lender applied this workout solution.
  • Providing a “pre-approved” workout eliminated the stress and worry of the borrower as he prepared for his upcoming surgery.





CANADA GUARANTY CAN HELP

The lender’s internal guidelines always supersede those offered by Canada Guaranty; however, in all cases, our Loss Management team is available to offer ongoing support, consultation and customized solutions to facilitate the successful implementation of a workout.

If your client or borrower is experiencing temporary financial hardship, please feel free to contact a member of our Loss Management team with any questions or to learn more about the Homeownership Solutions Program and the options available.

Contact the Loss Management Team:

Introduction from Andy Charles


Andy Charles

A Season of Change
Traditionally seen as a slower period following the busy spring and summer months in the mortgage industry, the fall season has supported an active housing market driven by the low rate environment and potential sellers listing their homes before the realities of winter set in across most of Canada. This time of year represents an important period of reflection and planning at Canada Guaranty. It’s an opportunity to review the distance travelled over the past 11 months, and consider what is required to maintain the highest level of service to support our partners’ continued success.

A new Federal Government assumed power in early November and the importance of Canada’s housing market to our economy will undoubtedly ensure it remains under close oversight by the new government. Canada Guaranty is a federally regulated company and is in regular communication with the Office of the Superintendent of Financial Institutions and the Department of Finance. We anticipate this process continuing under the new leadership.

No matter the season, our philosophy remains constant and that is to enhance each customer’s experience by listening and delivering exceptional service. On behalf of the Canada Guaranty team, thank you for giving us the opportunity to prove this commitment, every day.


Wishing you the very best for the Holiday Season!

Andy Charles
President and CEO
Canada Guaranty Mortgage Insurance Company

Introduction from Andy Charles


Andy Charles

Since our last issue, we were pleased to welcome two new lenders to our growing list of national partners and continue to deepen existing relationships by providing dedicated support to our customers. With each season comes change and, in recent weeks, our industry has continued to evolve with a variety of prudent mortgage underwriting protocols that reflect OSFI’s Guideline B-21.

Our organization adopts a balanced approach to supporting the Canadian housing market by promoting policies that encourage responsible homeownership and sustained strength in the housing industry, some of which include:

  • The direction of cash backs as a source of down payment
  • The implementation of maximum loan amounts under the Rental Advantage™ program
  • Enhanced requirements for information used to verify the reasonability of self-employed income
  • New mortgage loan documentation and retention requirements

Whether a lender, mortgage originator or insurer, we all share a vested interest in ensuring a sound and stable industry.

Regardless of the time of year, we are committed to delivering on our promise of responding to 90% of all applications within 90 minutes (and we’re proud to say we’ve been fulfilling this promise!). We’re open later during the week, available on Saturdays and our adjudication system continues to accept applications 22 hours a day. An experienced decision-maker is the first and last person you’ll speak with when calling our National Underwriting Centre, and across Canada our regional Sales and Underwriting teams work together to enhance your experience by providing personalized service, effective solutions and timely responses to your questions.


On behalf of the Canada Guaranty team, thank you for your continued support and the opportunity to earn your business every day. We wish you success and hope you enjoy some summer vacation. When you return, we’ll be standing by to support your business.

Andy Charles
President and CEO
Canada Guaranty Mortgage Insurance Company

The Homeownership Solutions Program


Helping More Borrowers Stay Homeowners
The Homeownership Solutions Program

“Life can be unpredictable and when short-term financial hardship occurs as a result of an unanticipated life event, early intervention can make all the difference in reaching a successful resolution. For borrowers who are highly motivated to maintain their homeownership and are receptive to working with their lender when experiencing financial difficulty, Canada Guaranty offers effective solutions to support the mortgagors in reaching a positive outcome.”

- Donna Parissi | Director of Loss Management, Canada Guaranty


Designed to help borrowers who are experiencing unforeseen short-term financial difficulty, the Canada Guaranty Homeownership Solutions Program provides lenders with greater flexibility to offer their borrowers assistance while satisfying the lending institution’s requirements and the borrower’s temporary challenges. The following scenarios represent real life examples of borrowers who received support and benefited as a result of the collaborative efforts between their lenders and Canada Guaranty.

Reason for Assistance (Borrower Circumstance) Lender’s and/or Borrower’s Request Implemented Workout Solution

Reduced Income

Mortgagor had an accident at work and had to go on short-term disability

Looking for assistance with mortgage payments during recovery
  • Canada Guaranty’s discussions with the lender and borrower ascertained that the mortgagor would be on short-term disability for a limited period of time to recover from the injury. Once recovered, the mortgagor would be able to return to full-time employment and resume their full income.
  • Based on input from the lender, a capitalization for two months of mortgage payments was applied, thereby removing all stress so that the mortgagor could focus on their recovery.

Severe property damage and mortgagor evacuated for required repairs

Following a fire, the mortgagor had to find temporary accommodations while the home was being repaired

Looking for assistance with mortgage payments during repair period; unable to manage both the mortgage and cost of temporary accommodations
  • Working with the lender, Canada Guaranty determined that an extended capitalization would be required to provide support to the mortgagor in these unfortunate circumstances.
  • This provided relief to the borrower on both a financial and personal level, removing the added stress of trying to manage both their mortgage and the temporary rent.









The lender’s internal guidelines always supersede those offered by Canada Guaranty; however, in all cases, our Loss Management team is available to offer ongoing support, consultation and customized solutions to facilitate the successful implementation of a workout.

CANADA GUARANTY CAN HELP
If your client or borrower is experiencing temporary financial hardship, please feel free to contact a member of our Loss Management team with any questions or to learn more about the Homeownership Solutions Program and the options available.

Contact the Loss Management Team:

Products + Solutions


SELF-EMPLOYED PROGRAM
Low Doc Advantage™

Further to OSFI’s Guideline B-21, new requirements for information used to verify the reasonability of income for self-employed borrowers became effective as of August 1, 2015. To ensure you are prepared for these changes, please take a moment to review the following important guidelines, which outline critical information to include with your client’s next application.

UPDATED GUIDELINES | Effective August 1, 2015

The Low Doc Advantage continues to be a program designed for borrowers with an established history of self-employment and a strong credit profile. In addition to satisfying existing Low Doc requirements and ensuring the borrower’s income is reasonable for the nature and tenure of the business:

  • Lenders are required to obtain the Notice of Assessment (NOA) from the most recent tax year, at the time of application, to confirm the income from line 150 and that there are no income tax arrears.
  • The following information must be included in the submission notes of the application, for each self-employed borrower:
  1. Income amount confirmed by line 150 on the most recent NOA.
  2. Gross revenue of the borrower’s business.
  3. Type of business being owned and operated (e.g. landscaping, bookkeeping, etc.).
  4. Ownership structure (e.g. sole proprietor) and the percentage of ownership.

To review all requirements and qualifying guidelines, please visit the Canada Guaranty website to download the Low Doc Advantage product sheet. Should you have any questions or wish to discuss your client’s unique circumstances, please do not hesitate to contact your dedicated Account Executive or speak directly with a member of our National Underwriting Team at 1.877.244.8422.

NOTE: The Lender’s internal guidelines always take precedence and must be adhered to prior to review by Canada Guaranty.

Housing Market Trends



To view additional monthly aggregate house price data for 13 of Canada’s major cities, please visit the Brookfield RPS House Price Index site.

Source: CREA (The Canadian Real Estate Association)

HOUSING MARKET SUMMARY

  • Throughout the spring market, home price appreciation continued to be strong in Vancouver, Toronto and Hamilton, while other major markets in Canada experienced relatively flat home prices. On a national level, house prices have risen 5% over last year.
  • Much of Canada continues to exhibit balanced housing markets; however, some key markets are in seller’s territory, including Greater Toronto, Hamilton, Vancouver and Calgary.
  • In recent months, Alberta’s sales-to-new listings ratio has stabilized after experiencing a significant rebalancing earlier this year.

NOTE: Traditionally, a buyer’s, balanced or seller’s market is defined by the following ranges of sales-to-listings percentages:

< 35% Buyer’s Market (More homes are for sale than there are buyers)
= 36-54% Balanced Market
> 55% Seller’s Market (More buyers available than there are homes for sale)

NOTE: Click on the image of the map to download/print in PDF format.

Low Doc Advantage Guidelines | Effective August 1, 2015

Low Doc Advantage Guidelines | Effective August 1, 2015
Further to OSFI’s Guideline B-21, Canada Guaranty is releasing new requirements for information used to verify the reasonability of income for self-employed borrowers. The following guidelines will be effective August 1, 2015.


The Low Doc Advantage program is designed for borrowers with an established history of self-employment and a strong credit profile. In addition to ensuring the borrower’s income is reasonable for the nature and tenure of the business:

  • Lenders are required to obtain the Notice of Assessment (NOA) from the most recent tax year, at the time of application, to confirm no income tax arrears and the income from line 150 for each self-employed borrower.
  • The following information must be included in the submission notes of the application, for each self-employed borrower:
    1. Income amount confirmed by line 150 on the most recent NOA.
    2. Gross revenue of the borrower’s business.
    3. Type of business being owned and operated (e.g. landscaping, bookkeeping, etc.).
    4. Ownership structure (e.g. sole proprietor) and the percentage of ownership.

All Low Doc Advantage applications will continue to benefit from review by a Senior Underwriter, dedicated to providing solutions that balance prudent risk with the long-term homeownership goals of qualified borrowers. Please do not hesitate to contact a member of our team with any questions.

Thank you,

Mary Putnam | Vice President, Sales and Marketing
Canada Guaranty Mortgage Insurance Company

Telephone 416.640.8936
Toll Free 866.414.9109 ext. 8936
E-mail mary.putnam@canadaguaranty.ca

CANADA GUARANTY BRUNCH | November 15, 2015

EVENT INFO

This year, the CAAMP Mortgage Forum brings industry colleagues from across the country to Toronto.
Please join us for an elegant brunch, hosted at the beautiful Ritz-Carlton Hotel.

DATE
Sunday, November 15, 2015

TIME
11 AM – 1 PM
(12:15 PM Greetings from Andy Charles, President & CEO)

LOCATION
Grand Ballroom
Ritz-Carlton Hotel
181 Wellington Street West, Toronto

Add to your Calendar

We look forward to a great event and hope to see you there!

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