The federal NDP is on side with mortgage brokers, concerned OSFI’s proposals – especially around re-qualifying renewals – goes one, two or maybe even three steps too far.
"We just need to make sure that people are protected in some of these temporary situations (where they may have lost a job),” said Peggy Nash, finance critic for the official opposition this week, ”if they have a good credit record and have never had a problem making their payment."
The concern echoes those of brokers across the country, specifically pointing to what many argue is the most controversial proposal now being contemplated by the federal banking regulator as a way of tightening mortgage lending.
OSFI has floated the idea of forcing mortgage-holders to re-qualify at renewal, although exactly what that involves remains unclear.
Broker, and their professional associations, were among the first to balk at the suggestion, arguing it could create the kind of market crisis the proposals aim to overt.
Nash appears to agree, with her party most worried Canadians temporarily out of work could possibly lose their homes. She’s asking the Harper government to back off.
OSFI has suggested it has little intention of backing down, It’s manager of policy developing expressing concern about the country’s ability to meet a significant housing correction head on.
“Are the banks equipped to handle a 40 percent drop (in property values)?” writes Vlasios Melessanakis, the manager of policy development for the Office of the Superintendent of Financial Institutions, in an internal document responding to broker Rob McLister and an article posted to his website in March.
"Canada is not immune. Just because nothing happened in Canada in 2008 (a U.S.-centered crisis), does not mean that Canada is not vulnerable to a housing correction now.”
The posture reveals the extent to which the regulator is committed to bringing forward a slew of tighter mortgage lending rules for federally regulated institutions. The broker channel has raised a red flag on several points -- not only renewals but the consideration of a borrower’s age at the time of application.