The industry has feared B-21 would bring with it further restrictions to those implemented by B-20.
The B-21 draft, which is based on OSFI’s internal review as well as the Financial Stability Board and the Joint Forum, will now enter a consultation period that is open until May 23.
“Once comments have been considered, a final guideline will be issued and an implementation date set,” an official release from OSFI states.
The six principles – which include implementing an underwriting plan, assessing mortgage lenders and their underwriting practices, and risk mitigation, among others -- can be found below.
Principle 1: Residential Mortgage Insurance Underwriting Plan
A (federally-regulated mortgage insurer) FRMI that is engaged in residential mortgage insurance underwriting should have a comprehensive Residential Mortgage Insurance Underwriting Plan (RMIUP). The FRMI’s insurance underwriting practices and procedures should comply with its established RMIUP.
Principle 2: Establishing Standards for the Initial Assessment and Qualification of Mortgage Lenders
A FRMI should establish sound standards for the purpose of initially assessing and qualifying mortgage lenders for mortgage insurance coverage.
The Office of the Superintendent of Financial Institutions (OSFI) released its Guideline B-21 Residential Mortgage Insurance Underwriting Practices and Procedures Monday, which include “six fundamental principles for sound mortgage insurance underwriting.”