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.”
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.