Tuesday, August 6, 2013

CMHC rule changes again

Canada Mortgage and Housing Corp. is limiting guarantees it offers banks and other lenders on mortgage-backed securities. The measure comes amid the federal government's efforts to protect taxpayers from financial risks in the housing sector, further cool lending and add upward pressure to mortgage rates.

The Crown corporation has notified banks, credit unions and other mortgage lenders that they will each be restricted to a maximum of $350 million of new guarantees this month under its National Housing Act Mortgage-Backed Securities (NHA MBS) program. The decision comes in the wake of "unexpected demand" for the guarantees, a spokeswoman for CMHC said in an e-mailed statement.

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Speaking to some mortgage specialists, they said that the simple fix is to start using Genworth instead of CMHC as the default insurer for high ratio mortgages, so from their point of view, this will not have any effect on the market.

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