Enhancements to homeowner mortgage loan insurance to address client operational needs

CMHC continues to lead the way with mortgage loan insurance product and service enhancements to promote housing accessibility and choice for Canadians. These enhancements provide our housing finance partners with responsible product and service solutions to better serve customers and grow your business.

CMHC is making a series of enhancements intended to respond to the realities of today’s market and to better meet the needs of clients.

Enhanced Homeowner Closing Costs policy

Lenders continue to be required to verify that borrowers have the financial capacity to cover closing costs. In recognition of the fact that closing costs may vary across jurisdictions CMHC will now permit lenders to use actual closing costs for verification purposes. Where borrowed, a 12 month maximum repayment period will no longer be imposed for the purposes of calculating the TDS ratio. All other conditions remain the same.

Variable Rate Mortgage Enhancements

CMHC is removing the 5-year maximum loan term restriction for standard Variable Rate Mortgages and Adjustable Rate Mortgages recognising the increased use of Variable Rate Mortgages (VRM) within the mortgage industry and in order to bring its VRM policies more in line with its fixed rate mortgage policies and industry practices.

Additionally, CMHC policy permits conversions from Fixed Rate Mortgages to Variable Rate Mortgages at term renewal at loan-to-value ratio up to 90%. CMHC will now accept conversions up to a loan-to-value ratio of 95% where there is no increase to the loan-to-value ratio and no new funds are advanced. All other conditions remain the same.

Enhanced Edits and Allowances policy and Lender Servicing Authorities

In order to reflect increasing market costs of some components of mortgage insurance claims, CMHC is revising its allowances for legal costs that Approved Lenders can claim without seeking specific CMHC approval. These allowances are monitored against market rates on a regular basis. In addition, Approved Lenders will also be authorized to approve environmental clean-up costs of up to $10,000 per claim, effect payment of non-discretionary strata / condominium fess of up to $25,000 per claim, and approve repairs to a total of $10,000 per claim without seeking specific prior CMHC approval.