OSFI is taking over CMHC

If the proposed changes by OSFI to CMHC are implemented then we all better be ready to make some big adjustments to how we do business.

Proposed Changes:

1.     Reducing the maximum value of a line of credit from 80% to 65% of a home’s value.

2.     Taking away interest only payments for said lines of credit.

3.     Eliminating cash back mortgages (a way for borrowers to get around the minimum 5% down rule).

4.     Requiring home appraisals when you renew your mortgage (what does this mean if the market corrects?).

5.     Stricter income qualification standards.

6.     Not insuring low LTV mortgages on equity type deals with lenders.

It is important to prepare your clients for the possible changes now and start to look for alternatives. The banks are already feeling the pressure from OSFI to tighten up or eliminate their BFS programs.

Your clients still require access to equity in their home and BFS clients need mortgage financing. Many BFS clients will not be eligible for conventional financing for at least two years until they have been filing sufficient income to CRA.

The alternative mortgage business will take an increasingly prominent role in Canadian mortgage lending over the next few years.  Private lenders will assist Canadians to finance their properties where the door is being closed conventionally. Please prepare your clients for the changes now to make presenting a private mortgage solution easier in the days ahead.