On July 6, 2017 OSFI released recommended changes to the B-20 Guidelines for sound residential Mortgage Underwriting. The changes align language throughout the guideline with OSFI’s July 2016 letter and clarify and strengthen expectations in a number of specific areas, including;
- Requiring a qualifying stress test for all uninsured mortgages;
- Requiring that Loan-to-Value (LTV) measurements remain dynamic and adjusts for local market conditions where they are used as a risk control, such as for qualifying borrowers;
- Expressly prohibiting co-lending arrangements that are designed, or appear to be designed to circumvent regulatory requirements.
These are only a small number of changes that have taken place within the past year to try to cool the housing market, and it looks like it may be working. Housing Sales in Canada have dropped significantly over the past several months, and what we are starting to see and hear from our members, is that Banks are reneging on prior Pre-Approval Commitments to their clients. If these are the type of practices going on at the Banks, then we are happy to differentiate ourselves from referencing the words Bank, Banker or Banking Check out this article for more information.
The Credit Union although not regulated by OSFI, does recognize these standards as prudent sound lending practices; however, knowing how important a home purchase can be for our members, we wouldn’t think of withdrawing an approval once we have made our commitment to you.
If this has happened to you, We’ve Got Your Back! Contact us today to see what we can do to assist you with your home purchase or refinance.