Canada Office of the Superintendent of Financial Institutions (OSFI) has issued a set of new draft guidelines to promote and support ethical residential mortgage insurance underwriting practices in the country.
Known as Residential Mortgage Insurance Underwriting Practices and Procedures, the new rules draft aims to ensure that mortgage insurers enhance their underwriting governance, internal controls, and risk management.
The purpose of the new rules is to reduce risk in the housing market.
The new draft, which is open for public feedback until 23 May 2014, was issued following publication of OSFI Guideline B-20 Residential Mortgage Underwriting Practices and Procedures in 2012.
OSFI superintendent Julie Dickson said, "With Guidelines B-20 and B-21, once finalized, OSFI is making clear its expectations for both lenders and insurers operating in the housing market."
With the new guidelines, OSFI wants insurance companies to evaluate the financial reliability of the bank and its mortgage lending practices as well as its ability to deliver data pertaining to the performance of its mortgage loan portfolio.