residential mortgages changes affecting you


Office of the Superintendent of Financial Institutions (OSFI) final version of B20, the Residential Mortgage Underwriting Practices and Procedures effective january 1, 2018.

905.537.8815 FSCO No. 10420

Banks and "A" Lenders pay us for your residential service. EXCEPT bad credit mortgages, some self employed mortgages from "B Lenders", private mortgages or multi-use and commercial loans - broker fees are payable by clients. Lenders change their products and interest rates without notice.

..... follow me to get mortgage updates ... Marie Copeland @AxcessMortgage

Residential mortgages changes to conventional financing effective January 1, 2018 how does this affect you? How will the private mortgage lenders come in to fill the void in the market place?



residential mortgages changes - what's happening ?

On October 17th 2017, Office of the Superintendent of Financial Institutions (OSFI) published its final version of B20, called Residential Mortgage Underwriting Practices and Procedures. This guideline, which comes into effect on January 1, 2018, applies to all federally regulated financial institutions (FRFI). This changes how mortgage applications are assessed, how property appraisals are managed, how much money the lenders will lend for various property types and quality in different real estate markets and quality of applicant covenant (income and credit).

This increases the likelihood of private lenders stepping in to fill in the residential mortgages void that will be created.


Components of B20 (Residential Mortgage Underwriting Practices and Procedures)

Here is the effect of these changes on the residential mortgage market:

The changes to residential mortgages guideline B20 emphasize OSFI’s expectations that federally regulated mortgage lenders tighten their mortgage qualifying practices.

Many of these rules exist now for insured high ratio mortgages to buy a home (less than 20% down payment) - lenders already qualify your insured application at posted rates and 25 year amortization, even though the actual contract mortgage rate you get may be about 2% lower.

The guideline focuses on the minimum qualifying rate for conventional uninsured mortgages, loan-to-property value (LTV) frameworks and limits, and restrictions to all those in the industry attempting to circumvent those LTV limits – with focus on property appraisals.

There are 3 parts to this new guideline:

  • OSFI is setting a new minimum qualifying rate, or “stress test,” for uninsured mortgages – these stress tests already exist on high ratio mortgages since November 2016. This also means more documents scrutiny. 
  • OSFI is requiring lenders to change and improve their loan-to-property value (LTV) limits so they will be dynamic and responsive to risk of various scenarios in the application, property type and quality and location. 
  • OSFI is placing restrictions on various lending arrangements designed, or appear designed to getting around the LTV limits. Major focus to be placed on the appraisals.


What do the changes mean for lenders ?

Lenders are still interpreting these new guidelines. They have some insight into how they will handle each issue individually, but it is still work in progress and only time can tell how some of these will play out.

  • What does the new qualifying rate, or “stress test,” for conventional mortgages mean to you? The biggest issue facing the mortgage industry will be the “stress test.” Clients who have less than 20% for a down payment already have to qualify at either the Bank Posted Rate or 2% higher than the negotiated rate provided to you by a lender, whichever is higher and 25 year amortization. This will now apply to conventional mortgages too even if you have a large down payment. This will decrease your buying power, and the mortgage amount you can afford and qualify for. “Is this mortgage payment affordable for you?” This will be a question to be answered by this “stress test”.  A helpful question to ask would be “is this mortgage payment affordable for you?” should your interest rate rise the additional 2%. The residential mortgages lenders will have to be satisfied that you can afford to repay the mortgage if your interest rate increases by 2% - this will have to be shown in your supporting documents at the time of application.
  • OSFI is requiring lenders to improve loan-to-property value (LTV) measurement and limits so they will be dynamic and responsive to risk. Lenders will review each housing market on a quarterly basis, and adjust lending loan to property value lending ratios based on market conditions in each area. Parameters are being set region to region. There will be a more stringent focus on appraisals.
  • OSFI is placing restrictions on certain lending arrangements that are designed, or appear designed to circumvent LTV limits. This component will directly affect the “B” or “Alternative Lenders” existing bundle programs of 85% of appraised property value. OSFI views this program as circumventing the Bank Act and lending money beyond a lender’s guidelines. 

“B” lenders are still interpreting this component, and it should become clearer in the coming weeks. All alternative mortgage or “B” applications prior to December 31, 2017 can still utilize the 85% program as available through our broker channel. This is subject to availability. 


We are here to help you

Axcess Mortgage and Loans Financing Co. Ltd. Website can be used as your residential mortgages online resource. You can also ask me questions using the Questions and Answers link on this website. Check back on our website for my answers in about 48 hours after submitting your question.

We will continue to ensure that you, a mortgage consumer is more educated on the mortgage industry.

Clients are aware of the ‘A’ rates that are out there.

However, they often don’t understand why these lower rates aren’t accessible to them and what industry terms, such as LTV, stated income, and TDSR mean. As brokers, we are your trusted advisers by explaining to you why you may not currently fit in the ‘A’ market.

We’ll provide you with a game plan that will get you back on track to qualify for the lower rates at the earliest opportunity, even if today you are a private loan bad credit borrower or you need no proof of income mortgage - income where documents other than your CRA tax returns are used to qualify. As a result of regulatory changes, more and more clients are now entering the alternative and private mortgage market, and I suspect the new changes will push even more clients this way.

We will guide you through working with your lender, and packaging your application properly, to put you ahead of that curve. We will manage your expectations and keep you and your lender aware of every single step in the process.

By taking these steps, we can significantly improve our clients’ closing ratios, and most important of all, reduced stress for you. These steps will allow a hassle-free experience that is smoother and faster. 

Marie Copeland FSU, Hamilton Mortgage Broker


We look forward to continuing to be your trusted mortgage adviser throughout this changing mortgage landscape.

Call 905-308-8063 for home mortgage help or,

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