First National to Provide Mortgage Underwriting Processing Services to Manulife Bank

TORONTODec. 2, 2019 First National Financial Corporation today announced that First National Financial LP has entered into an agreement with Manulife Bank of Canada (“Manulife Bank”) to provide underwriting and fulfillment processing services for mortgages originated by Manulife Bank through the residential mortgage broker channel in Ontario and Atlantic Canada.

Under the strategic agreement, First National will employ a customized software solution based on its industry-leading MERLIN technology to accept mortgage applications from the Manulife Bank mortgage broker channel and underwrite these mortgages in accordance with Manulife Bank’s credit policies, compliance standards, and controls. Manulife Bank will fund all the mortgages underwritten under the agreement and retain full responsibility for underwriting guidelines, mortgage servicing, and the client relationship. The underwriting and fulfillment services provided by First National will enable Manulife Bank to further enhance its already strong presence in the mortgage broker channel.

“This is an important agreement that leverages the distinct capabilities and strengths of both parties,” said Stephen Smith, Chairman and Chief Executive Officer of First National. “For First National, it represents the next step in the expansion of our underwriting and fulfillment services.”

First National will provide these services from its offices in Toronto. “The mortgage broker distribution channel accounts for about $90 billion of new mortgage originations each year,” said Scott McKenzie, Senior Vice President, Residential Mortgages. “This agreement further validates the channel’s relevance where First National will continue to be a lender in its own right.”

“We are very pleased to be chosen for this mandate,” said Jason Ellis, President, and Chief Operating Officer, “It’s a clear endorsement of our industry-leading technology and expertise in the independent mortgage broker channel by one of Canada’s premier financial institutions.”

Manulife Bank offers everything from everyday banking accounts to mortgages, deposits, and loans. Manulife Bank has proven that banking can be done differently and has been doing it for more than 25 years. On a mission to make lives better and decisions easier, this new agreement gives Manulife Bank greater flexibility to expand the availability of Manulife One to more Canadians.

First National will commence the underwriting and fulfillment processing services beginning in December 2019.

About First National Financial Corporation
First National Financial Corporation (TSX: FN,TSX:FN.PR.A,TSX:FN.PR.B) is the parent company of First National Financial LP, a Canadian-based originator, underwriter and servicer of predominantly prime residential (single-family and multi-unit) and commercial mortgages. With over $110 billion in mortgages under administration, First National is Canada’s largest non-bank originator and underwriter of mortgages and is among the top three in market share in the mortgage broker distribution channel.  For more information, please visit

SOURCE First National Financial Corporation

Equitable Group Reports First Quarter 2018 Earnings

Equitable Group Inc. reported financial results for the three months ended March 31, 2018 that reflected continued profitable growth of its wholly owned subsidiary, Equitable Bank, and on the basis of that performance increased its common share dividend.


  • Net income was $40.2 million, down 7% from $43.4 million in the first quarter of 2017
  • Diluted earnings per share (“EPS”) were $2.34, down 8% from $2.54 in the comparative quarter of last year
  • Return on Shareholders’ Equity (“ROE”) was 14.5% compared to 18.4% in the Q1 2017
  • Mortgages Under Management (“MUM”) were a record $23.8 billion, up 9% from $21.7 billion at March 31, 2017 and 2% up from December 31, 2017
  • Book value per common share was $67.14, up 16% from $57.73 at March 31, 2017

Of note, Equitable took various actions in the second quarter of 2017 to successfully manage through funding market disruptions. The cost of these actions reduced first quarter 2018 earnings by $0.27 per share and ROE by 1.6 percentage points. These actions are discussed in the Company’s 2017 annual Management’s Discussion and Analysis.


The Board of Directors today declared a quarterly common share dividend of $0.27 per common share, payable July 5, 2018, to common shareholders of record at the close of business on June 15, 2018.  This represents a 17% increase over dividends declared in May 2017 and a 4% increase over the dividend declared in February 2018. This increase reflects the Board of Director’s belief that the Bank’s capital position is more than sufficient to support future asset growth. The Board also declared a quarterly dividend of $0.396875 per preferred share, payable June 30, 2018, to preferred shareholders of record at the close of business on June 15, 2018.


“Equitable produced solid first quarter results by leveraging its diversified business model and status as Canada’sChallenger Bank™ to successfully adapt to changing market conditions,” said Andrew Moor, President and Chief Executive Officer. “Mortgage assets, the source of most of our earnings, continued to grow despite challenging market conditions in the Single Family Lending business.  As a planned offset, management deployed more capital into the Commercial Lending business and grew that portfolio by 6% in the quarter.   As well, single family renewal rates increased in response to B-20 and the Bank’s attentive customer service, which helped to support single family portfolio growth in the quarter.   Deposits grew to record levels as the EQ Bank digital platform surpassed 50,000 customers.  Asset growth, in concert with continued low loan losses and tight expense control would have produced record first quarter EPS had it not been for the cost of our 2017 liquidity actions.  The Bank’s continued strong performance and capital position supported our fourth common share dividend increase in the past year, and enabled us to finish the quarter as we started: with a capital position that exceeded all regulatory and internal requirements by a reasonable margin.”


  • Single Family Lending mortgage principal was $9.5 billion at March 31, 2018, up 16% from $8.2 billion a year ago, aided by higher renewal rates.
  • Commercial Lending mortgage principal was $3.1 billion at March 31, 2018, up $122 million or 4% from Q1 2017, supported by record quarterly origination levels in Q1 2018.
  • Securitization Financing MUM increased 6% to $11.2 billion at March 31, 2018 from $10.5 billion a year ago on higher multi-family volumes.
  • Deposit principal outstanding amounted to $11.9 billion at March 31, 2018, up 19% from $9.9 billion relative to Q1 of last year.

Equitable’s credit metrics reflect the high quality of the mortgage portfolio. Net impaired mortgage assets at March 31, 2018 were 0.13% of total mortgage assets compared to 0.21% at March 31, 2017. The allowance for credit losses represented 0.13% of total mortgage assets at March 31, 2018, in excess of the Bank’s average annual loss rate of 0.04% over the past decade.  This allowance represents the amount that the Bank has reserved on its balance sheet to absorb credit losses. As a result of the adoption of IFRS 9 on January 1, 2018, the allowance for credit losses decreased $8.5 million due to a transitional adjustment.

The Provision for Credit Losses (“PCL”) was $0.8 million or 0.02% of mortgage principal in Q1 2018, which is $0.4 millionor one basis point higher than last quarter but stable compared to Q1 2017.  IFRS 9 is based on an expected loss concept compared to an incurred loss approach under the previous IAS 39 and as such, IFRS 9 incorporates forward-looking economic forecasts. Management’s analysis, based on extensive back testing, suggests that IFRS 9 will not have a material impact on the average PCL over a long-term horizon but may result in greater quarterly volatility.


Equitable Bank’s Capital Ratios continue to exceed minimum regulatory standards and remain above the levels of most other publicly listed banks. At March 31, 2018, the Bank’s:

  • Common Equity Tier 1 Capital Ratio was 14.7%, surpassing the Basel III minimum of 7.0%, and up from last year’s level of 13.9%
  • Total Capital Ratio was 16.0%, above the regulatory requirement of 10.5%
  • Leverage Ratio was 5.5% and as such the Bank was fully compliant with the target that OSFI sets on a confidential, institution-by-institution basis


Equitable continues to push forward with key strategic initiatives that are designed to further its status as Canada’sChallenger Bank™ and improve the value of its franchise for shareholders:

  • EQ Bank introduced GICs to its platform, enabling Canadians to access an important savings vehicle straight from any mobile device, further diversifying EQ Bank’s deposits, and lengthening the term of those deposits. EQ BankGICs offer a competitive rate of interest for various terms of up to 5 years.
  • EQ Bank finished the first quarter with $1.7 billion of deposits, 42% or $515 million higher than a year ago, primarily reflecting the growing popularity of the EQ Bank Savings Plus Account and more generally, the convenience, control, and performance provided by an all-digital demand account. This growth complemented a 23% or $1.7 billion year-over-year increase in brokered term deposits (GICs) placed by deposit agents, investment dealers and financial planners on behalf of Canadian savers.
  • Equitable introduced its PATH Home Plan™ offering through mortgage brokers in major urban centres in OntarioBritish Columbia and Alberta. The PATH Home Plan™ reverse mortgage solution provides Canadians over the age of 55 with a cost-effective way to unlock equity in their homes – without downsizing or incurring monthly charges – to fund their preferred retirement lifestyles. While this product will not make a material contribution to asset growth or earnings in 2018, management is pleased with early market receptivity and believes PATH has the potential to create meaningful long-term value.
  • Equitable successfully introduced digital functionality within its Single Family business that provides residential customers with the option of 24/7 self-service, a development that is consistent with the Bank’s objective of providing simple, convenient service in its chosen markets.
  • Equitable’s productive workforce and branchless business model produced an Efficiency Ratio of 37.7% in the first quarter even as the Bank continued to invest in future growth and improve operational effectiveness.


Equitable expects that its strategy, including its disciplined approach to capital allocation, will continue to deliver value to shareholders and protect the money that depositors have trusted to the Bank.  Asset quality remains high and the Bank’s diversified business model continues to present meaningful opportunities.  Management expects earnings to continue growing in 2018 but that ROE will be below the Bank’s 5-year average of 17.2% due to the costs associated with successfully navigating through funding market disruptions that affected a subset of financial institutions in 2017. The assumptions used in formulating these expectations can be found in our Management’s Discussion and Analysis available on the Company’s website and on SEDAR.

Canada’s housing market is adjusting to more restrictive B-20 underwriting guidelines implemented on January 1st by Canada’s federally regulated financial institutions,” said Mr. Moor.  “We believe this period of adjustment will last several quarters as home buyers change their behaviours and lenders update their competitive strategies.  We continue to expect our alternative single-family portfolio to grow modestly in 2018 despite dampened demand for new single-family mortgages due to improved mortgage renewal rates and the fact that even at reduced levels, originations should still be higher than our attrition.”

To offset slower portfolio growth in Single Family, Equitable intends to continue deploying more capital into other businesses, including Commercial Lending and reverse mortgages. The diversification of the Bank’s lending book continues to be both a strength and an objective for the future. Equitable has deep expertise and experience in secured lending and believes it can grow Commercial Lending and PATH reverse mortgage assets within its current risk-return appetite. Considering all factors, management believes that year-over-year growth in MUM and balance sheet assets could be in the range of 6% to 8% in 2018, although significant uncertainty remains in this outlook due to unsettled market dynamics.

“As we move forward and as part of our normal planning activities, we will evaluate whether the Bank is carrying the appropriate amount of common equity capital given evolving market opportunities,” said Mr. Moor. “While we are pursuing exciting new Challenger Bank growth avenues – each with opportunities to deploy capital at high ROEs – we will take actions to adjust our equity base if we have more capital than we can use effectively. We will determine the best course of action for shareholder value creation once the true impact of B-20 is clarified. In the meantime, as Canada’s Challenger Bank™, we remain squarely focused on making banking better for Canadians across all of our business lines.”

“In support of our growth initiatives, we plan to continue investing in the Bank’s franchise, adding more features and functionality to our EQ Bank platform, and reinforcing our high-level of customer service, all of which will cause non-interest expenses to increase at year-over-year rates slightly higher than the growth rate of the overall business,” said Tim Wilson, Senior Vice President and Chief Financial Officer. “That said, if actual growth in our lending markets is different than anticipated, we will manage our expense levels accordingly. All things considered, we expect our Efficiency Ratio will be in the high 30% range this year, a level that will define Equitable as one of Canada’s most efficient banks.”


Equitable also announced the release of its first Public Accountability Statement, highlighting the Bank’s commitments as an engaged and accountable community member dedicated to enriching the lives of Canadians. The report contains information on Equitable Bank’s initiatives to develop its workforce, make financial services more accessible across Canada, improve financial literacy, support the arts and minimize its environmental impact.  All Canadian Banks with Shareholders’ Equity of more than $1 billion are required by the Bank Act to issue such reports annually.

“As Canada’s Challenger Bank, we identify with helping Canadians build resilience whether it be on an individual level, or within our shared communities,” said Mr. Moor. “Our first annual Accountability Statement provides a fantastic opportunity to report on what the Bank has accomplished hand-in-hand with our employees and community partners. I’m proud of what our small, but dedicated team has done and excited by all that we have planned to keep growing together in the years ahead.”

A copy of the Public Accountability Statement is available online at


Equitable Group Inc. is a growing Canadian financial services business that operates through its wholly-owned subsidiary, Equitable Bank. Equitable Bank, Canada’s Challenger Bank™, is the country’s ninth largest independent Schedule I bank and offers a diverse suite of residential lending, commercial lending and savings solutions to Canadians. Through its proven branchless approach and customer service focus, Equitable Bank has grown to over $25 billion of Assets Under Management. EQ Bank, the digital banking arm of Equitable Bank, provides state-of-the-art digital banking services to more than 50,000 Canadians. Equitable Bank employs more than 600 dedicated professionals across the country, and is a 2018 recipient of Canada’s Best Employer Platinum Award, the highest bestowed by AON. For more information about Equitable Bank and its products, please visit

SOURCE Equitable Group Inc.

MBRCC Releases New Guide For Mortgage Licensing

The Mortgage Broker Regulators’ Council of Canada releases guidance on licensing education standards

The Mortgage Broker Regulators’ Council of Canada (MBRCC) has released a new Mortgage Education and Accreditation Standards User Guide (User Guide) to help providers of courses in the mortgage broking industry achieve consistency in licensing education across the country.

The User Guide is an important step in the MBRCC’s efforts to foster a comprehensive accreditation process for mortgage professionals across Canada. It is based on identified learning outcomes and competencies required for all mortgage broking licensing courses across the country.

“Each province establishes the licensing requirements for mortgage brokers within their jurisdiction, including education requirements,” says Cory Peters, Chair of MBRCC.

“The harmonized standards outlined in our User Guide will help ensure licensed mortgage brokers across Canada are equipped with the skills, knowledge and competency levels needed to better protect the interests of consumers and strengthen industry integrity,” he added.

The User Guide outlines requirements related to curriculum, course exams, course administration and infrastructure. It also promotes:

  • Instructional design, development and delivery of mortgage education;
  • Regulator’s course accreditation requirements; and
  • Expectations for licensee competency and professionalism.

The User Guide will not supersede existing legislation or regulatory requirements in any jurisdiction. The MBRCC has recommended that the Standards be implemented over a period of up to four years to provide regulators and course providers ample time to prepare.

Going forward, jurisdictions will report courses they have accredited to the MBRCC, which will maintain a roster of approved courses and their providers.

“Mortgage broker” is a widely used term. Depending on the type of licence and the province in which it was issued, the licensed professional brokering a mortgage transaction may be a mortgage broker, sub mortgage broker, associate mortgage broker or mortgage agent.

About the MBRCC:

The MBRCC is comprised of regulators across Canada responsible for administering mortgage broker legislation and regulating the industry in their respective jurisdictions. The MBRCC provides Canada’s mortgage broker regulators with a forum to work cooperatively, better share information and coordinate engagement of stakeholders to identify trends and develop solutions to common regulatory issues.

SOURCE Mortgage Broker Regulators’ Council of Canada

Canadians choosing fixed-rate mortgages in 2018 as mortgage rates expected to increase

Today,, an online rate comparison platform for auto insurance and mortgages, released a report showing that the number of Canadians who applied for a fixed-rate mortgage in January and February saw a substantial spike. Of users applying for a mortgage, 64.4% in January and 54.6% in February opted for a fixed-rate mortgage over a variable-rate, increases of 20 percentage points and 10 percentage points, respectively. The spike comes after the Bank of Canada increased their interest rate to 1.25% on January 14 of this year.

In the past, trends have shown that the majority of users on, who process tens of thousands of mortgage quotes annually, have gone with a variable-rate mortgage. However, since July 2017, when the Bank of Canadaannounced a 25 basis point hike, the number of consumers locking in a fixed-rate mortgage has been consistently increasing.

“The key for Canadians is not to panic. For the past 30 years, mortgage rates have been trending downward,” said Justin Thouin, Co-founder and CEO of “There have been brief periods of increase over that time, like we’re in right now, but a mortgage is a long-term investment and the long-term data tells us that a variable-rate mortgage is the best option.”

Historically, the majority of Canadians who shop for mortgage rates on opt for variable-rate mortgages. Since January 2014, an average of 56.56% of users have gone variable, compared with 43.44% who chose a fixed-rate mortgage. The increase in fixed-rate mortgages locked in by Canadian consumers is seen by as a response to rate hikes, and fear of higher rates in the future.

Understanding The Impact of Rate Hikes

If a consumer purchases a home for $750,000 (with a down payment of 10 per cent amortized over 25 years), at a five-year, variable rate of 2.20%, they would have a total monthly mortgage interest payment of $3,025. If the Bank of Canada increases its overnight rate by 25 basis points, that homeowner’s monthly interest payment on their mortgage would be $3,111 — an increase of $86 per month.

That same homeowner using a fixed mortgage rate — the most competitive fixed product on last month was 3.03% — would have a total mortgage payment of $3,315.  While they can lock in that rate for five years, they’re still spending $290 a month more in interest when compared to the variable product, even after variable rates go up. A total of $3,480 a year in increased costs.

About is an online rate comparison site for insurance, mortgages, loans and credit card rates in Canada. The free, independent service connects directly with financial institutions and providers from all over North America to provide Canadians with a comprehensive list of rates. wants to help everyone become more financially literate, with a goal of saving Canadians $1 billion in interest and fees.


BMO Extends Mortgage Rate Guarantee Period for Home Buyers

BMO Bank of Montreal announced today that it would be increasing the rate guarantee period for mortgages from 90 days to 130 days – the longest among all Canada’s major banks – amidst expectations for continued Bank of Canada rate hikes in 2018.

The change will benefit home buyers navigating an increasingly complicated market, and provide them additional time to finalize their mortgage plans with their guaranteed pre-approved rate.

“This change in our mortgage rate guarantee period could not be timelier for our customers,” said Martin Nel, Head, Personal and Small Business Banking, BMO Financial Group. “As always, we are listening and responding to their needs to help make their financial dreams a reality, while removing friction and uncertainty from the home buying process.”

Forecasting for the housing market also suggests why those looking to enter the market, or get into a new home, could benefit from the extended timeline.

“In the coming year, home buyers face tougher mortgage rules, a rising interest rate environment and uncertain housing markets in high-priced regions,” said Sal Guatieri, Senior Economist, BMO Bank of Montreal. “After pulling the rate trigger on January 17, we expect the Bank of Canada to raise policy rates two more times this year by a total of 50 basis points to address potential inflation risks stemming from an economy pushing against capacity limits.”

Mr. Guatieri noted that a tighter monetary policy, together with interest rate pressures arising from a stronger U.S. economy, will likely lift longer-term interest rates in Canada by one-half percentage point this year. An extended rate guarantee would give buyers more time to assess the impact of new mortgage rules on house prices in high-priced Toronto and Vancouver before making a decision.

For more information on BMO mortgages, please visit, or connect with a BMO Mortgage Specialist or visit your nearest BMO Branch.

About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider – the 8thlargest bank, by assets, in North America. With total assets of $728 billion as of January 31, 2018, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.

SOURCE BMO Financial Group

Canadian housing starts trend stable in January

The trend in housing starts was 224,865 units in January 2018, compared to 226,346 units in December 2017, according to Canada Mortgage and Housing Corporation (CMHC). This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

“The national trend in housing starts held steady for a third consecutive month in January, remaining near the 10-year high set in December,” said Bob Dugan, CMHC’s chief economist. “This reflects higher starts of multi-unit dwellings in urban centres in recent months, which has offset lower starts of single-detached homes.”

Monthly highlights


Starts for all home types in the Vancouver CMA trended up in January, reaching a pace nearly double that of the same month last year. There were 2,599 housing starts across the region in January of 2018, as opposed to 1,334 in January of 2017. The North Shore was a particular hotspot for activity this month as a number of condominium and rental multi-family units got underway.


Housing starts in the Kelowna CMA saw an increase in January 2018, totaling 87 units, compared with 51 units in the same month last year. The increase was supported by new rental units getting underway, continuing with the trend seen throughout 2017. New housing construction, particularly for multi-unit dwellings, continues to be supported by strong population growth and a robust labour market.


Housing starts in the Edmonton CMA have been trending lower since peaking in July of last year. On a month-over-month seasonally-adjusted basis, single-family starts were up 2% in January compared to December while multi-family starts were up 38%. Much of the increase in multi-family construction was due to an increase in the apartment segment where inventory levels remain elevated.


Total housing starts in Lethbridge increased in the first month of 2018 compared to January 2017 with gains in both the single-detached and multiples segments. However, despite the year-over-year increase, both the trend and the SAAR recorded declines in January compared to the previous month. Declining employment in the region through 2017 has reduced demand for housing and has impacted the pace of new home construction.


January 2018 saw the highest number of apartment starts for any January since 1991. Since 2012, the proportion of single-detached and row starts lessened on a year-over-year basis as more apartments were built. Strong starts for apartment units in recent years can be partly attributed to rising costs of homeownership, rising immigration of young professionals to the area, and strong employment.


For the second month in a row, housing starts in the Toronto CMA trended slightly lower. An increase in apartment starts partially offset the decline in single-detached housing starts. Increased supply in the resale market has resulted in less demand for new single-detached homes. Meanwhile new condominiums remain in high demand as home buyers flock to relatively lower priced homes, and investors seek to capitalize on low vacancy rates and increasing rents.


Total starts trended higher in January, driven primarily by an influx of row unit starts in both the Town of Innisfil and the City of Barrie. Land scarcity in popular areas and affordability concerns have encouraged row unit construction, which saw the highest starts in 2017 since 1999. Strong labour market conditions and population growth remain supportive of the demand for new housing units going into 2018.


The trend in Kingston CMA total housing starts has declined slightly for four consecutive months, after having been pulled up by high numbers of rental apartment starts in June 2017. This pullback is likely temporary, since high demand in the resale market and robust demand for rental accommodations point to a need for new supply.


In January, the number of new housing units that got under way was fairly high relative to the last few years, thanks to the construction of many units intended for the condominium market. The stronger housing demand and tighter resale market are therefore continuing to support residential construction in the area.

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of Canada’s housing market. In some situations analyzing only SAAR data can be misleading, as they are largely driven by the multi-unit segment of the market which can vary significantly from one month to the next.

The standalone monthly SAAR of housing starts for all areas in Canada was 216,210 units in January, essentially unchanged from 216,275 units in December. The SAAR of urban starts increased slightly by 0.2% in January to 198,400 units. Multiple urban starts essentially held steady at 134,685 units in January while single-detached urban starts increased by 0.6% to 63,715 units.

Rural starts were estimated at a seasonally adjusted annual rate of 17,810 units.

Preliminary Housing Starts data are also available in English and French through our website and through CMHC’s Housing Market Information Portal. Our analysts are also available to provide further insight into their respective markets.

As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.

Bridging Finance Inc. Announces the Launch of the Bridging Real Estate Lending Fund LP

Bridging Finance Inc. (“Bridging Finance“) is pleased to announce the launch of its latest product, the Bridging Real Estate Lending Fund LP (the “Bridging Real Estate Lending Fund“) which will be available for sale as of March 9, 2018 through the IIROC dealer channel on FundSERV and to institutional investors.

The investment strategy of the Bridging Real Estate Lending Fund will be to invest in an actively managed portfolio of first and second ranked mortgage loans that are secured by real property used for commercial purposes in Canada. At the onset, the target market will be the Province of Ontario and will expand throughout Canada thereafter.

In addition, Bridging Finance is pleased to announce that it has entered into an agreement with MarshallZehr Group Inc. (“MarshallZehr“), a licensed mortgage brokerage (#12453) and mortgage administrator (#11955), to act as the mortgage administrator of the mortgages.

“We are very pleased to continue our growth and broaden our relationship with the team of professionals at MarshallZehr. We have been able to experience first-hand the quality of their work and integrity and are eager to work in collaboration with them on growing the Bridging Real Estate Lending Fund,” said David Sharpe, Chief Executive Officer of Bridging Finance.

“Bridging Finance has established itself as a leader of private debt financing in Canada and have built a great reputation with both investors and borrowers alike. We are thrilled to expand our relationship with Bridging Finance and look forward to working together on numerous projects,” said Gregory Zehr, Chief Executive Officer of MarshallZehr.

About MarshallZehr Group Inc.
Established in 2008, MarshallZehr is a privately held real estate lending firm formed under the laws of Ontario. Along with its principals which have a combined 50+ years of various experience in the real estate industry, MarshallZehr possesses expertise and experience in originating, underwriting, servicing and syndicating mortgage investments. MarshallZehr brings a fresh perspective, financing efficiency and active administration, to elevate opportunities and attract the right capital to enable business success for both borrowers and lenders. For more information, please visit

About Bridging Finance Inc.
Established in 2012, Bridging Finance is a privately held Canadian company providing middle-market North American companies with alternatives to the financing options offered by traditional lenders. Lending proceeds, typically ranging from $3 million to upwards of $50 million, are used by companies to address needs such as restructuring existing debt, providing working capital for growth, supporting inventory purchases and financing expenditures and acquisitions/buyouts.  Bridging Finance is the co-manager of the Sprott Bridging Income Fund LP and the Sprott Bridging RSP Fund, which invest in factoring/private debt loans that have a low correlation to traditional asset classes. Bridging Finance also offers portfolio management services for institutional clients and currently manages approximately $700 million of assets. For more information, please visit

The units of the Bridging Real Estate Lending Fund (the “Units”) will not be qualified for sale to the public under applicable Canadian securities laws and, accordingly, any offer and sale of the Units in Canada will be made on a basis that is exempt from the prospectus requirements of such securities laws and only through registered dealers.

This news release shall not constitute an offer to sell the Units or the solicitation of an offer to buy the Units, nor will there be any sale of the Units, in any jurisdiction where such offer, solicitation or sale is not permitted.

SOURCE Bridging Finance Inc.

For further information: on Bridging Finance Inc.: David Sharpe, LLB, LLM, MBA, Chief Executive Officer, Bridging Finance Inc., C: (647) 981-5658,

NAI Terramont Commercial Announces Merger

In a merger of equals, NAI Commercial Montreal and Terramont Real Estate Services Inc., two of Montreal’s top commercial real estate firms, will join forces and beginning March 1 will operate as NAI Terramont Commercial. With the merger, the official NAI Global office in Montreal enters the top 5 firms serving the office, industrial, retail, tenant and investor market in Canada’s second biggest city, announced Paul-Eric Poitras, President of the newly formed entity NAI Terramont Commercial.

Poitras was President of NAI Commercial Montreal, which began operations in 2005 and as a company has primarily served industrial property owners and occupiers, as well as local, national and international commercial property investors and sellers. Since 1998 Terramont has been providing corporate real estate solutions for some of North America’s leading companies locally, nationally, across the U.S. and around the world. Terramont’s strength has historically been in the tenant representation and office leasing arenas. For international client services, Terramont had formerly been affiliated with Cresa Partners and later, TCN Worldwide.

NAI Terramont Commercial will initially consolidate offices into NAI Commercial’s location at 615 René-Lévesque Blvd W, Montreal, QC H3B 1P9, Canada. Combined, with 22 brokers NAI Terramont Commercial becomes the 5th largest commercial real estate services firm ranked by the number of brokers in Montreal.

“The combined firms are complementary in so many ways and the primary beneficiaries of the merger will be our respective clients, which will now have a single resource to provide all of their real estate needs regionally as well as nationally, and with NAI Global’s backing, globally,” said Paul-Eric Poitras.

Added Jean-Marc LeBlanc, who had been a Senior Vice President and co-founder of Terramont and now assumes the role of Senior Partner at NAI Terramont Commercial: “The strength and operating efficiency achieved by blending two great and entrepreneurial commercial real estate businesses will not only enable us to pursue new business that may have otherwise been out of reach for our firms individually, the merger also gives us fresh opportunity to consider acquisitions of other local and boutique commercial real estate companies and grow throughout Northeastern Canada.”

Other goals of the new company, according to Poitras, include establishing an alliance with a strong and local firm offering building management, project management, lease administration and legal services. The firm also intends to invest in technology on a regular basis to offer its clients and brokers the most advanced and mobile experience in the commercial real estate industry.

Michelle Moller, a former principal of Terramont, is one of the three managing partners of NAI Terramont along with LeBlanc and Poitras.

Jay Olshonsky, FRICS, SIOR and President of New York-based NAI Global, said he was thrilled to have an even better and bigger presence serving the Montreal marketplace.

“NAI Commercial Montreal has historically been one of the most active participants in our leadership groups and at global conferences, as well as being one of the most active trading partners in deal generation out of Canada with U.S. and other NAI firms worldwide. Adding the quality and depth of personnel that Terramont represents for us in Quebec Province is an absolute win-win for NAI Global,” Olshonsky said.

About NAI Terramont Commercial

NAI Commercial, under the banner of the NAI Global network, is one of the largest commercial real estate brokerage firms in Canada with nine offices spread across the country providing leadership and market insight to local, pan-Canadian and international investors. The newly formed NAI Terramont Commercial based in Montreal, Quebec, boasts an experienced and energized team of brokers, offering tailored brokerage services in the leasing and disposition of office, industrial and retail properties, as well as servicing the real estate investment market. To learn more, visit

About NAI Global

NAI Global is a leading global commercial real estate brokerage firm. NAI Global offices are leaders in their local markets and work in unison to provide clients with exceptional solutions to their commercial real estate needs. NAI Global has more than 400 offices strategically located throughout North AmericaLatin AmericaEuropeAfrica and Asia Pacific, with over 7,000 local market professionals, managing in excess of over 425 million square feet of property.  Annually, NAI Global completes in excess of $20 billion in commercial real estate transactions throughout the world.

NAI Global provides a complete range of corporate and institutional real estate services, including brokerage and leasing, property and facilities management, real estate investment and capital market services, due diligence, global supply chain and logistics consulting and related advisory services.

To learn more, visit or

SOURCE NAI Terramont Commercial

For further information: Denise Parent, NAI Terramont Commercial, 514.866.3333 ext. 224 or; Gary Marsh, NAI Global Consultant, +1 415.999.3793 or; Lindsay Fierro, NAI Global, +1 212.405.2474 or

Daniel Drimmer Acquires Shares of True North Commercial REIT

Daniel Drimmer announced today that D.D. Acquisitions Partnership (the “Acquiror“) has acquired beneficial ownership of 78,500 trust units (“Units“) of True North Commercial Real Estate Investment (the “REIT“) pursuant to a public offering of 6,325,000 Units of the REIT at a price of $6.37 per Unit (the “Offering“) for gross proceeds of $40,290,250. The Acquiror is an Ontario general partnership, the principal business of which is to make investments with its head office at 1400-3280 Bloor Street West, Centre Tower, Toronto, ON M8X 2X3 and controlled by Mr. Drimmer.

The Acquiror acquired an aggregate of 78,500 Units for aggregate consideration of $500,045 representing approximately 0.15% of the issued and outstanding Units based on 51,964,097 Units outstanding as of March 1, 2018, following the completion of the Offering and after giving effect to the exchange of all outstanding class B limited partnership units (“Class B LP Units“) of True North Commercial Limited Partnership (a limited partnership controlled by the REIT) for Units on a one-for-one basis. After giving effect to the Units acquired by the Acquiror pursuant to the Offering, the percentage of Units owned and controlled by the Offeror decreased to approximately 9.15% of the issued and outstanding Units (based on 51,964,097 Units outstanding as of March 1, 2018, after giving effect to the exchange of all Class B LP Units on a one-for-one basis).  Because the Acquiror now exercises ownership and control over less than 10% of the issued and outstanding Units, it is no longer subject to ongoing early warning or insider reporting requirements in respect of its ownership of Units.

The Acquiror, together with Daniel Drimmer and Drimmer Holdings Ltd. and PD Kanco LP (each controlled by Daniel Drimmer and having the same principal business and head office, and collectively, the “Offeror“), owned and controlled 3,849,180 Units and 828,123 Class B Units representing approximately 10.25% of the issued and outstanding Units based on 45,639,097 Units outstanding as of February 28, 2018 prior to the completion of the Offering and after giving effect to the exchange of all outstanding Class B LP Units for Units on a one-for-one basis.

The Units are being acquired for investment purposes. Subject to various factors including, without limitation, the REIT’s financial position, the price of Units, market conditions, the Acquiror’s determinations from time to time as to whether the trading price of the Units adequately reflects the value of the Units in relation to the REIT’s activities and future prospects, and other factors and conditions the Acquiror deems appropriate, the Acquiror may acquire additional Units or may dispose of any or all of its Units, from time to time through, among other things, the purchase or sale of Units on the open market or in private transactions or otherwise, on such terms and at such times as the Acquiror may deem advisable. The REIT’s address is 1400-3280 Bloor Street West, Centre Tower, Toronto, ON M8X 2X3.

For further information and to obtain a copy of the early warning report to be filed under applicable Canadian securities laws in connection with the foregoing matters, please see the REIT’s profile on SEDAR at or use the contact information below.

SOURCE Daniel Drimmer

For further information: Daniel Drimmer, 1400-3280 Bloor Street West, Centre Tower Toronto, ON M8X 2X3, (416) 234-8444

1 in 4 Retired Canadians living with debt

A worry-free retirement may be a thing of the past as Canadians struggle to manage debt. From living with a mortgage to unpaid credit cards, retirees can find themselves facing financial challenges in their golden years.The Sun Life Financial Barometer, a new national survey, found that one-in-four (25%) retirees are facing such challenges and living with debt.

Baby boomers are no stranger to today’s increased financial demand; in fact, one-in-five (20%) retirees are still making mortgage payments. The financial strain doesn’t stop there, the survey results reveal that retirees still use credit in some of the same ways they did before retirement. Mortgage aside, here’s where they still owe money:

  • 66% have unpaid credit cards;
  • 26% are making car payments;
  • 7% have unpaid health expenses;
  • 7% owe money on holiday expenses or vacation property; and
  • 6% haven’t paid off home renovations.

“Through our national survey, we took a moment to check-in with Canadians and gauge how they are stacking up when it comes to their finances,” said Jacques Goulet, President, Sun Life Financial Canada. “From credit card debt to a mortgage, retirees are faced with a list of expenses in life after work. We recognize that managing finances can be overwhelming, particularly for those who are no longer working. Seeking sound advice and working with a financial advisor can help you reach your goals.”

At the same time retirees face lingering debt, almost one-quarter (24%) of working Canadians are dipping into their retirement savings. Canadians pulled cash for the following reasons:

  • 63% did so because they needed to (e.g., health expenses, debt repayment);
  • 24% as part of the First Time Home Buyers’ Plan; and
  • 13% because they wanted to (e.g., vacation, car purchase).

“Our survey results highlight the importance of getting ready for retirement,” explains Tom Reid, Senior Vice-President, Group Retirement Services, Sun Life Financial Canada. “Although it can seem far away, retirement creeps up faster than you think – building a financial plan and making meaningful contributions will pay off in the long run. There are helpful tools and resources you can tap into to get on the right track to building the income you want and need to retire.”

The following tips can help Canadians save for a bright retirement:

  1. Start now. Begin saving and investing as early as possible to set yourself up for success.
  2. Don’t leave money on the table. If your employer offers a pension plan and will match your contributions, contribute the maximum amount possible.
  3. Invest wisely. If you do not have access to a defined contribution plan, RRSPs and TFSAs are other great vehicles to consider.
  4. Have a plan and stick to it. It’s never too late to build a financial plan that will get you where you want to be.
  5. Seek valuable advice. A financial advisor can help you create a financial plan, set achievable goals, and guide you through each life stage.


About the survey
The Sun Life Financial Barometer is based on findings of an Ipsos poll conducted between October 13 and October 19, 2017. A sample of 2,900 Canadians was drawn from the Ipsos I-Say online panel: 2,900 Canadians from 20 to 80 years of age. The data for Canadians surveyed was weighted to ensure the sample’s regional, age, and gender composition reflects that of the actual Canadian population.

The precision of Ipsos online poll is measured using a credibility interval. In this case, the poll is accurate to within +/- 2.1% at 95% confidence level had all Canadian adults been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to methodological change, coverage error and measurement error.

About Sun Life Financial
Sun Life Financial is a leading international financial services organization providing insurance, wealth and asset management solutions to individual and corporate Clients. Sun Life Financial has operations in a number of markets worldwide, including Canadathe United States, the United KingdomIrelandHong Kongthe PhilippinesJapanIndonesiaIndiaChinaAustraliaSingaporeVietnamMalaysia and Bermuda. As of December 31, 2017, Sun Life Financial had total assets under management (“AUM”) of $975 billion. For more information please visit

All figures in Canadian dollars except as otherwise noted.

SOURCE: Sun Life Financial Canada

Mortgage Professionals Canada discusses negative impact of new rules on canadian housing market

Members of Canada’s national mortgage industry association were pleased to have had the opportunity to meet with over 50 Members of Parliament and senior government officials over the past two days. Members discussed issues of housing affordability, availability and accessibility as well as the negative impacts that the recent mortgage rule changes are having and will continue have on Canadian consumers.

“We are concerned that the cumulative impact of recent mortgage changes are slowing housing market activity, decreasing competition and increasing costs for consumers,” said Paul Taylor, President and CEO of Mortgage Professionals Canada. “That said, we have been encouraged that Members of Parliament are listening to our concerns, and we continue to inform them of the positive role mortgage brokers play in the market”.

Mortgage Professionals Canada acknowledges that the initial objective of the changes was to cool down certain markets and there are signs that this is being achieved, at least in the Greater Toronto Area and to a lesser extent the Greater Vancouver Area. However, there is evidence of reductions in housing activity, both sales and housing starts, in areas of the country that were already moderate, flat or even declining.

CMHC’s insured volumes fell 34% in the first six months of 2017. This number is indicative of a reduction in home purchases by young Canadians from middle and low income families, and first time home buyers. As the voice of Canada’s national mortgage industry, the association is concerned that the combination of the changes, and the speed with which they have been cumulatively implemented, have created some adverse effects which could cause a potentially significant decline in housing activity nationally. This will be accelerated by the recent OSFI decision to add a stress test to all uninsured mortgages.

Mortgage Professionals Canada is the national mortgage industry association whose members include mortgage brokers, mortgage lenders, mortgage insurers and industry service providers. The association represents over 11,500 individual members and over 1,000 businesses across Canada.

SOURCE Mortgage Professionals Canada

Residential Mortgage Underwriting Practices and Procedures – effective January 1, 2018 B-20

I. Purpose and Scope of the Guideline

This Guideline sets out OSFI’s expectations for prudent residential mortgage underwriting, and is applicable to all federally-regulated financial institutionsFootnote1 (FRFIs) that are engaged in residential mortgage underwriting and/or the acquisition of residential mortgage loan assets in Canada.  It complements relevant provisions of the Bank ActTrust and Loan Companies Act, the Insurance Companies Act and the Cooperative Credit Associations Act, as well as the Government of Canada’s mortgage insurance guarantee framework, which establishes the rules for government-backed insured mortgages.Footnote2

For the purpose of this Guideline, a “residential mortgage” includes any loan to an individualFootnote3 that is secured by residential property (i.e., one to four unit dwellings).  Home equity lines of credit (HELOCs), equity loans and other such products that use residential property as security are also covered by this Guideline.

This Guideline articulates five fundamental principles for sound residential mortgage underwriting.  The first principle relates to FRFI governance and the development of overarching business objectives, strategy and oversight mechanisms in respect of residential mortgage underwriting and/or the acquisition of residential mortgage loan assets.

The next three principles focus on the residential mortgage credit decision and the underwriting process, specifically the assessment of:

  • The borrower’s identity, background and demonstrated willingness to service their debt obligations on a timely basis (Principle 2);
  • The borrower’s capacity to service their debt obligations on a timely basis (Principle 3); and,
  • The underlying property value/collateral and management process (Principle 4).

These three principles should be evaluated by lenders using a holistic, risk-based approach – unless otherwise specified in this guidance.  The borrower’s demonstrated willingness and capacity to service their debt obligations on a timely basis should be the primary basis of a lender’s credit decision.  Undue reliance on collateral can pose challenges, as the process to obtain title to the underlying property security can be difficult for the borrower and costly to the lender.

The fifth principle addresses the need for mortgage underwriting and purchasing to be supported by effective credit and counterparty risk management, including, where appropriate, mortgage insurance.  The final section of the Guideline summarizes disclosure and supervisory requirements.

OSFI expects FRFIs to verify that their residential mortgage operations are well supported by prudent underwriting practices, and have sound risk management and internal controls that are commensurate with these operations.

II. Principles


Principle 1: FRFIs that are engaged in residential mortgage underwriting and/or the acquisition of residential mortgage loan assets should have a comprehensive Residential Mortgage Underwriting Policy (RMUP). Footnote4  Residential mortgage practices and procedures of FRFIs should comply with their established RMUP.

Residential Mortgage Underwriting Policy (RMUP)

The Board-approved Risk Appetite FrameworkFootnote5 should establish limits regarding the level of risk that the FRFI is willing to accept with respect to residential mortgages, and this should form the basis for the RMUP.  The RMUP should further align with the FRFI’s enterprise-wide strategy and, in turn, be linked to the enterprise risk management framework.

The RMUP should reflect the size, nature and complexity of a FRFI’s residential mortgage business and should give consideration to factors and metrics such as:

  • Significant elements of the FRFI’s business strategy and approach to residential mortgage underwriting and the acquisition of residential mortgage loan assets (e.g., products, markets) – in Canada and internationally;
  • At the portfolio level, risk management practices and processes with respect to residential mortgage loans and loan assets, including limits on relevant segments or parameters (e.g., lending, acquisition, product, borrower/property characteristics, and geographic concentration);
  • At the individual residential mortgage loan level, acceptable underwriting and acquisition standards, criteria and limits (e.g., credit scores, loan-to-value ratios, debt service coverage, amortization periods) for all residential mortgage products and loan types (e.g., conforming and non-conforming);
  • Identification and escalation processes for residential mortgage underwriting and/or acquisition exceptions, if any, including a process for approval and exception reporting;
  • Limits on any exceptions to residential mortgages underwritten and/or acquired; and
  • The roles and responsibilities for those positions charged with overseeing and implementing the RMUP.

FRFIs should revisit their RMUP on a regular basis to ensure that there is strong alignment between their risk appetite statement and their actual mortgage underwriting, acquisition, and risk management policies and practices.

Board and Senior Management Roles

Senior Management is responsible for the development and implementation of the RMUP and related controls. However, the Board of Directors (Board) of the FRFI has a critical role in providing high-level guidance to, and oversight of, Senior Management with respect to matters relating to mortgage underwriting and portfolio management.

The Board of the FRFI should review and discuss the RMUP or any changes to the RMUP.  The Board should understand the decisions, plans and policies being undertaken by Senior Management with respect to residential mortgage underwriting and/or the acquisition of residential mortgage loan assets, and their potential impact on the FRFI.  It should probe, question and seek assurances from Senior Management that these are consistent with the Board’s own decisions and Board-approved business and risk strategy for the FRFI, and that the corresponding internal controls are sound and being implemented in an effective manner.

The Board should receive timely, accurate, independent and objective reporting on the related risks of the residential mortgage business, including the procedures and controls in place to manage the risks, and the overall effectiveness of risk management processes.

The Board should be aware of, and be satisfied with, the manner in which material exceptions to policies and controls related to residential mortgages are identified, approved and monitored.

Internal Controls, Monitoring and Reporting

Effective control, monitoring and reporting systems and procedures should be developed and maintained by FRFIs to ensure on-going operational compliance with the RMUP.  FRFIs should identify, measure, monitor and report the risks in all residential mortgage lending and acquisition operations on an on-going basis, and across all jurisdictions.  The FRFI’s residential mortgage risk appetite should be understood at all relevant levels of the organization.

FRFIs should have adequate processesFootnote6 in place with respect to residential mortgages to independently and objectively:

  • Identify, assess and analyze the key risks;
  • Monitor risk exposures against the Board-approved risk appetite of the FRFI;
  • Ensure that risks are appropriately controlled and mitigated;
  • Ensure that risk management policies, processes and limits are being adhered to;
  • Provide exception reporting, including the identification of patterns, trends or systemic issues within the residential mortgage portfolio that may impair loan quality or risk mitigation factors; and
  • Report on the effectiveness of models.

Mortgage Underwriting Declaration

A senior officer of a FRFI should make an annual declaration to the Board confirming that the FRFI’s residential mortgage underwriting and acquisition practices and associated risk management practices and procedures meet, except as otherwise disclosed in the declaration, the standards set out in this Guideline.

When a deviation from this Guideline has taken place, the nature and extent of the deviation, and the measures taken or proposed to correct (and mitigate the risk associated with) the deviation, should be documented and disclosed to the Board and to OSFI in full.


Principle 2: FRFIs should perform reasonable due diligence to record and assess the borrower’s identity, background and demonstrated willingness to service his/her debt obligations on a timely basis.

Background and Credit History of Borrower

FRFIs should ensure that they make a reasonable enquiry into the background, credit history, and borrowing behaviour of a prospective residential mortgage loan borrower as a means to establish an assessment of the borrower’s reliability to repay a mortgage loan.

For example, a credit bureau score, offered by the major credit bureaus, is an indicator often used to support credit granting. However, a credit score should not be solely relied upon to assess borrower qualification, as such an indicator measures past behaviour and does not immediately incorporate changes in a borrower’s financial condition or demonstrated willingness to service their debt obligations in a timely manner.

FRFIs should also ensure that they obtain appropriate borrower consent for this assessment and comply with relevant provincial and federal legislation governing the use and privacy of personal information (e.g., Personal Information Protection and Electronic Documents Act).

Loan Documentation

Maintaining sound loan documentation is an important administrative function for lenders.  It provides a clear record of the factors behind the credit granting decision, supports lenders’ risk management functions, and permits independent audit/review by FRFIs and by OSFI.  As well, maintaining sound documentation is necessary for lenders to demonstrate compliance with mortgage insurance requirements and ensure insurance coverage remains intact.

Consequently, FRFIs should maintain complete documentation of the information that led to a mortgage approval.  This should generally include:

  • A description of the purpose of the loan;
  • Employment status and verification of income (see Principle 3);
  • Debt service ratio calculations, including verification documentation for key inputs (e.g., heating, taxes, and other debt obligations);
  • LTV ratio, property valuation and appraisal documentation (see Principle 4);
  • Credit bureau reports and any other credit enquiries;
  • Documentation verifying the source of the down payment;
  • Purchase and sale agreements and other collateral supporting documents;
  • An explanation of any mitigating criteria or other elements (e.g., “soft” information) for higher credit risk factors;
  • Property insurance agreementsFootnote7;
  • A clearly stated rationale for the decision (including exceptions); and
  • A record from the mortgage insurer validating commitment to insure the mortgage, where applicable.

The above documentation should be obtained at the origination of the mortgage and for any subsequent refinancing of the mortgage.  FRFIs should update the borrower and property analysis periodically (not necessarily at renewal) in order to effectively evaluate credit risk.  In particular, FRFIs should review some of the aforementioned factors if the borrower’s condition or property risk changes materially.

As a general principle, an independent third-party conducting a credit assessment of a FRFI’s mortgage loan should be in a position to replicate all aspects of the underwriting criteria, based on the FRFI’s sound documentation, to arrive at the derived credit decision.

Purpose of Mortgage Loan

FRFIs should ascertain and document the purpose of a prospective loan, as it is a key consideration in assessing credit risk.  This includes ascertaining the:

  • Intended use of the loan (e.g., purchase, refinancing), and
  • Type of purchase (e.g., owner-occupied primary residence, recreational or other secondary property, investment property, property that relies on rental income to service the loan); or
  • Type of refinancing (e.g., debt consolidation, changes to existing loan characteristics, access to home equity, renovation, etc.)

Anti-Money Laundering/Anti-Terrorist Financing

As part of a FRFI’s assessment of the borrower, if the FRFI is aware, or there are reasonable grounds to suspect, that the residential mortgage loan transaction is being used for illicit purposes, then the FRFI should decline to make the loan and consider filing a suspicious transaction report to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) with respect to the attempted transaction.

FRFIs should ensure that residential mortgage loans are subject to the requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR), as well as OSFI’s Guideline B-8 Deterring and Detecting Money Laundering and Terrorist Financing with respect to detecting and deterring the possible use of a property purchase or mortgage to launder the proceeds of crime or assist in terrorist financing.Footnote8

In particular, FRFIs should ensure that they comply with the customer identification and record keeping requirements of the PCMLTFR, and also ensure that they obtain sufficient information about the borrower to determine whether the customer is a higher risk customer, as defined under the PCMLTFA and PCMLTFR.


FRFIs should maintain adequate mechanisms for the detection, prevention and reporting of all forms of fraud or misrepresentation (e.g., falsified income documents) in the mortgage underwriting process.  For insured mortgage loan applications, FRFIs are expected to report suspected or confirmed fraud or misrepresentation to the relevant mortgage insurer.


Principle 3: FRFIs should adequately assess the borrower’s capacity to service his/her debt obligations on a timely basis. 

Income Verification

FRFIs should demonstrate rigour in the verification of a borrower’s income, as income is a key factor in the assessment of the capacity to repay a mortgage loan, and verification of income helps detect and deter fraud or misrepresentation.  This includes substantiation of a borrower’s:

  • Employment status; and
  • Income history.

In regard to loan documentation that supports income verification, FRFIs should undertake rigorous efforts to confirm that:

  • The income amount is verified by an independent source;
  • The verification source is difficult to falsify;
  • The verification source directly addresses the amount of the declared income; and
  • The income verification information/documentation does not contradict other information provided by the borrower in the underwriting process.

To the extent possible, income assessments should also reflect the stability of the borrower’s income, including possible negative outcomes (e.g., variability in the salary/wages of the borrower).  Conversely, temporarily high incomes (e.g., overtime wages, irregular commissions and bonuses) should be suitably normalized or discounted.

For borrowers who are self-employed, FRFIs should also be guided by the sound principles listed above.  In particular, FRFIs should obtain proof of income (e.g., Notice of Assessment and T1 General) and relevant business documentation.

Lenders should also exercise rigorous due diligence in underwriting loans that are materially dependent on income derived from the property to repay the loan (e.g., rental income derived from an investment property).

Borrowers relying on income from sources outside of Canada pose a particular challenge for income verification, and lenders should conduct thorough due diligence in this regard.  Income that cannot be verified by reliable, well-documented sources should be treated cautiously when assessing the ability of a borrower to service debt obligations.

Guarantors and Co-Signors of Mortgages

Where a FRFI obtains a guarantee or co-signor supporting the mortgage, it should also undertake a sufficiently rigorous credit assessment of the guarantor/co-signor.  This assessment should be commensurate with the degree to which the guarantor/co-signor’s support is relied upon.  The guarantor/co-signor should fully understand his/her legal obligations.

Debt Service Coverage

A fundamental component of prudent underwriting is an accurate assessment of the adequacy of a borrower’s income, taking into account the relevant mortgage payments and all debt commitments.  As part of this assessment, FRFIs should establish debt serviceability metrics (including the method to calculate these metrics), set prudent measures for debt serviceability (articulated in the RMUP) and calculate each borrower’s debt serviceability ratios for the purposes of assessing affordability.

Two ratios that are commonly used are the Gross Debt Service (GDS) ratio and the Total Debt Service (TDS) ratio.  For example, for insured mortgages, the Canada Mortgage Housing Corporation (CMHC) defines GDS and TDS ratios and sets maximum GDS and TDS limits.  Private mortgage insurers also define similar debt serviceability metrics and limits for mortgage insurance products.  OSFI expects the average GDS and TDS scores for all mortgages underwritten and/or acquired to be less than the FRFI’s stated maximums, as articulated in its RMUP, and reflect a reasonable distribution across the portfolio.

FRFIs should have clear policies with respect to the contributing factors for the calculation of GDS and TDS ratios, including, but not limited to:

  • Principal and interest payments on the mortgage loan;
  • Primary and other sources of income;
  • Heating costs;
  • Property taxes;
  • Condominium or strata fees; and
  • Payments for all other credit facilities (e.g., unsecured personal loan, second mortgage loan, credit card).

GDS and TDS ratios should be calculated conservatively (i.e., appropriately stressed for varied financial and economic conditions and/or higher interest rates).

For insured residential mortgages, OSFI expects FRFIs to meet mortgage insurers’ requirements in regard to debt serviceability.  For uninsured residential mortgages, FRFIs should contemplate current and future conditions as they consider qualifying rates and make appropriate judgments.  At a minimum, the qualifying rate for all uninsured mortgages should be the greater of the contractual mortgage rate plus 2% or the five-year benchmark rate published by the Bank of Canada.Footnote9


The mortgage amortization period for the loan is an important factor in the lending decision, as it affects the required debt service for the borrower and the growth of borrower equity in the underlying property.  FRFIs should have a stated maximum amortization period for all residential mortgages that are underwritten.  OSFI expects the average amortization period for mortgages underwritten to be less than the FRFI’s stated maximum, as articulated in its RMUP.

Additional Assessment Criteria

In addition to income and debt service coverage, FRFIs should take into consideration, as appropriate, other factors that are relevant for assessing credit risk, such as the borrower’s assetsFootnote10 and liabilities (net worth), other living expenses, recurring payment obligations, and alternate sources for loan repayment.


Principle 4: FRFIs should have sound collateral management and appraisal processes for the underlying mortgage properties.


Mortgage loans are granted primarily on the basis of the borrower’s demonstrated willingness and capacity to service his/her debt obligations.  However, to the extent that the lender would ever need to realize on the underlying property serving as security, it is important to have sound collateral practices and procedures.

Property Appraisals

A significant amount of leverage is often involved in residential mortgage lending and there is general reliance on collateral to provide adequate recourse for repayment of the debt if the borrower defaults.  As such, a proper and thorough assessment of the underlying property is essential to the residential mortgage business and key to adequately mitigating risks.  FRFIs should have clear and transparent valuation policies and procedures in this regard.

In assessing the value of a property, FRFIs should take a risk-based approach, and consider a combination of valuation tools and appraisal processes appropriate to the risk being undertaken.  The valuation process can include various methods such as on-site inspections, third-party appraisals and/or automated valuation tools.

On-site inspection
In general, FRFIs should conduct an on-site inspection on the underlying property, to be performed by either a qualified employee or an appraiser, depending on the nature of the property or transaction.  Beyond the valuation of the property, an on-site property inspection is beneficial in the process of validating the occupancy, condition and, ultimately, the existence of the property.
Third-party appraisal
FRFIs that use third-party appraisers should ensure that appraisals are prepared with the appropriate professional appraisal skill and diligence, and that appraisers are designated, licensed or certified, and meet qualification standards.  As well, these appraisers should be independent from the mortgage acquisition, loan processing and loan decision process.
Automated valuation tools
Where FRFIs use automated valuation tools, processes should be established to monitor their on-going effectiveness in representing the market value of the property.  Controls should also be in place to ensure that the tools are being used appropriately by lending officers.

In general, FRFIs should not rely on any single method for property valuation.  FRFIs should maintain and implement a framework for critically reviewing and, where appropriate, effectively challenging the assumptions and methodologies underlying valuations and property appraisals.  FRFIs should undertake a more comprehensive and prudent approach to collateral valuation for higher-risk transactions.  Such transactions include, for example, residential mortgage loans with a relatively high LTV ratio, loans for illiquid properties, and loans in markets that have experienced rapid property price increases, which generate more uncertainty about the accuracy and stability of property valuations.

Realistic, substantiated and supportable valuations should be conducted to reflect the current price level and the property’s function as collateral over the term of the mortgage.  Consistent with Principle 2 above, comprehensive documentation in this regard should be maintained.

FRFIs should ensure that the claim on collateral is legally enforceable and can be realized in a reasonable period of time or, absent that verification, ensure that title insurance from a third party is in place.

When extending loans to borrowers, FRFIs should impose contractual terms and conditions that secure their full protection under the laws applicable in the relevant jurisdiction, and seek to preserve an appropriate variety of recourses (including, where applicable, actions on personal covenant) should the borrower default.  In addition, FRFIs should have the necessary action plans in place to determine the best course of action upon borrower default.  Such action plans should cover:

  • The likely recourses/options available to the FRFI upon default in all relevant jurisdictions;
  • The identification of the parties against whom these recourses may be exercised; and
  • A strategy for exercising these options in a manner that is prudentially sound.

Loan-to-Value (LTV) Ratio


The commonly-used LTV ratio is an evaluation of the amount of collateral value that can be used to support the loan.  Past experience suggests it is highly correlated with credit risk.  Residential mortgage loans with higher LTV ratios generally perform worse than those with a lower LTV ratio (i.e., higher proportion of equity).

LTV Ratio Frameworks

Robust LTV ratio frameworks can serve to mitigate the risk of various mortgage loans (e.g. lower LTV ratio limits can help to mitigate risk by limiting loan exposure).  FRFIs should establish and adhere to appropriate maximum LTV ratio limits for various types of mortgage transactions (e.g., insured loans, conventional mortgage loans, non-conforming mortgage loans, and HELOCs).  The maximum LTV ratio limits may be determined by law or may be established by a FRFI based on risk and other considerations, including the current and expected market conditions, the type of loan, as well as other risk factors that may impact borrowers’ ability to service their debt and/or lenders’ ability and cost to realize on their security. OSFI expects FRFIs’ LTV ratio frameworks to be dynamic. To this end, FRFIs should have in place a robust process for regularly monitoring, reviewing and updating their LTV ratio frameworks.

The LTV ratio should be re-calculated upon any refinancing, and whenever deemed prudent, given changes to a borrower’s risk profile or delinquency status, using an appropriate valuation/appraisal methodology.

A FRFI should not arrange (or appear to arrange) with another lender, a mortgage or combination of a mortgage and other lending products (secured by the same property), in any form that circumvents the FRFI’s maximum LTV ratio or other limits in its RMUP, or any requirements established by law. For greater clarity, a FRFI should not engage in any transactions (e.g., co-lending, bundling a mortgage loan with various priority interests, or any funding structure involving other secured loans) with other lenders, where the combined LTV of the loan(s) secured against the property exceeds the FRFI’s specific LTV limits established within its LTV ratio framework. Footnote11

Down Payment

With respect to the borrower’s down payment for both insured and uninsured mortgages, FRFIs should make rigorous efforts to determine if it is sourced from the borrower’s own resources or savings.  Where part or all of the down payment is gifted to a borrower, it should be accompanied by a letter from those providing the gift confirming no recourse.  Where non-traditional sources of down payment (e.g., borrowed funds) are being used, further consideration should be given to establishing greater risk mitigation.  Incentive and rebate payments (i.e., “cash back”) should not be considered part of the down payment. Footnote12

Property Value used for the LTV Ratio

FRFIs should assess and adjust, as appropriate, the value of the property for the purposes of calculating the LTV and determining lending thresholds within LTV limits, including limits for conventional mortgage loans, non-conforming mortgage loans and HELOCs (see sub-sections below), by considering relevant risk factors that make the underlying property more vulnerable to a significant house price correction or that may significantly affect the marketability of the property.  These factors include, but are not limited to:

  • The location, type, and expected use of the property for which the loan is granted;
  • The property’s current market price, recent price trends and housing market conditions; and
  • Any other relevant risk that may affect the sustainability of the value of the underlying property.

In markets that have experienced rapid house price increases, FRFIs should use more conservative approaches to estimating the property value for LTV calculations and not assume that prices will remain stable or continue to rise.

For the purposes of incorporating property value risk and determining appropriate lending thresholds for mortgage loans, FRFIs have flexibility to apply valuation adjustments to specific properties when calculating LTV and/or by setting LTV ratio framework limits that consider and incorporate the property valuation risk factors described in this sub-section.

LTV Ratio and Loan Type

Residential mortgage loans are often defined with reference to their LTV ratio.  A FRFI’s LTV limit structure for underwriting loans should reflect the risk attributes of different types of mortgage loans and be consistent with its RMUP.  OSFI expects the average LTV ratios for all conforming and non-conforming residential mortgages to be less than the FRFI’s stated maximums, as articulated in its RMUP, and reflect a reasonable distribution across the portfolio.

(i) Non-Conventional (“High Ratio”) Mortgage Loans

Non-conventional, or “high ratio”, loans have higher LTV ratios (less equity) at origination and generally require mortgage insurance to mitigate risk (see Principle 5).  By law, residential mortgages underwritten for the purpose of purchasing, renovating or improving a property must be insured if their LTV ratios are greater than 80 percent. Footnote13

(ii) Conventional (“Low Ratio”) Mortgage Loans

Conventional, or “low ratio”, mortgage loans have lower LTV ratios (more equity) at origination and do not require mortgage insurance by law since their LTV ratios are equal to or less than 80 percent.

(iii) Non-Conforming Mortgage Loans

Non-conforming mortgage loans are a subset of conventional mortgage loans and are broadly defined as having higher-risk attributes or deficiencies, relative to other conventional mortgages.  OSFI expects FRFIs to develop and maintain a comprehensive and risk-based definition for non-conforming loans in their RMUPs.  In general, a FRFI’s definition should include any of the following:

  • Loans with insufficient income verification (i.e., do not meet principle 3);
  • Loans to borrowers with low credit scores;
  • Loans to borrowers with high debt serviceability ratios;
  • Loans with underlying property attributes that result in elevated credit risk (e.g., illiquid properties); or
  • Loans that otherwise have clear deficiencies relative to other conforming mortgages.

OSFI expects FRFIs to impose a maximum LTV ratio less than or equal to 65 percent for non-conforming residential mortgages.  This threshold should not be used as a demarcation point below which sound underwriting practices and borrower due diligence do not apply.

In general, the maximum lending threshold for a non-conforming loan should decrease as the risk of the transaction increases (e.g., due to presence of multiple higher-risk attributes or deficiencies in a loan application, the presence of higher risk factors around property valuation, etc.)

(iv) Home Equity Lines of Credit (HELOCs)

A HELOCFootnote14 is a form of non-amortizing (revolving) credit that is secured by a residential property.  Unlike a traditional residential mortgage, most HELOCs are not constructed to fit a pre-determined amortization, although regular, minimum periodic payments are generally required by most lenders.

HELOC products provide an alternative source of funds for consumers.  However, FRFIs should recognize that, over time, these products can also significantly add to a consumer’s outstanding debt. While some borrowers may elect to repay their outstanding HELOC balances over a shorter period of time relative to the average amortization of a typical traditional mortgage, the revolving nature of HELOCs can also lead to greater persistence of outstanding balances, and greater risk of loss to lenders.  As well, it can be easier for borrowers to conceal potential financial distress by drawing on their lines of credit to make mortgage payments and, consequently, present a challenge for lenders to adequately assess changing credit risk exposures in a timely fashion.

Given the unique features of HELOCS relative to traditional residential mortgages, FRFIs should ensure appropriate mitigation of the associated risks of HELOCs, including the ability to expect full repayment over time, and the need for increased monitoring of a borrower’s credit quality.  In addition, FRFIs should review the authorized amount of a HELOC where any material decline in the value of the underlying property has occurred and/or the borrower’s financial condition has changed materially.  This expectation also applies where a HELOC is structured as part of a consolidated or linked mortgage loan product.

OSFI expects FRFIs to limit the non-amortizing HELOC component of a residential mortgage to a maximum authorized LTV ratio of less than or equal to 65 percent.Footnote15  OSFI expects the average LTV ratio for all HELOCs to be less than the FRFI’s stated maximums, as articulated in its RMUP, and reflect a reasonable distribution across the portfolio.

For greater clarity, in determining lending thresholds for HELOCs, OSFI expects FRFIs to apply the principles set out in the sub-sections “LTV Ratio Frameworks” and “Property Value used for the LTV Ratio”. In general, the maximum lending threshold for a HELOC should decrease as the risk of the transaction increases (e.g., due to presence of higher-risk borrower factors, the presence of higher risk factors around property valuation, etc.)


Principle 5: FRFIs should have effective credit and counterparty risk management practices and procedures that support residential mortgage underwriting and loan asset portfolio management, including, as appropriate, mortgage insurance.

Mortgage Insurance

Mortgage default insurance (mortgage insurance) is often used as a risk mitigation strategy.  However, mortgage insurance should not be a substitute for sound underwriting practices by FRFIs, as outlined in this Guideline.  It should not be considered a substitute for conducting adequate due diligence on the borrower, or for using other risk mitigants.

FRFIs may obtain mortgage insurance from CMHC and private mortgage insurance providers.  OSFI agrees that the use of either is appropriate, provided that a FRFI conduct due diligence on the mortgage insurer commensurate with its level of exposure to that insurer.  When performing such an assessment, a FRFI should give consideration to, among other things, the mortgage insurer’s:

  • Claims payment record;
  • Expected future claims obligations;
  • Balance sheet strength;
  • Funding sources, including the level of and access to capital, and form, amount and sources of liquidity;
  • Management, including the quality of its governance practices and procedures; and
  • Reinsurance arrangements and the direct and indirect impact that they may have on the FRFI’s own arrangements with the insurer.

The evaluation of each FRFI’s mortgage insurance counterparty should be updated throughout the life of the insurance contract.  In cases where there may be material exposures incurred but not reported losses, FRFI management should ensure that the evaluation continues beyond the expiration date of the contract to ensure that the FRFI assesses potential insurance recoverable from expected future claims.

For insured mortgages, FRFIs should meet any underwriting, valuation, or other information requirements set out by the mortgage insurer to ensure the validity of insurance on those loans.

Purchase of Mortgage Assets Originated by a Third Party

FRFIs that acquire residential mortgage loans that have been originated by a third party should ensure that the underwriting standards of that third party – including due diligence on the borrower, debt service coverage, collateral management, LTV ratios, etc. – are consistent with the FRFI’s RMUP and compliant with this Guideline.  FRFIs should not rely solely on the attestation of the third party.  In addition to underwriting, FRFIs should also consider the risks associated with other functions that may be performed by the third party in respect of acquired loans (e.g., servicing).

Model Validation and Stress Testing

FRFIs often use models to contribute to residential mortgage underwriting and/or acquisition decisions (e.g., valuation or bankruptcy models) or to make lending decisions by way of auto-adjudication.

FRFIs are expected to have an independent validation process at both inception and on a regular basis for these models.  This would include the regular review and recalibration of risk parameters with respect to their mortgage portfolio.  The models used should reflect the nature of the portfolio and, as appropriate, be adapted if there is substantial variation of risk within the portfolio.  This could include the development of new models to capture specific risk segments.

Additionally, FRFIs should have a stress-testing regime that considers unlikely, but plausible, scenarios and their potential impact on the residential mortgage portfolio.  The results of such stress testing should be considered in the on-going validation of any models and substantially reflected in FRFIs’ Internal Capital Adequacy Assessment Process (ICAAP)Footnote16 (deposit-taking institutions) or internal target capital ratio (insurance companies).

Higher-Risk Asset Portfolios

Heightened Prudence

FRFIs have the flexibility to underwrite and/or acquire a wide range of residential mortgages with varying risk profiles.  However, for residential mortgage loan asset portfolios of FRFIs that constitute greater credit risks (e.g., non-conforming mortgages), OSFI expects FRFIs to exercise heightened prudence through:

  • Greater Board and senior management oversight of the asset portfolio;
  • Increased reporting and monitoring of the residential mortgage loan asset portfolio by management;
  • Stronger internal controls (i.e., additional substantiation of credit qualification information, enhanced credit approval processes, greater scrutiny by the risk management oversight function, etc.);
  • Stronger default management and collections capabilities; and
  • Increased capital levels backstopping the impact of portfolio risk (see next section).

FRFIs should understand their mortgage portfolio risk dynamics, and ensure they are taken into account when refining their risk appetite expectations.

Adequacy of Regulatory Capital

OSFI expects that FRFIs will maintain adequate regulatory capital levels to properly reflect the risks being undertaken through the underwriting and/or acquisition of residential mortgages.  FRFIs should reflect mortgage loan assets with inherently greater risk either in their risk-based rating systems or through risk-sensitive increases in capital identified through their ICAAP (deposit-taking institutions) or internal target capital ratio (insurance companies).

III. Guideline Administration

Disclosure Requirements

Increased disclosure leads to greater transparency, clarity and public confidence in FRFI residential mortgage underwriting practices.  As a matter of principle, FRFIs should publicly disclose sufficient information related to their residential mortgage portfolios for market participants to be able to conduct an adequate evaluation of the soundness and condition of FRFIs’ residential mortgage operations.

Public disclosures related to residential mortgages should include, but not limited to, the publishing by residential mortgage lenders and acquirers that are FRFIs, on a quarterly basis, and in a format and location that will support public availability and comprehension:

  • The amount and percentage of the total residential mortgage loans and HELOCs that are insured versus uninsured.  This should include the FRFI’s definition of “insured”.  In addition, a geographic breakdown for the amount and percentage of the total residential mortgage loans and HELOCs that are insured versus uninsured – provincially in Canada, as well as from foreign operations;
  • The percentage of residential mortgages that fall within various amortization period ranges significant for the FRFI, e.g., 20-24 years, 25-29 years, 30-34 years, 35 years and greater – in Canada, as well as from foreign operations;
  • The average LTV ratio for the newly originated and acquired uninsured residential mortgages and HELOCs at the end of each period.  In addition, a geographic breakdown for the average LTV ratio for the newly originated and acquired uninsured residential mortgage loans and HELOCs – provincially in Canada, as well as from foreign operations; and
  • A discussion on the potential impact on residential mortgage loans and HELOCs in the event of an economic downturn.

To meet the above disclosure requirements, the presentation of foreign operations can be grouped into one category, such as “other jurisdictions”.

Supervision of FRFI

Information for Supervisory Purposes

Enhanced transparency and sound documentation, will allow OSFI to better understand the FRFI’s financial position and economic impacts and risks associated with a FRFI’s residential mortgage underwriting and acquisition practices.  A FRFI is required to maintain and provide to OSFI, upon request, its RMUP and associated management reports.  A FRFI should promptly inform OSFI if it becomes aware of any mortgage underwriting issues that could materially impact its financial condition.

Non-compliance with the Guideline

OSFI supervises FRFIs in order to determine whether they are in sound financial condition and to promptly advise the FRFI Board and Senior Management in the event the institution is not in sound financial condition or is not complying with supervisory requirements. OSFI is required to take, or require the Board and/or Senior Management to take, necessary corrective measures or series of measures to deal with prudential soundness issues in an expeditious manner and to promote the adoption by management and boards of directors of financial institutions of policies and procedures designed to control and manage risk.

Where a FRFI fails to adequately account and control for the risks of underwriting or acquisition of residential mortgages, on a case-by-case basis, OSFI can take, or require the FRFI to take, corrective measures.  OSFI actions can include heightened supervisory activity and/or the discretionary authority to adjust the FRFI’s capital requirements or authorized leverage ratio, commensurate with the risks being undertaken by the FRFI.

IV. Other Guidance

This Guideline is complementary to, and should be read in conjunction with, other OSFI guidance:

  • Corporate Governance Guideline
  • Guideline B-1 (Prudent Person Approach)
  • Guideline B-2 (Large Exposure Limits)
  • Guideline B-8 (Deterring and Detecting Money Laundering and Terrorist Financing)
  • Guideline B-10 (Outsourcing of Business Activities, Functions and Processes)
  • Guideline E-21 (Operational Risk Management)
  • Capital Adequacy Requirements Guideline
  • Leverage Requirements Guideline
  • Guideline A-4 (Regulatory Capital and Internal Capital Targets)


Footnote 1
This includes financial institutions incorporated, continued or regulated under the Bank ActTrust and Loan Companies ActInsurance Companies Act and the Cooperative Credit Associations Act.

Return to footnote1referrer

Footnote 2
For the purpose of this Guideline, an “insured mortgage” refers to a mortgage loan that is insured against loss caused by default on the part of a borrower, under a loan secured by real property (i.e., one- to four-unit dwellings) or chattel, or for a property that is on-reserve.  This includes both individual transaction and portfolio insurance.  It does not include separate insurance products that often accompany mortgage loans, such as: life, disability, illness, loss of employment, title, or property valuation insurance.

Return to footnote2referrer

Footnote 3
For greater clarity, this includes an individual borrower, personal investment company, personal holding company, or personal trust. This does not include commercial loans, such as loans to entities engaged in residential real estate investments or transactions where a residential property is used in support of a commercial credit application.

Return to footnote3

Footnote 4
The RMUP can be one consolidated document or a set of mortgage policy documents.

Return to footnote4referrer

Footnote 5
The requirements for the Risk Appetite Framework are summarized in the OSFI Corporate Governance guideline.

Return to footnote5referrer

Footnote 6
Typically, these processes are carried out by the FRFI’s risk management oversight function.

Return to footnote6referrer

Footnote 7
This includes a borrower’s agreement to obtain property insurance, as a condition of mortgage approval, as well as proof of property insurance obtained by the FRFI when the mortgage funds are disbursed.

Return to footnote7

Footnote 4
The RMUP can be one consolidated document or a set of mortgage policy documents.

Return to footnote4referrer

Footnote 5
The requirements for the Risk Appetite Framework are summarized in the OSFI Corporate Governance Guideline.

Return to footnote5referrer

Footnote 6
Typically, these processes are carried out by the FRFI’s risk management oversight function.

Return to footnote6referrer

Footnote 7
This includes a borrower’s agreement to obtain property insurance, as a condition of mortgage approval, as well as proof of property insurance obtained by the FRFI when the mortgage funds are disbursed.

Return to footnote7

Footnote 8
The PCMLTFA and the PCMLTFR do not apply to property and casualty insurance companies.

Return to footnote8referrer

Footnote 9
The benchmark rate (5-yr conventional mortgage rate) is published weekly by the Bank of Canada in Series V80691335.

Return to footnote9

Footnote 10
From an operational risk perspective, obtaining recourse to a borrower’s foreign assets, in the event of default, may be more challenging for FRFIs.

Return to footnote10referrer

Footnote 11
This restriction does not apply in cases where the additional secured funding is provided by a municipal, territorial, provincial or the federal government.

Return to footnote11

Footnote 12
Incentive and rebate payments (i.e., “cash back”) may be considered as part of the down payment in cases related to Affordable Housing Programs that are funded by a municipal, territorial, provincial or the federal government. OSFI expects a FRFI to exercise increased oversight, control, and reporting in respect of such transactions.

Return to footnote12referrer

Footnote 13
See the Bank Act, subsection 418(1); Trust and Loan Companies Act, subsection 418(1); Insurance Companies Act, subsection 469(1); and the Cooperative Credit Associations Act, subsection 382.1 (1).

Return to footnote13referrer

Footnote 14
For the purpose of this guideline, all reverse mortgages, or any non-amortizing (revolving) credit product secured by residential property, are considered to be HELOCs.

Return to footnote14referrer

Footnote 15
Additional mortgage credit (beyond the LTV ratio limit of 65 percent for HELOCs) can be extended to a borrower.  However, the loan portion over the 65 percent LTV ratio threshold should be amortized.

Return to footnote15referrer

Footnote 16
Deposit-taking institutions establish a level of capital adequate to support the nature and level of an institution’s risk.  Each federally-regulated deposit-taking institution is responsible for developing and implementing its own ICAAP for the purpose of setting internal capital targets and developing strategies for achieving those internal targets that are consistent with its business plans, risk profile and operating environment. See OSFI Guideline E-19 Internal Capital Adequacy Assessment Process.

Return to footnote16referrer

New Mortgage Rules Jan 1 2018

For anyone looking to buy or refinance this may greatly impact your ability to borrow. For more information please contact me.

OSFI is reinforcing a strong and prudent regulatory regime for residential mortgage underwriting

OTTAWA – October 17, 2017 – Office of the Superintendent of Financial Institutions Canada

Today the Office of the Superintendent of Financial Institutions Canada (OSFI) published the final version of Guideline B-20 − Residential Mortgage Underwriting Practices and Procedures. The revised Guideline, which comes into effect on January 1, 2018, applies to all federally regulated financial institutions.

The changes to Guideline B-20 reinforce OSFI’s expectation that federally regulated mortgage lenders remain vigilant in their mortgage underwriting practices. The final Guideline focuses on the minimum qualifying rate for uninsured mortgages, expectations around loan-to-value (LTV) frameworks and limits, and restrictions to transactions designed to circumvent those LTV limits.

OSFI is setting a new minimum qualifying rate, or “stress test,” for uninsured mortgages.

  • Guideline B-20 now requires the minimum qualifying rate for uninsured mortgages to be the greater of the five-year benchmark rate published by the Bank of Canada or the contractual mortgage rate +2%.

OSFI is requiring lenders to enhance their loan-to-value (LTV) measurement and limits so they will be dynamic and responsive to risk.

  • Under the final Guideline, federally regulated financial institutions must establish and adhere to appropriate LTV ratio limits that are reflective of risk and are updated as housing markets and the economic environment evolve.

OSFI is placing restrictions on certain lending arrangements that are designed, or appear designed to circumvent LTV limits.

  • A federally regulated financial institution is prohibited from arranging with another lender a mortgage, or a combination of a mortgage and other lending products, in any form that circumvents the institution’s maximum LTV ratio or other limits in its residential mortgage underwriting policy, or any requirements established by law.


“These revisions to Guideline B-20 reinforce a strong and prudent regulatory regime for residential mortgage underwriting in Canada,” said Superintendent Jeremy Rudin.

Quick Facts

  • On July 7, 2017, OSFI published draft revisions to Guideline B-20 – Residential Mortgage Underwriting Practices and Procedures. The consultation period ended on August 17, 2017.
  • OSFI received more than 200 submissions from federally regulated financial institutions, financial industry associations, other organizations active in the mortgage market, as well as the general public.
  • The cover letter includes an unattributed summary of the comments and an explanation of how these issues were dealt with in the final Guideline B-20.
  • Following publication of Guideline B-20 OSFI plans to assess Guideline B-21 − Residential Mortgage Insurance Underwriting Practices and Procedures for consequential amendments.

Associated Links

About OSFI

The Office of the Superintendent of Financial Institutions Canada (OSFI) is an independent agency of the Government of Canada, established in 1987 to protect depositors, policyholders, financial institution creditors and pension plan members, while allowing financial institutions to compete and take reasonable risks.

Media Contact:
Annik Faucher
OSFI – Public Affairs 

First National Financial Corporation surpasses $100 billion in mortgages under administration

First National Financial Corporation announced it has crossed the $100 billion threshold in Mortgages Under Administration, a significant accomplishment that reflects the Company’s stature as a primary lender to Canadian homeowners and commercial real estate buyers.

“Achieving this milestone reinforces First National’s position as Canada’s largest non-bank mortgage lender and Canada’s largest CMHC multi-residential lender,” said Stephen Smith, Chairman and CEO. “We are proud of the role our Company has played in helping hundreds of thousands of Canadians to achieve their real estate ownership goals for almost 30 years. My sincere thanks to First National’s employees, our institutional partners, the mortgage broker community and our customers for making $100 billion a reality.”

A Canadian company, First National opened for business in Toronto in 1988 and has grown to become a nationwide lender across residential and commercial markets.

$100 billion of Mortgages Under Administration (MUA) reflects an investment in the properties owned by almost 300,000 single family borrowers and over 5,000 commercial borrowers,” said Moray Tawse, Executive Vice President. “That’s the equivalent of all of the homes in a city the size of Kitchener, so this is a significant milestone for us.”

All of the Company’s single family origination volumes come through the mortgage broker channel and mortgage brokers play a critical role in MUA growth.

“In serving borrowers and mortgage brokers, First National tries to go beyond what other lenders do to champion each opportunity,” said Scott McKenzie, Senior Vice President, Residential Mortgages. “We try to be a reliable delivery partner by responding to 90% of submissions in under four hours. Although we’ve grown, First National has never lost sight of what it takes to be a leading financial services provider.”

Of the Company’s now $100 billion book of business, commercial mortgages represent approximately 23%.

“First National is a case study in Canadian entrepreneurship,” said Jeremy Wedgbury, Senior Vice President, Commercial Mortgages. “It started with Stephen and Moray working together in a small office on Eglinton Avenue and now includes over 900 employees serving in five offices across Canada. Our entrepreneurial culture resonates with commercial borrowers who value the Company’s ability to solve problems, provide business advice and ultimately, get deals done faster and more efficiently than the competition.”

About First National Financial Corporation

First National Financial Corporation (TSX: FN, TSX: FN.PR.A, TSX:FN.PR.B) is the parent company of First National Financial LP, a Canadian-based originator, underwriter and servicer of predominantly prime residential (single-family and multi-unit) and commercial mortgages. With more than $100 billion in mortgages under administration, First National is Canada’s largest non-bank originator and underwriter of mortgages and is among the top three in market share in the mortgage broker distribution channel.  For more information, please visit

Forward-Looking Information
Certain information included in this news release may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by the use of terms such as “may”, “will, “should”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potential”, “continue” or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management’s future outlook and anticipated events or results, and may include statements or information regarding the future financial position, business strategy and strategic goals, product development activities, projected costs and capital expenditures, financial results, risk management strategies, hedging activities, geographic expansion, licensing plans, taxes and other plans and objectives of or involving the Company. Particularly, information regarding growth objectives, any future increase in mortgages under administration, future use of securitization vehicles, industry trends and future revenues is forward-looking information. Forward-looking information is based on certain factors and assumptions regarding, among other things, interest rate changes and responses to such changes, the demand for institutionally placed and securitized mortgages, the status of the applicable regulatory regime and the use of mortgage brokers for single family residential mortgages. This forward-looking information should not be read as providing guarantees of future performance or results, and will not necessarily be an accurate indication of whether or not, or the times by which, those results will be achieved. While management considers these assumptions to be reasonable based on information currently available, they may prove to be incorrect. Forward looking-information is subject to certain factors, including risks and uncertainties listed under ”Risk and Uncertainties Affecting the Business” in the MD&A, that could cause actual results to differ materially from what management currently expects. These factors include reliance on sources of funding, concentration of institutional investors, reliance on relationships with independent mortgage brokers and changes in the interest rate environment. This forward-looking information is as of the date of this release, and is subject to change after such date. However, management and First National disclaim any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

SOURCE First National Financial Corporation

For further information: Robert Inglis, Chief Financial Officer, First National Financial Corporation, Tel: 416-593-1100, Email:; Ernie Stapleton, President, Fundamental, Tel: 905-648-9354, Email:

Related Links

Consumers Locking in Mortgages ahead of Bank of Canada Rate Hikes

The number of Canadians who applied for a fixed-rate mortgage in August saw a substantial spike, with 59.31% of users on the website opting for a fixed-rate mortgage over variable.

Historically, the majority of Canadians who shop for mortgage rates on opt for variable-rate mortgages. Since January 2014, 56.56% of users have gone variable, compared with 43.44% of those who go fixed. The shift in August is seen as a reaction to the Bank of Canada’s decision to raise interest rates. On July 12, the bank hiked rates by 25 basis points — the first upward move since 2010. Rates were again raised another quarter of a percent on September 6.

“It’s important for consumers not to panic,” said Justin Thouin, co-founder and CEO of “Data over the past 30 years shows that Canadians have saved more money on interest by going with a variable rate, rather than a fixed-rate mortgage.”

“Yes, a BoC rate hike means your mortgage payments go up if you have a variable-rate mortgage. And this causes some Canadians to overreact and do anything they can to switch to a fixed-rate mortgage,” Thouin adds.  “Doing this might buy you peace of mind if the thought of rising interest rates keeps you up at night.  But based on the past 30 years, staying in a variable rate mortgage is still the right choice in the long run if your goal is to pay as little interest as possible.”

Understanding The Impact of Rate Change

If a consumer purchases a home for $750,000 (with a down payment of 10 per cent amortized over 25 years), at a five-year, variable rate of 1.95 per cent, they would have a total monthly mortgage interest payment of $1,096.88 (keep in mind, this does not include additional costs such as mortgage insurance, principal payment or property taxes).  If the Bank of Canada increases its overnight rate by 25 basis points, that homeowner’s monthly interest payment on their mortgage would be $1,237.50 — an increase of $140.62 per month.

That same homeowner using a fixed mortgage rate — the most competitive fixed product on last month was 2.63% — would have a total monthly mortgage interest payment of $1,479.38.  While they can lock in that rate for five years, they’re still spending $241.88 a month more in interest compared with the variable product even after variable rates go up. That’s $2,902.56 a year in increased costs!

“Analysts have a wide range of opinions as to how many additional increases the BoC will make over the next 18 months, but until there is a substantial increase, the impact will be not that extreme,” says Thouin.

About is changing the way that Canadians think about personal finance. It’s a one-stop-shop for Canadians to compare offers on personal financial products quickly and easily from North America’s leading companies, including our partners at CAA, PC Insurance, and Scotiabank. has helped millions of Canadians explore their financial options and continues to work towards our goal of saving Canadians $1 billion in fees and interest.


8 Percent Returns for Syndicate Mortgage Lenders in Markham Low-Rise

Building and Development Mortgages Canada Inc. (BDMC) announced today and early exit for lenders in a syndicate mortgage that funded part of the York Downs development by Sunrise Homes and Fortress Real Developments Inc. (Fortress). Lenders received their principal back in full and an average annualized return of 8.81%.

Lenders were paid out through the sale of the townhouse project, located in York Downs/Angus Glen area, north of 16th Avenue, in the City of Markham. The approximately two acre luxury residential housing development was planned for 50 homes, split between traditional townhouses with 15′ feet of lot frontage and back-to-back townhouses with 21′ feet of frontage.

After closing on the property in August of 2016, new low-rise house prices in the Greater Toronto Area have skyrocketed in value, rising approximately 40% per Altus Group Data. Fortress and Sunrise indicated that offers to purchase the property began to come in almost immediately, as developers looked to capitalize on strong market conditions.

Markham is one of the most desirable locations for new housing in the Greater Toronto Area,” said Jawad Rathore, the CEO of Fortress. “At Fortress, we create value after we acquire lands, either through zoning, sales or construction. At the York Downs site, value was immediately realized by the intelligent assembly we executed with our partners at Sunrise Homes. We were also fortunate to take advantage of the significant increase in the low rise home market, and were able to achieve our value objective in a much shorter period than originally projected.”

The exit comes more than two years ahead of the loan term. BDMC principal broker Ildina Galati explained, “Lenders are seeing healthy returns on these early exits and this is a direct testament to the borrowers we work with, their experience, the strong due diligence they do in terms of understanding the market and the value they create for all stakeholders involved in the projects.”

This latest project is the 6th that has exited in 2017 and to date over $100 Million of lender principal has been paid back; average estimated annualized returns in the 23 exited projects is 9.27%. Projects have exited through a variety of mechanisms available to the development partnerships including, completion of the build-out with delivery of more than 1700 units, sale of the development site and refinancing of the project.

BDMC has closed over 14,000 lenders into syndicate mortgages in 80 projects across Canada. The projects range from high-rise residential to condo commercial projects offering a variety of tenures and built forms for them to choose from. Through BDMC, over $920 million has been funded into development projects to date with the projects having a built out value of $6 billion.

About the Companies

Building & Development Mortgages Canada Inc. – established in 2007, is a premier mortgage brokerage licensed in Ontario, Nova Scotia, AlbertaManitoba, British Columbia and Saskatchewan. BDMC closes all of the syndicate mortgage transactions that fund Fortress projects. For more information visit:

Fortress Real Developments Inc. is a Canadian real estate development company that seeks out and analyzes opportunities in major Canadian markets. The company is focused on quality projects with recognizable alpha in residential low-rise, high-rise, commercial and industrial market segments.

Ontario Passes Legislation for Home Inspections

Ontario Pension Plan

Ontario passed legislation today that will strengthen consumer protection by introducing new rules for home inspections.

The Putting Consumers First Act will:

  • Regulate the home inspection industry through mandatory licensing and proper qualifications for home inspectors, as well as minimum standards for contracts, home inspection reports, disclosures and the performance of home inspections.

Strengthening consumer protection is part of our plan to create jobs, grow our economy and help people in their everyday lives.

Quick Facts

  • Home inspectors are one of the only professionals involved in a real estate transaction that are not currently provincially regulated.
  • The proposed legislation to regulate home inspectors was based on 35 recommendations made by a 16-member expert panel, which were supported by both industry and consumers.

The ministry is seeking input on a proposal for legislation that would establish mandatory qualifications for home inspectors.

Currently anyone in Ontario can call themselves a home inspector. Many consumers depend on the opinions of their home inspector to make what is often the largest purchase decision of their lifetime.

In order to improve consumer protection in this important part of the home buying process, the Ministry of Consumer Services is consulting on a panel’s findings and recommendations to introduce mandatory qualifications for home inspectors.

The panel was established by the Ministry of Consumer Services and met for four months to discuss issues, consider options, and make recommendations on qualifications of home inspectors.

The panel has made thirty-five recommendations in five areas:

– regulation of home inspectors
– technical standards for home inspectors
– professional home inspector qualifications
– consumer protection requirements
– regulatory governance for Ontario’s home inspection industry

The Ministry of Consumer Services is now collecting public comments on the panel’s recommendations. The panel’s report with the recommendations is attached here and the ministry welcomes feedback and encourages anyone interested to provide comments.

The panel’s report and any public feedback the ministry receives will guide the government as it considers whether to bring forward legislation to establish qualifications for home inspectors.

Source: Ministry of Consumer Services

Canadian housing starts trend upwards in March

new home mortgages

Housing starts are trending higher at 211,342 units in March 2017, compared to 205,521 units in February 2017, according to Canada Mortgage and Housing Corporation (CMHC). This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

“March housing starts were at their highest level since September 2007, pushing the trend in housing starts upward for a third consecutive month,” said Bob Dugan, CMHC’s Chief Economist. “Stronger residential construction at the national level is reflected by a rising trend in single-detached and multi-unit starts in Ontario and continued growth of new rental apartments in Quebec.”

Monthly highlights

  • Vancouver housing starts trended lower for the fourth consecutive month but, remained above the five-year average. Actual housing starts reached the highest level on record for March since 1972, driven by new apartment construction. Starts activity in the Vancouver CMA is also picking up again after an unusually cold winter.
  • In Toronto, the total starts trend moved higher in March, supported by all housing types. While apartment starts registered the strongest trend increase in March, single-detached home construction has been trending higher since the end of last summer. Demand for new housing is growing as supply in the rental and resale markets is short, reflected by low rental apartment vacancy rates and declining active listings.
  • The decline in townhouse starts contributed to a downward trend in Hamilton CMA total housing starts, despite the strength in single-detached and semi-detached housing starts. Notwithstanding this month’s decline, strong demand from local residents and out-of-town buyers continued to support townhouse construction as this type of dwelling remains the most viable option for many first time homebuyers.
  • ‘Demand’ is the story in St. Catharines-Niagara. As buyers from Toronto and Hamilton seek the relatively affordable options, resale inventory is being squeezed and prices are soaring. This is prompting buyers to turn to the new housing market, where singles in land-abundant Niagara Falls remain a sought-after commodity.
  • Multi-unit residential construction in the Montreal area remained significant in March. In addition to several seniors’ residences, many rental apartments were started in all parts of the metropolitan area this past month, and new rental units reached a 25-year high. With the decrease in inventories of unsold condominium units, renewed growth was also noted in this segment, as many new projects got under way.
  • The pace of residential construction in the Quebec area has slowed down since the beginning of the year. This decline has been mainly due to a decrease in activity in the purpose-built rental housing segment. It should be mentioned that starts of this type reached historically high levels in 2015 and 2016. Consequently, given the significant number of rental apartments currently under construction and the recent increase in the vacancy rate in the area, a downward adjustment was expected.
  • There is an upward momentum to residential construction in Charlottetown. Strong population growth coupled with a tight supply of both resale homes and rental units has led more home buyers to look to the new home market. Singles starts over the first quarter of 2017 reached levels not recorded since 1987.

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of Canada’s housing market. In some situations analyzing only SAAR data can be misleading, as they are largely driven by the multi-unit segment of the market which can vary significantly from one month to the next.

The standalone monthly SAAR of housing starts for all areas in Canada was 253,720 units in March, up from 214,253 units in February. The SAAR of urban starts increased by 20.2 per cent in March to 235,674 units. Multiple urban starts increased by 30.2 per cent to 160,989 units in March, while single-detached urban starts increased by 3.1 per cent, to 74,685 units.

Rural starts were estimated at a seasonally adjusted annual rate of 18,046 units.

As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.

Source CMHC

Mortgage Application – Apply Online

online mortgage application

Online Mortgage Application Form
Printable Mortgage Application Form

The online mortgage application can be filled out on your phone or tablet/computer and the printable one can be emailed to, faxed back to 705-506-0501, or dropped off at 35 Worsley Street suite 201, in Barrie.

Please Note: If you are just “shopping around” for mortgage rates, or if you are currently working with another mortgage broker or financial institution, having multiple credit bureau checks done in a short period of time can actually harm your credit rating, as this is often an early indication of fraudulent activity. Credit Bureau checks will show when and who has been checking. Some lenders may refuse to deal with a borrower who has multiple recent credit checks on their credit report, or may require a valid reason why multiple credit checks were done.

Mortgage Applications will be processed by:

Michael Curry (705)717-5598
Mortgage Agent (Lic. M1200155)
VERICO The Mortgage Wellness Group
Head Office
35 Worsley Street, Suite 201
Barrie, ON
L4N 1L7

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The Mortgage Application Process

From filling in the paperwork, to signing on the dotted line.

There are various steps that will have to happen before you will be approved for a mortgage loan for a home purchase:

  • Choosing a potential lender
  • A pre-approval process if you want to know how much money you’ll have to shop with
  • Meeting and information download
  • A Debt Service Ratios analysis
  • A property analysis if you have identified the home of your dreams
  • Completing the Application
  • Negotiation and commitment
  • Closing process liaison
  • Mortgage administration

Choosing a potential lender

Using a mortgage broker/agent

  • If you are using a mortgage broker/agent and when they know all they need to know about you and your needs, they will start to consider which mortgage might be a good fit for you. They will think about whether you meet various lenders’ qualification requirements.
  • The mortgage broker/agent will provide you with options based on an assessment of the lender, the mortgage, its structure, its features and its risks in light of the information you have provided about your circumstances. The mortgage broker/agent must also explain his or her rationale for the options that have been identified.
  • Make sure the mortgage broker/agent provides you with information that will help you determine whether you can afford the mortgage, including an estimate of the total cost of borrowing for the term of the mortgage. The total cost of the mortgage depends on the terms and conditions for paying it back, such as the interest rate and the amount of time it takes to pay off the entire mortgage or “amortization period”. The total cost can be much more than the amount you are borrowing. You need to determine if the rate, amortization period and total cost of the mortgage are right for you.

Going direct to a lender or through other channels

  • Make sure you shop around to find a mortgage at a rate and for a term that is affordable for you, and with conditions with which you can live. If you are using a private lender, lending their own money on the security, make sure that they are either licensed if doing business as a mortgage lender, or otherwise are using a licensed Mortgage Brokerage.

Want to be Pre-Approved?

It is a good idea to get pre-approved for a mortgage before you start your search for a new home as it might help you keep a budget range in mind. You can ask a mortgage broker/agent to help you with this process, or go straight to a financial institution or other lender.

You will receive written confirmation for a certain amount at a particular interest rate and the offer will be good for a specified amount of time. Keep in mind however that a pre-approved mortgage is not a guarantee of being approved for the mortgage loan, as that depends on a number of things including the property you want to purchase.

Meeting and Information

Your mortgage broker/agent or your lender will ask you for information to help them better understand you, your goals for the mortgage loan, and the type of mortgage you want or need including:

  • Your financial circumstances
  • Your assets
  • Your sources of income and/or funds, including employment
  • Your mortgage needs and objectives
  • Your knowledge of mortgages
  • Your preference in terms of amount, rate, term, amortization and conditions
  • Your risk tolerance
  • Other parties to the transaction
  • If you have identified a property you wish to purchase, information about the property that will become the security for the mortgage loan
  • If you know what your credit rating is
  • Your debt load or liabilities
  • The amount of down payment you have saved

They will also ask for documentation to confirm the information you provide.

Take the following information with you to your first meeting with a mortgage broker/agent or lender:

  • Information about your employment including confirmation of salary. A letter from your employer will be suitable for this
  • Information about any other sources of income you have and evidence
  • Details regarding where you bank
  • Proof of any assets including RRSPs or a savings account
  • Details of any loans or other debts such as student loans
  • Evidence of your down payment including information about the amount of down payment you have saved and where it’s coming from
  • The full address of the property
  • A copy of the real estate listing, if applicable
  • Your mortgage pre-approval certificate, if one was issued and you have now identified a property
  • Contact information for your lawyer or notary
  • A copy of the agreement of purchase and sale
  • Estimates of your monthly housing costs (e.g., property taxes, utilities, etc.)
  • Proof that you have the funds to cover any closing costs

Lenders or mortgage brokers/agents will rely on the information you provide. This information helps them find the mortgage option(s) and/or lender(s) that are right for you. It is critical that you are completely honest when providing them this information. Errors in your application can easily lead to a mortgage that is not right for you or fit for your circumstances, plus misstating facts or providing false information in your mortgage application can have serious consequences. You could face up to 10 years of jail time.

Lenders and mortgage brokers/agents are expected to ask questions and seek additional information in the event of inconsistencies with the information you provide.

Debt Service Ratios Analysis

Your mortgage broker/agent or lender will need to make sure that you can carry a mortgage. They will do this by performing a Debt Service Ratio Analysis, basically comparing your debt to your income to see whether you can afford the mortgage loan you want.

Most lenders will require that your monthly housing costs (Gross Debt Service), including mortgage payments, property taxes, condo fees and heating expenses, are no more than 32 per cent of your gross monthly income.

They also want to know that your total monthly debt load, including for example car loans or leases and credit card payments (Total Debt Service), is not more than 44 per cent of your gross monthly income.

As well as qualifying for the mortgage loan at the rate offered by the lender, if you are putting less than 20 per cent of the purchase price down and are therefore applying for a high-ratio mortgage, you will also need to qualify at the Bank of Canada’s five-year fixed posted mortgage rate, which is usually higher. In that case your lender will also require that housing costs are no more than 39 per cent of your monthly income.

This extra “stress test” is the Government of Canada’s response to the sharp increase in house prices in certain Canadian cities, and concerns that currently low mortgage rates will eventually rise. All home buyers applying for a high-ratio loan, and therefore requiring mortgage insurance, or those required by their lender to get mortgage insurance for other reasons, are subject to the “stress test”. It assures mortgage lenders that the home buyer would still be able to afford the mortgage if prices or rates increase.

Property Analysis

If you have already identified a property, your lender or mortgage broker/agent might need to analyze the property to ensure it is worth enough to provide security for the mortgage loan.

They might want to view the property online with you, view the property listing on MLS or a self-listing website and/or obtain a property appraisal or home inspection to determine fair market value. You may need to negotiate access to the property with the sellers, and you will be responsible for paying appraisal and home inspection fees, unless a lender pays as an incentive for you to sign up.

Completing the Application

If you are using a mortgage broker/agent to find you a loan, once they have your approval to approach a particular lender, they will complete your application including information about the property if you have chosen one, and information about you from your meeting. You should be asked to sign a written acknowledgement that they have disclosed the risks associated with the mortgage they have presented.

If you are dealing direct with a lender, you will complete the application with them.

The mortgage application will include basic information such as your name, address and telephone number, social insurance number, employer, income, number of dependents, and the name and address of your bank or other financial institution.

The application will also detail: your assets, such as mutual funds and RRSPs and liabilities, including credit cards, credit lines, loans or leases; the purpose of the loan; mortgage loan amount required; the type of mortgage loan you want; the mortgage term, amortization and interest rate you seek; plus a description of the property you want to purchase such as address, size, type and construction.

Make sure you read the application carefully before signing it, and never sign an incomplete form.

You will also need to sign a Credit Authorization Form giving the mortgage broker/agent or lender authorization to perform a credit check. A mortgage broker/agent cannot and should not request a credit report without prior consent from you.

Credit Bureau Check

A credit report from a credit bureau will tell a potential lender how well you have paid your debts and bills in the past, your outstanding debt levels, and employment, income and residence history.

The credit bureau report will include a credit score – a single indicator of how likely you are to repay your loan at the agreed upon terms. It summarizes all the information available about you and provides the findings as a single number.

The report will also include information about any bankruptcies, collections, judgments, garnishments or liens against you and whether you have gone through a foreclosure or Power of Sale proceeding in the last five to seven years.

Neither the lender nor your mortgage broker/agent will be able to give you a copy of this report, but can discuss issues with you and must note these issues in the mortgage application.

While the mortgage broker/agent or lender is required to do a credit check, you can always also get a copy of your own credit history and make sure it is complete and accurate. Doing this early in your home buying journey and before you meet with a mortgage broker/agent or lender gives you the chance to re-establish a good credit history if the report shows you currently have poor credit.

There are two main credit-reporting agencies: Equifax Canada Inc. and TransUnion of Canada. You will pay a small fee for this service.

Once completed you will sign the mortgage application form, confirming that the facts on the application are correct.

Negotiation and Commitment

Once a potential lender lets you or your mortgage broker/agent know that they are willing to advance the loan, you or your mortgage broker/agent will then start to negotiate the deal. You will discuss a final mortgage rate and term for the loan and you or your mortgage broker/agent might need to supply more documentation to support your application.

Once you receive the official Mortgage Approval or Letter of Commitment, make sure to review all of the terms and conditions before you sign and return the agreement.

Closing Process Liaison

Once the lender has received your signed agreement the closing process will start. Your mortgage broker/agent may continue to liaise between you and the lender and perhaps even the lawyers involved for you and the seller.

Ongoing Mortgage Administration

If you have used a mortgage broker/agent to help you find a mortgage loan, and their brokerage is also licensed as an administrator, after the property sale closes and the funds are provided by the lender, your mortgage file may be sent to the mortgage brokerage’s administration department. They will track payments, calculate outstanding loan balances and might collect municipal property taxes. They may alert the mortgage broker/agent when your mortgage term is near completion so that the mortgage broker/agent can assist you with renewal or the selection of a new lender for the next term.


Financial Services Commission of Ontario (FSCO)

5160 Yonge Street, P.O. Box 85,
Toronto, Ontario M2N 6L9
Telephone: (416) 250-7250 | Toll free: 1 (800) 668-0128
Fax: (416) 590-7070 | TTY: 1 (800) 387-0584

Mortgage Terminology Explained

Agreement of Purchase and Sale
A legal agreement that offers a certain price for a home. The offer may be firm (no conditions attached), or conditional (certain conditions must be fulfilled before the deal can be closed).

Amortization Period
The time over which all regular payments would pay off the mortgage. This is usually 25 years for a new mortgage, however can be greater, up to a maximum of 30 years.

The process of determining the value of property, usually for lending purposes. This value may or may not be the same as the purchase price of the home.

Appraisal Value
An estimate of the market value of the property.

Blended Payments
Payments consisting of both a principal and an interest component, paid on a regular basis (e.g. weekly, biweekly, monthly) during the term of the mortgage. The principal portion of payment increases, while the interest portion decreases over the term of the mortgage, but the total regular payment usually does not change.

Canada Mortgage and Housing Corporation (CMHC)
The National Housing Act (NHA) authorized Canada Mortgage and Housing Corporation (CMHC) to operate a Mortgage Insurance Fund which protects NHA Approved Lenders from losses resulting from borrower default.

Certificate of Location or Survey
A document specifying the exact location of the building on the property and describing the type and size of the building including additions, if any.

Certificate of Search or Abstract of Title
A document setting out instruments registered against the title to the property, e.g. deed, mortgages, etc.

Closed Mortgage
A mortgage agreement that cannot be prepaid, renegotiated or refinanced before maturity, except according to its terms.

Closing Costs
Various expenses associated with purchasing a home. These costs can include, but are not limited to, legal/notary fees and disbursements, property land transfer taxes, as well as adjustments for prepaid property taxes or condominium common expenses, if any.

Closing Date
The date on which the sale of a property becomes final and the new owner usually takes possession.

CMHC or GEMICO Insurance Premium
Mortgage insurance insures the lender against loss in case of default by the borrower. Mortgage insurance is provided to the lender by CMHC or GEMICO and the premium is paid by the borrower.

Conditional Offer
An offer to purchase subject to conditions. These conditions may relate to financing, or the sale of an existing home. Usually a time limit in which the specified conditions must be satisfied is stipulated.

Conventional Mortgage
A mortgage that does not exceed 80% of the purchase price of the home. Mortgages that exceed this limit must be insured against default, and are referred to as high-ratio mortgages (see below).

Debt-Service Ratio
The percentage of the borrower’s gross income that will be used for monthly payments of principal, interest, taxes, heating costs and condominium fees.

Deed (Certificate of Ownership)
The document signed by the seller transferring ownership of the home to the purchaser. This document is then registered against the title to the property as evidence of the purchaser’s ownership of the property.

A sum of money deposited in trust by the purchaser when making an offer to be held in trust by the vendor’s agent, broker, lawyer or notary until the closing of the transaction.

The interest of the owner in a property over and above all claims against the property. It is usually the difference between the market value of the property and any outstanding encumbrances.

Fire Insurance
Before a mortgage can be advanced, the purchaser must have arranged fire insurance. A certificate or binder from the insurance company may be required on closing.

Firm Offer
An offer to buy the property as outlined in the offer to purchase with no conditions attached.

Fixed-Rate Mortgage
A mortgage for which the rate of interest is fixed for a specific period of time (the term).

A legal procedure whereby the lender eventually obtains ownership of the property after the borrower has defaulted on payments.

Gross Debt Service (GDS) Ratio
The percentage of gross income required to cover monthly payments associated with housing costs. Most lenders recommend that the GDS ratio be no more than 32% of your gross (before tax) monthly income.

Gross Household Income
Gross household income is the total salary, wages, commissions and other assured income, before deductions, by all household members who are co-applicants for the mortgage.

High Ratio Mortgage
If you don’t have 20% of the lesser of the purchase price or appraised value of the property, your mortgage must be insured against payment default by a Mortgage Insurer, such as CMHC.

An amount of money required to be withheld by the lender during the construction or renovation of a house to ensure that construction is satisfactorily completed at every stage.

Home Equity
The difference between the price for which a home could be sold (market value) and the total debts registered against it.

The examination of the house by a building inspector selected by the purchaser.

Interest Rate Differential Amount (IRD)
An IRD Amount is a prepayment charge that may apply if you pay off your mortgage principal prior to the maturity date or pay the mortgage principal down beyond the prepayment privilege amount. The IRD amount is equivalent to the difference between your annual interest rate and the posted interest rate on a mortgage that is closest to the remainder of the term less any rate discount you received, multiplied by the amount being prepaid, and multiplied by the time that is remaining on the term.

Interim Financing
Short-term financing to help a buyer bridge the gap between the closing date on the purchase of a new home and the closing date on the sale of the current home.

Maturity Date
Last day of the term of the mortgage agreement.

Mortgage Critical Illness Insurance
Mortgage Critical Illness Insurance is available as an enhancement to Mortgage Life Insurance. Mortgage Critical Illness Insurance is underwritten by the Canada Life Assurance Company. Complete details of benefits, exclusions and limitations are contained in the Certificate of Insurance. It is recommended for all mortgagors. It can pay off your mortgage — up to $300,000 — if you are diagnosed with life-threatening cancer, heart attack or stroke.

Mortgagee and Mortgagor
The lender is the mortgagee and the borrower is the mortgagor.

Mortgage Life Insurance
A form of reducing term insurance recommended for all mortgagors. If you die, have a terminal illness, or suffer an accident, the insurance can pay the balance owing on the mortgage. The intent is to protect survivors from the loss of their homes.

Mortgage Term
The number of years or months over which you pay a specified interest rate. Terms usually range from six months to 10 years.

Open Mortgage
A mortgage which can be prepaid at any time, without requiring the payment of additional fees.

Payment Frequency
The choice of making regular mortgage payments every week, every other week, twice a month or monthly.

Principal, interest and taxes. Together, these make up the regular payment on a mortgage if you elect to include property taxes in your mortgage payments.

This allows you to move to another property without having to lose your existing interest rate. You can keep your existing mortgage balance, term and interest rate plus save money by avoiding early discharge penalties.

Prepayment Charge
Compensation when the borrower prepays all or part of a closed mortgage more quickly than is allowed as set out in the mortgage agreement.

Prepayment Option
The ability to prepay all or a portion of the principal balance. Prepayment charges may be incurred on the exercise of prepayment options.

The amount of money borrowed for a new mortgage.

Renegotiating your existing mortgage agreement. May include increasing the principal or paying out the mortgage in full.

At the end of a mortgage term, the mortgage may “roll over” on new terms and conditions acceptable to both the lender and the borrower. This is known as renewing a mortgage. Otherwise, the lender is entitled to be repaid in full. In this case, the borrower may seek alternative financing.

Continue reading “Mortgage Application – Apply Online”

Fitch credit rating agency warns Canada of Trump

fitch ratings

fitch ratingsThe Trump Administration represents a risk to international economic conditions and global sovereign credit fundamentals, Fitch Ratings says. US policy predictability has diminished, with established international communication channels and relationship norms being set aside and raising the prospect of sudden, unanticipated changes in US policies with potential global implications.

The primary risks to sovereign credits include the possibility of disruptive changes to trade relations, diminished international capital flows, limits on migration that affect remittances and confrontational exchanges between policymakers that contribute to heightened or prolonged currency and other financial market volatility. The materialisation of these risks would provide an unfavourable backdrop for economic growth, putting pressure on public finances that may have rating implications for some sovereigns. Increases in the cost or reductions in the availability of external financing, particularly if accompanied by currency depreciation, could also affect ratings.

In assessing the global sovereign credit implications of policies enacted by the new US Administration, Fitch will focus on changes in growth trajectories, public finance positions and balance of payments performances, with particular emphasis on medium-term export prospects and possible pressures on external liquidity and sustainable funding. US positions on some countries may change quickly, at least initially, but any potential rating adjustments will depend on consequent changes to sovereign credit fundamentals, which will almost certainly be slower to materialise.

Elements of President Trump’s economic agenda would be positive for growth, including the long-overdue boost to US infrastructure investment, the focus on reducing the regulatory burden and the possibility of tax cuts and reforms, assuming cuts don’t lead to proportionate increases in the government deficit and debt. One interpretation of current events is that, after an early flurry of disruptive change to establish a fundamental reorientation of policy direction and intent, the Administration will settle in, embracing a consistent business- and trade-friendly framework that leverages these aspects of its economic programme, with favourable international spill-overs.

In Fitch’s view, the present balance of risks points toward a less benign global outcome. The Administration has abandoned the Trans-Pacific Partnership, confirmed a pending renegotiation of the North American Free Trade Agreement, rebuked US companies that invest abroad, while threatening financial penalties for companies that do so, and accused a number of countries of manipulating exchange rates to the US’s disadvantage. The full impact of these initiatives will not be known for some time, and will depend on iterative exchanges among multiple parties and unforeseen additional developments. In short, a lot can change, but the aggressive tone of some Administration rhetoric does not portend an easy period of negotiation ahead, nor does it suggest there is much scope for compromise.

Sovereigns most at risk from adverse changes to their credit fundamentals are those with close economic and financial ties with the US that come under scrutiny due to either existing financial imbalances or perceptions of unfair frameworks or practices that govern their bilateral relations. Canada, China, Germany, Japan and Mexico have been identified explicitly by the Administration as having trade arrangements or exchange rate policies that warrant attention, but the list is unlikely to end there. Our revision of the Outlook on Mexico’s ‘BBB+’ sovereign rating to Negative in December partly reflected increased economic uncertainty and asset price volatility following the US election.

The integrative aspects of global supply chains, particularly in manufactured goods, means actions taken by the US that limit trade flows with one country will have cascading effects on others. Regional value chains are especially well developed in East Asia, focused on China, and Central Europe, focused on Germany.

Tighter immigration controls and possible deportations could have meaningful effects on remittance flows, as the US has the world’s largest immigrant population. World Bank data confirm that the US and Mexico share the world’s top migration corridor and have the largest bilateral remittance flows. Relative to GDP, remittances are even larger for Honduras, El Salvador, Guatemala and Nicaragua, all of which receive most inflows from the US.

Countries hosting US direct investment, at least part of which has financed export industries focused back on the US, are at risk of being singled out for punitive trade measures. The list of these countries is potentially long, since US-based entities account for nearly one-quarter of the stock of global foreign direct investment. Countries with the highest stock of US investment in manufacturing are Canada, the UK, Netherlands, Mexico, Germany, China and Brazil.

James McCormack
Managing Director, Sovereigns
+44 20 3530 1286
Fitch Ratings Ltd
30 North Colonnade
London E14 5GN

Charles Seville
Senior Director, Sovereigns
+1 212 908 0277

Mark Brown
Senior Analyst
Fitch Wire
+44 20 3530 1588

Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email:; Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email:; Leslie Tan, Singapore, Tel: +65 67 96 7234, Email:

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at All opinions expressed are those of Fitch Ratings.


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