The Government of Canada placed into effect a very important mandate called Guideline B20. It requires financial institutions and mortgage brokers to provide sound residential mortgage underwriting practices. This was done to reduce the risk of financial loss for lenders. Securing and protect lenders’ finances ultimately reduces the risk and burden to the entire nation’s financial system. This guideline requires lenders to strictly evaluate a borrower’s ability to pay back a loan based on certain conditions.
Guideline B20 also sets standards that improve banks’ resilience, both under normal conditions and during financial downturns.
Lenders subject to OSFI supervision hold nearly 80% of all residential mortgages issued in Canada. As well, residential mortgage loans account for almost 30% of the total assets held by these lenders. Sound mortgage underwriting practices reduce risks to the financial system, and to Canadians who entrust their savings to Canada’s financial institutions.
Residential Mortgage Seekers
Canadian residential mortgage seekers and borrowers will now be required to meet strict criteria to ensure they are good to pay back their residential mortgages and home loans. Without the Guideline B20 criteria met, they will not be able to secure a mortgage or loan in Canada.
Mortgage Brokers and Guideline B20
Mortgage brokers are committed to their lenders’ financial security by strictly adhering to Guideline B20. As mentioned, this protection also safeguards the health of our nation. Lenders can rest assured a mortgage broker will provide the sound mortgage underwriting and protection needed for their investments. Your borrowers will need to meet the conditions of Guideline B20 to secure their mortgage or loan.
Contact your mortgage broker in Windsor, Ontario, Chris J. Gallant, The Mortgage Fellow.
Source: The Government of Canada
Canada’s economy depends on regulatory bodies like The Office of the Superintendent of Financial Institutions (OSFI). It fulfills its mandate to protect the interests of depositors and other creditors of financial institutions. This Government of Canada provides a regularly updated information sheet providing information about Guideline B-20’s effectiveness and statistics about areas they continue to monitor.