AN writes by e-mail, 26 Apr 2012:
“I want to draw your readers’ attention to the May 1st, 2012 deadline for commenting on the Office of the Supervisor of Financial Institution’s Draft Guideline for Residential Mortgage Underwriting Practices and Procedures found at:
OSFI – Draft Guideline B-20 – Residential Mortgage Underwriting Practices and Procedures
As a horrified observer of the effects of excessively lax lending in Vancouver, I have summarized the five principles in the Draft Guideline for federally regulated financial institutions as follows:
Principle 1 – Follow an institutional Residential Mortgage Underwriting Policy
Principle 2 – Verify identity and credit history of borrowers
Principle 3 – Verify income of borrowers
Principle 4 – Appraise real estate properly
Principle 5 – Don’t substitute mortgage insurance for sound underwriting practices
Reading between the lines, it basically says: “Knock it off with the cash-back mortgages”.
These Principles are hyper-obvious and sensible. However, I don’t expect that Canadian lenders will agree. They will probably spend millions of dollars on lawyers and lobbyists, both before and after the deadline, in a concerted effort to water down guidance from the OSFI.
I think there should be a grassroots lobby in favour of more sensible mortgage underwriting. I would like to urge your readers to craft an email in support of the Draft Guideline and send it to OSFI before the deadline on Tuesday, May 1st, 2012.
The email address for feedback to OSFI is:
We, too, have been struck by the deleterious effects of “excessively lax lending” in our city.
The described tightening of lending criteria would be very sensible.
If you feel the same way, write an e-mail to the OSFI.