In response to increased risks in the mortgage market, Canada’s banking regulator has issued a reminder to lenders about their risk management responsibilities.
The Office of the Superintendent of Financial Institutions (OSFI) this week released a regulatory notice reminding federally regulated lenders of their obligations pertaining to mortgage risk management and underwriting guidelines.
The measures range from being proactive with vulnerable accounts, including “early and proactive engagement with vulnerable borrowers,” to credit loss provisioning and “sound” mortgage underwriting.
“None of the measures outlined in our latest regulatory notice are new,” a spokesperson from OSFI told CMT.
OSFI says the notice is meant to complement its Guideline B-20, while specifically drawing attention to and reinforcing the regulator’s expectations for lenders in the current economic and interest rate environment.
“The notice responds to the heightened risk environment related to existing mortgage accounts and lender portfolios,” OSFI said. “These risks include potential payment shocks and renewal and refinancing risks, particularly for…
