The Office of the Superintendent of Financial Institutions has published guidance for banks on new regulations governing mortgage insurance, setting out the costs that can be passed on to borrowers.

OSFI notes that new provisions dealing with mortgage insurance will come into force on July 1, and, in support of these changes, regulations have been introduced to provide details on what can be considered part of the cost of insurance that may be charged back to the borrower.

The regulator notes that in the course of its consultation on these regulations, the Department of Finance received a number of questions related to implementation issues. In order to address these questions, OSFI is now issuing guidance “to provide further clarity to financial institutions that are passing on the cost of mortgage insurance to borrowers”.

OSFI says it expects that all financial institutions offering insured mortgages “will establish policies and procedures with respect to their calculation of the actual cost of mortgage insurance, where the institution charges borrowers an amount for the insurance.”

It says that these policies should be available upon request by OSFI, and it sets out the factors that should be taken into consideration when determining the actual cost of mortgage insurance.

IE