2022-06-30

Clarification on the Treatment of Innovative Real Estate Secured Lending Products under Guideline B-20

OSFI has issued this advisory to clarify the underwriting and risk management expectations for federally-regulated financial institutions regarding three innovative real estate secured lending products. Combined loan plans must ensure all lending above 65 percent loan-to-value is amortizing and non-readvanceable, while shared equity mortgages require bona fide equity contributions in the first lien position and remain subject to an 80 percent loan-to-value cap. Reverse mortgages are similarly bound by a maximum 65 percent loan-to-value limit at origination and require heightened due diligence regarding collateral management, property appraisal, and longevity risk.

Canada

Office of the Superintendent of Financial Institutions

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