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Monday, 5 May 2014

New CMHC rules leave many behind, lucky for other insurers

CMHC or beloved mortgage insurer is changing course; raising mortgage insurance rate, cutting off self-employed clients and stop insuring second home. Other insurers like Genworth
Both private mortgage insurers opted out and have decided not to follow in CMHC’s footsteps and alter their programs for self-employed buyers. But is this only a temporary move?
“We will not be making any amendments to current product guidelines,” a Genworth stated Friday. “ NO amendment to the number of Genworth-insured properties for each borrower.”
Canada Guaranty business for self program also escaped changes, according to the Globe and Mail.
CMHC changes will be in effect  from May 30, 2014 the Crown Corporation will stop insuring second homes and self-employed people who do not have documented income source verification.
Mortgage brokers believe this opens up a competitive window for private insurers.
“If you really look at how many people are self-employed in the country they really are the backbone of the economy,”  Zoltan Padar of MortgagePRO Ltd.  “That’s a good product and it has been proven over time that the two (private) insurers can be very competitive.
“Cutting self-employed program will be a lesson to businesses – some lenders only work with CMHC but if I’m a first mortgage lender I would start supporting the other insurers as well." he added.

Genworth, however, has made one amendment to its vacation and secondary home programs. Now they will insure one home and one secondary home, vacation home if you pleased.
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