Canada’s banking and insurance regulator highlighted fraudulent mortgage practices as a key threat to the country’s financial system, prompting consultations with lenders over how to ensure that the system can withstand a severe housing market downturn. “It has come to light that institutions have been, I would say inadvertently, making mortgages to people whose income has been falsified,” said Jeremy Rudin, superintendent of financial institutions. His comments follow an extraordinary series of co-ordinated announcements on Friday from the federal Finance Minister, the Office of the Superintendent of Financial Institutions (OSFI) and Canada Mortgage and Housing Corp., designed to curb risks associated with red-hot housing markets in Toronto and Vancouver. The changes will raise minimum down payments for some buyers, raise fees associated with securitized government-backed mortgages and could require lenders such as banks to hold more capital against insured loans.
By: David Berman
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