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More protection: Final Principles for Mortgage Product Suitability Assessments issued + new mortgage charter

To help mortgage brokers make the best recommendations for your clients and further protect them, the Mortgage Broker Regulators’ Council of Canada (MBRCC), as part of its 2023-2026 strategic plan, is publishing its Principles for Mortgage Product Suitability Assessments.

“Given high interest rates, elevated inflation and reduced mortgage affordability, many consumers are looking to the mortgage brokering sector for sound advice,” Antoinette Leung, chair of MBRCC, mentions in a release.

 

Principles will enhance “protection of Canadian consumers during a period of challenging financial conditions”

 

Leung continues, “The principles developed by MBRCC will support the industry’s provision of suitable recommendations to clients, enhancing the protection of Canadian consumers during a period of challenging financial conditions.”

Public feedback on the proposed principles was requested and obtained last summer. Respondents were generally supportive, and MBRCC made revisions based on the feedback received.

 

Even more protection for borrowers

 

This is timely and complementary to the federal government’s recent Fall Economic Statement. In the announcement, it introduced its Canadian Mortgage Charter initiative, which adds to the expectations and guidance already established for how banks and financial institutions should treat borrowers.

 

Federal government’s mortgage charter expectations

 

The Government of Canada’s website states the expectations listed in the charter:

1. Allowing temporary extensions of the amortization period for mortgage holders at risk

2. Waiving fees and costs that would have otherwise been charged for relief measures

3. Not requiring insured mortgage holders to requalify under the insured minimum qualifying rate when switching lenders at mortgage renewal

4. Contacting homeowners four to six months in advance of their mortgage renewal to inform them of their renewal options

5. Giving homeowners at risk the ability to make lump sum payments to avoid negative amortization or sell their principal residence without any prepayment penalties

6. Not charging interest on interest in the event that mortgage relief measures result in a temporary period of negative amortization

Source: Government of Canada

 

Review MBRCC’s proposed principles here.

 

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