Canada Mortgage and Housing Corporation is tightening up the types of mortgage insurance it will offer.
The Crown corporation said Friday that it is going to stop offering mortgage insurance on second homes. It will also stop offering mortgage insurance to self-employed people whose income cannot be validated through traditional means. The changes on second homes also mean that anyone who has an insured mortgage will not be eligible to act as a co-borrower on another insured mortgage
CMHC says that its second home program and its self-employed-without-third-party-income-validation programs combined account for less than 3 per cent of its insurance business volumes in terms of the numbers of mortgages insured.
“Given the limited use of these products, their discontinuation is not expected to have a material impact on the housing market,” it stated in a press release.
The Crown corporation has been offering insurance on second homes since 2005, enabling people to buy more than one residence with a smaller down payment than they would otherwise need. It has been offering insurance to self-employed people without strong income validation since 2007.
CMHC will cease offering both products as of May 30.
CMHC noted that “self-employed Canadians can still qualify for CMHC insured financing through CMHC homeowner products with a validation of their income using traditional methods.” Those might include a notice of assessment, audited financial statements, or unaudited financial statements prepared by an independent third party.
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In response to this change in CMHC, reported May 2, 2014