OTTAWA, March 6 /CNW Telbec/ - Canada Mortgage and Housing Corporation
(CMHC) announced today that it will improve its mortgage loan insurance
approval system, through a product enhancement called Self-Employed
Simplified, to help more self-employed borrowers realize their dream of
"Self-Employed Simplified, will make it easier for certain self-employed
borrowers to obtain mortgage loan insurance and, as a result, benefit from
competitive interest rates," said Pierre Serré, CMHC's Vice-President,
Insurance Product and Business Development. "This product enhancement will
help self-employed borrowers and commissioned salespersons to obtain a
CMHC-insured mortgage, much like borrowers who receive a salary or hourly wage
from an employer."
In recognition of the growing proportion of self-employed people in
today's workforce, CMHC has developed tools that help assess the risk
associated with borrowers who have difficulty obtaining third-party validation
of their income using traditional forms of documentation. Increasingly
sophisticated risking models will enable the Corporation to launch this
product enhancement effective March 30, 2007.
CMHC Self-Employed Simplified is designed for borrowers who have a
minimum of two years in the same type of work and a proven track of
responsibly managing their debt. CMHC Self-Employed Simplified will insure
mortgages on one- or two-unit homeowner properties and will also be available
for refinance transactions, for mortgages up to 90 per cent of a home's value.
As Canada's leading mortgage insurer, CMHC shares a wealth of knowledge
and housing expertise for the benefit of Canadians. CMHC's mortgage insurance
has opened doors for millions of Canadians, giving them the assurance and
piece of mind that comes with homeownership.
As Canada's national housing agency, Canada Mortgage and Housing
Corporation (CMHC) draws on 60 years of experience to help Canadians access a
variety of quality, environmentally sustainable, and affordable homes - homes
that will continue to create vibrant and healthy communities across the
BACKGROUNDER - CMHC SELF-EMPLOYED SIMPLIFIED
Self-employed people represent a growing proportion of the Canadian
workforce. CMHC's Self-Employed Simplified product enhancement responds to
this reality by making it easier for more self-employed borrowers to obtain
CMHC mortgage loan insurance, and as a result to benefit from competitive
CMHC already has mortgage loan insurance products for self-employed
borrowers and commissioned salespersons who can provide traditional
documentation to substantiate their income. These products will continue to be
CMHC Self-Employed Simplified will help more self-employed borrowers
realize their dream of homeownership by making mortgage loan insurance
available for borrowers who have difficulty obtaining third-party validation
of their income through traditional forms of documentation. However, it will
be limited to self-employed borrowers who have a proven track record of
managing their debt, and who have worked a minimum of two years in the same
type of work, either as an employee or self-employed.
CMHC System Enhancements
CMHC Self-Employed Simplified is possible due to enhancements to CMHC's
emili mortgage insurance approval system. These enhancements will include the
use of new predictive models that assess the reasonableness of the income
declared by the self-employed borrower. They will also allow for better
assessment of mortgage default risk associated with self-employed borrowers
who cannot provide traditional forms of documentation to substantiate their
The use of these models will help CMHC to insure these mortgage loans in a
responsible and prudent manner.
The CMHC Self-Employed Simplified mortgage insurance premium will vary
from 0.8 per cent of the mortgage loan amount for loans with at least a
35-per-cent down payment, to six per cent for loans with a five-per-cent down
payment. These levels reflect the absence of traditional forms of
documentation to support the current income of the self-employed borrower.
While CMHC Self-Employed Simplified premiums are higher than those paid by
borrowers with traditional forms of documentation, it is important to
recognize that this product enhancement also allows borrowers to benefit from
lower interest rates than would otherwise be the case.
As always, CMHC will continue to review its product suite on an ongoing
basis, and where possible will act to reduce the cost of mortgage financing
for Canadians. This is evidenced by the elimination of homeowner application
fees in June 2006, and reductions in homeowner mortgage loan insurance
premiums of up to 30 per cent since 2003.
For further information:
For further information: media enquiries: Kristen Scheel, Media
Relations, (613) 748-4632; Please visit www.cmhc.ca or call 1-800-668-2642