Government Imposes More Change...


CMHC has circulated a letter to the mortgage community and in it are the new changes which are to take effect April 19, 2010. However, there is a more recent change that is to take effect April 9,2010. This change is to do with those who are self-employed and it's not pretty.

Effective April 9, 2010 the Government has imposed new changes to how the self-employed are qualified. In CMHC's words:

CMHC is also announcing po licy changes to the CMHC Self-Employed Product Without traditional Third Party Validation of Income. Effective April 9, 20 10, self-employed borrowers with more than 3 years in the same business and commissioned-income borrowers will be required to confirm their income and will not be eligible for the Self-Employed Product Without Traditional Third Party Validation of Income. This product is intended for a small portion of borrowers who find it very difficult to document income - inparticular, recently self-employed borrowers. For the majority of self-employed borrowers, income validation is readily available through financial statements, contracts, T4s and other third party income validations. The changes will ensure that self-employed borrowers with third party income validation will benefit from a lower premium. Furthermore, the maximum loan-to-value ratio available under the CMHC Self-Employed Product Without Traditional Third Party Validati on of Income will be reduced from 95%to 90%for purchase transactions and from 90%to 85%for refinance.

This change is significant and will undoubtedly have a profound effect on our industry moving forward. Share these developments with your contacts and always, we welcome your calls.