It follows a public consultation and defines a new approach for the regulatory capital requirements for mortgage insurance risk that is “more risk sensitive” with key characteristics including borrower creditworthiness, outstanding loan balance, loan-to-value ratio, and remaining amortization.
“The market has evolved considerably since the capital framework for mortgage insurers was last updated. The new framework places us at the vanguard of understanding and quantifying the risks in mortgage insurance,” noted Superintendent Jeremy Rudin.
The advisory is available on the OFSI website
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OFSI has published its final advisory on capital requirements for federally-regulated mortgage insurers which comes into effect on Jan.1 2017.