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Protection of Residential Mortgage or Hypothecary Insurance Act — P-25.7 3
Purposes 3 The purposes of this Act are (a) to authorize the Minister to provide protection in respect of certain mortgage or hypothecary insurance contracts in order to support the efficient functioning of the housing finance market and the stability of the financial system in Canada; and (b) to mitigate the risks arising from the provision of that protection.
Protection of Residential Mortgage or Hypothecary Insurance Act — P-25.7 4
Designation 4 (1) At the written request of a mortgage insurer, the Minister may, after consulting with the Superintendent, designate the mortgage insurer as an approved mortgage insurer for the purposes of this Act. Term of designation (2) The designation or its renewal are in effect for any period that the Minister specifies.
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Suspension of designation 5 (1) After consulting with the Superintendent, the Minister may, by notice sent to an approved mortgage insurer, suspend the approved mortgage insurer’s designation if the Minister is of the opinion that the approved mortgage insurer has failed to comply with any provision of this Act or the regulations. Effective date and length (2) The notice must set out the effective date and the length of the suspension. Prohibition (3) An approved mortgage insurer that has had its designation suspended must not insure any new mortgage or hypothecary loans until the suspension expires or is cancelled by the Minister. Obligations during suspension (4) For as long as the designation of an approved mortgage insurer is suspended, the approved mortgage insurer remains subject to the provisions of this Act and the regulations and must meet any conditions imposed by the Minister and satisfy any undertakings required by him or her. Cancellation of suspension (5) The Minister may cancel a suspension if he or she considers it appropriate to do so.
Protection of Residential Mortgage or Hypothecary Insurance Act — P-25.7 6
Cancellation of designation 6 (1) After consulting with the Superintendent, the Minister may, by notice sent to an approved mortgage insurer, cancel the approved mortgage insurer’s designation if (a) the Minister is of the opinion that the approved mortgage insurer has failed to comply with any provision of this Act or the regulations; (b) a winding-up order is made in respect of the approved mortgage insurer; (c) the approved mortgage insurer ceases to be a mortgage insurer; or (d) the approved mortgage insurer requests in writing that its designation be cancelled. Effective date of cancellation (2) The notice must set out the effective date of the cancellation. Publication (3) As soon as feasible after sending the notice, the Minister must cause the name of the approved mortgage insurer whose designation is cancelled and the effective date of the cancellation to be published in the Canada Gazette . Obligations after cancellation (4) After the designation of a corporation as an approved mortgage insurer is cancelled and for as long as the Minister has any actual or potential obligations under section 16 in respect of the policies the corporation issued or the contracts of insurance it entered into that could be deemed to be policies under section 19 , the corporation remains subject to sections 8 and 15 and the regulations related to those sections, as if it were still an approved mortgage insurer, and it must meet any conditions imposed by the Minister and satisfy any undertakings required by him or her.
Protection of Residential Mortgage or Hypothecary Insurance Act — P-25.7 7
Company never designated 7 (1) For the period referred to in subsection (2), a company that has never been designated as an approved mortgage insurer is subject to sections 8 and 15 and the regulations related to those sections, as if it were an approved mortgage insurer, and must meet any conditions imposed by the Minister and satisfy any undertakings required by him or her. Period (2) The period is the length of time that the Minister has any actual or potential obligations under section 16 in respect of the contracts of insurance the company entered into that could be deemed to be policies under section 19 .
Protection of Residential Mortgage or Hypothecary Insurance Act — P-25.7 8
Adequacy of capital 8 (1) In order to mitigate the risks to Her Majesty that arise from the provision of mortgage or hypothecary insurance protection under this Act, an approved mortgage insurer must, in relation to its business and in addition to the capital it is required to maintain under the Insurance Companies Act , maintain adequate capital. Adequacy determined by Minister (2) The adequate level of capital is to be determined by the Minister after considering the advice of the Superintendent.
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Fees for risk exposure 9 An approved mortgage insurer must, in accordance with the regulations, pay fees to the Receiver General to compensate Her Majesty for Her exposure to the risks arising from the provision of the mortgage or hypothecary insurance protection under this Act.
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Designation of qualified mortgage lenders 10 (1) An approved mortgage insurer may designate as a qualified mortgage lender for the purposes of this Act any mortgage or hypothecary lender that meets prescribed criteria. Term of designation (2) The designation or its renewal are in effect for any period that the approved mortgage insurer specifies. Cancellation of designation (3) The approved mortgage insurer may, by notice sent to a qualified mortgage lender that it has designated as such, cancel the qualified mortgage lender’s designation. Effective date of cancellation (4) The notice must set out the effective date of the cancellation.
Protection of Residential Mortgage or Hypothecary Insurance Act — P-25.7 11
Insurance restricted 11 (1) Except as permitted by the regulations, an approved mortgage insurer must not insure any risk unless the risk is in respect of an eligible mortgage loan made by a qualified mortgage lender that has been designated as such by the approved mortgage insurer. Reinsurance restricted (2) Except as permitted by the regulations, an approved mortgage insurer must not cause itself to be reinsured against any risk that it has undertaken under its policies or reinsure any risk that another insurer has undertaken under that insurer’s contracts of insurance.
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Subsidiaries 12 (1) An approved mortgage insurer must obtain the Minister’s approval before establishing or acquiring a subsidiary as defined in subsection 2(1) of the Insurance Companies Act . Conditions and undertakings (2) An approved mortgage insurer must meet any conditions imposed by the Minister and satisfy any undertakings required by him or her in respect of its business activities with any of its subsidiaries.
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Conditions and undertakings — business with affiliates, etc. 13 (1) The Minister may impose conditions on and require undertakings from an approved mortgage insurer in respect of its business activities with a person or entity that is (a) an affiliate, as defined in subsection 2(1) of the Insurance Companies Act , of the approved mortgage insurer; (b) a related party, within the meaning of section 518 of that Act, of the approved mortgage insurer; or (c) in a prescribed relationship with the approved mortgage insurer. Conditions and undertakings — increased risks (2) The Minister may also impose conditions on and require undertakings from an approved mortgage insurer if the Minister is of the opinion that the activities of a person or entity referred to in subsection (1) could materially increase the risks to Her Majesty that arise from the provision of mortgage or hypothecary insurance protection under this Act. Obligation of approved mortgage insurer (3) An approved mortgage insurer must meet any conditions imposed on it and satisfy any undertakings required from it under subsection (1) or (2).
Protection of Residential Mortgage or Hypothecary Insurance Act — P-25.7 14
Prohibited policies — affiliates, etc. 14 Except as permitted by the regulations, an approved mortgage insurer must not be a party to a policy under which the beneficiary is a person or entity referred to in subsection 13(1).
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Obligation to retain information, books and records 15 (1) An approved mortgage insurer must keep and retain books and records and retain information in respect of its business that are relevant for the purposes of this Act or that are prescribed. Obligation to provide information or copies (2) At the request of the Minister or the Superintendent, an approved mortgage insurer must, without delay, provide the requester with any information or copies of any books or records that the approved mortgage insurer is required to retain. Disclosure of information (3) The Minister and the Superintendent may disclose to each other any information or copies of any books or records received under subsection (2) and may also disclose them to the Governor of the Bank of Canada, the Chief Executive Officer of the Canada Deposit Insurance Corporation and the Commissioner of the Financial Consumer Agency of Canada. Disclosure of conditions and undertakings (4) The Minister may disclose to the Superintendent any conditions imposed by the Minister and any undertakings required by him or her under this Act. Public information (5) An approved mortgage insurer must make available to the public prescribed books, records and information. 2011, c. 15, s. 20 “15”; 2016, c. 7, s. 179
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Minister’s obligations 16 (1) Subsections (2) to (4) apply if (a) a winding-up order is made in respect of a corporation that had, before the making of the order, issued a policy to a qualified mortgage lender in respect of an eligible mortgage loan; (b) the policyholder or a beneficiary under the policy has made a claim to the liquidator that is related to the policy; and (c) the liquidator has allowed the claim and determined that it will not be paid in whole. Event has occurred (2) If an event that is insured against under the policy has occurred before the conditions set out in subsection (1) are met, the Minister must make a payment out of the Consolidated Revenue Fund to the beneficiary under the policy in an amount equal to the amount calculated in accordance with section 22 . Event has not occurred (3) If an event that is insured against under the policy has not occurred before the conditions set out in subsection (1) are met, the Minister must elect to either (a) make a payment out of the Consolidated Revenue Fund to an approved mortgage insurer or the Canada Mortgage and Housing Corporation, with the payee’s consent, in an amount sufficient to allow the payee to enter into, with the policyholder, a contract of insurance that replaces the policy in accordance with subsection 23 (1), or (b) satisfy, as required by subsection 24 (1), future claims arising from the occurrence, if any, of such an event. Other election (4) If the Minister makes an election under paragraph (3)(a), no further election is to be made, but the making of an election under paragraph (3)(b) does not preclude the making of an election under paragraph (3)(a).
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Minister’s discretion 17 (1) Subsections (2) and (3) apply if a winding-up order is made in respect of a corporation that had, before the making of the order, issued a policy to a qualified mortgage lender in respect of an eligible mortgage loan. Event has occurred (2) If an event that is insured against under the policy has occurred before the condition set out in subsection (1) is met, the Minister may make a payment referred to in subsection 16 (2). Event has not occurred (3) If an event that is insured against under the policy has not occurred before the condition set out in subsection (1) is met, the Minister may make a payment referred to in paragraph 16 (3)(a) or satisfy future claims referred to in paragraph 16 (3)(b).
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Ineligible mortgage loan 18 A contract of insurance entered into by an approved mortgage insurer and a qualified mortgage lender — that has been designated as such by the approved mortgage insurer — in respect of a mortgage or hypothecary loan that is not an eligible mortgage loan is deemed, for the purposes of sections 16 , 17 and 20 to 25 to be a policy in respect of an eligible mortgage loan if the Minister is satisfied that the approved mortgage insurer and the qualified mortgage lender believed the loan to be an eligible mortgage loan and that the ineligibility of the loan was not due to negligence or bad faith by either of them.
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Pre-existing contracts 19 If a winding-up order is made in respect of a company, a contract of insurance that the company entered into before the coming into force of this Act is deemed, in respect of a mortgage or hypothecary loan that is the subject of the contract of insurance, to be a policy issued to a qualified mortgage lender in respect of an eligible mortgage loan for the purposes of sections 16, 17 and 20 to 25, if (a) Her Majesty would have been bound to make a payment in respect of the contract of insurance had section 44 not come into force; and (b) the mortgage or hypothecary loan meets the criteria established by regulations made under subsection 42(1) that relate to a guarantee of payment referred to in subsection 14(1) of the National Housing Act . 2011, c. 15, s. 20 “19”; 2014, c. 20, s. 314
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Subrogation 20 If the Minister is obligated, or decides under section 17 , to make a payment referred to in subsection 16 (2) or paragraph 16 (3)(a) or satisfy future claims in accordance with paragraph 16 (3)(b) in respect of a policy, Her Majesty is subrogated to all the rights the corporation had under the policy immediately before the making of the winding-up order.
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Subrogation — subsection 16 (2) 21 (1) If the Minister is obligated, or decides under section 17 , to make a payment referred to in subsection 16 (2) in respect of a policy, Her Majesty is subrograted, once the payment is made, to (a) the rights that the policyholder or the beneficiary under the policy has to make a claim related to the policy; (b) a right to any proceeds payable in respect of the policy as a result of the making of the winding-up order; and (c) the lender’s rights under the loan covered by the policy. Subrogation — subsection 16 (3) (2) If the Minister is obligated, or decides under section 17 , to make a payment referred to in paragraph 16 (3)(a) or satisfy future claims in accordance with paragraph 16 (3)(b) in respect of a policy, Her Majesty is subrogated to (a) the rights that the policyholder has to make a claim related to the policy; and (b) a right to any proceeds paid or payable in respect of the policy as a result of the making of the winding-up order. Subrogation — subsection 24 (1) (3) If the Minister makes a payment under subsection 24 (1) in respect of a policy, Her Majesty is subrogated to the lender’s rights under the loan covered by the policy.
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Calculation of amount — event has occurred 22 The amount for the purpose of subsection 16 (2) is the amount determined by the formula A – B – C where A is the total of the amounts payable to the beneficiary under the policy immediately before the winding-up order is made; B is the amount of any proceeds the beneficiary has received in respect of the policy since the making of the winding-up order; and C is 10% of the original principal amount of the first eligible mortgage loan in respect of which the premium for the insurance was paid.
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Replacement insurance 23 (1) The insurance referred to in paragraph 16 (3)(a) must be sufficient to cover the amount of benefits determined by the formula A – B where A is the amount of benefits payable under the replaced policy; and B is 10% of the original principal amount of the first eligible mortgage loan in respect of which the premium for the original insurance was paid. No liability — replaced policy (2) If the Minister makes a payment referred to in paragraph 16 (3)(a), the Minister is not liable to make any other payment under this Act in respect of the replaced policy. Protection for replacement insurance contracts (3) If the payment is made to an approved mortgage insurer, the contract of insurance entered into as a result of the payment is a policy for the purposes of this Act. Regulations — replacement policy payments (4) Despite the formulas set out in section 22 and subsections 23 (1) and 24 (1), the Governor in Council may make regulations prescribing the manner of calculating the amount of any payment referred to in subsection 16 (2), paragraph 16 (3)(a) or subsection 24 (1) in respect of the policy referred to in subsection (3).
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Satisfaction of future claims 24 (1) If the Minister is obligated, or decides under section 17 , to satisfy future claims in accordance with paragraph 16 (3)(b) and a claim is subsequently made to the Minister by reason of the occurrence of an event that was insured against under the policy, the Minister must make a payment out of the Consolidated Revenue Fund to the beneficiary under the policy in an amount equal to the amount determined by the formula A – B where A is the total of the amounts that would have been payable to the beneficiary under the policy; and B is 10% of the original principal amount of the first eligible mortgage loan in respect of which the premium for the insurance was paid. Conditions (2) The Minister is not obligated to pay the amount determined in accordance with the formula unless he or she is satisfied that the beneficiary would have been entitled to a payment under the policy and that the policyholder has discharged its obligations under the policy and the obligations it would have had under the policy had the winding-up order not been made.
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Affiliates, etc. 25 A payment referred to in subsection 16 (2), paragraph 16 (3)(a) or subsection 24 (1) must not be made in respect of a policy if the corporation in respect of which the winding-up order was made was, immediately before that order was made, a party to the policy in contravention of section 14 .
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Time of payment — subsection 16 (2) 26 (1) A payment required to be made under subsection 16 (2) must be made before the expiry of two years or of any other prescribed period beginning on the day on which the conditions referred to in paragraphs 16 (1)(a) to (c) have been met. Time of payment — subsection 24 (1) (2) A payment required to be made under subsection 24 (1) must be made before the expiry of two years or of any other prescribed period beginning on the day on which the Minister is satisfied that the conditions referred to in subsection 24 (2) have been met.
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Limit 27 The aggregate outstanding principal amount of the following loans must not at any time exceed $300,000,000,000 or any other amount that is authorized for the purposes of this section under an appropriation Act: (a) all mortgage or hypothecary loans that are insured by corporations that are or were approved mortgage insurers; and (b) all mortgage or hypothecary loans that are insured under contracts of insurance that could be deemed to be policies under section 19 and that are entered into by companies that have never been designated as approved mortgage insurers.
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Allocation of limit 28 (1) The Minister may, by notice in writing, at any time allocate any portion of the amount applicable under section 27 to any approved mortgage insurer in order to support the efficient functioning of the housing finance market and the stability of the financial system in Canada and to mitigate the risks to Her Majesty that arise from the provision of mortgage or hypothecary insurance protection under this Act. Prohibition (2) An approved mortgage insurer to whom an amount is allocated must not insure any new mortgage or hypothecary loans if doing so would cause the outstanding principal amount of all mortgage or hypothecary loans that are insured by it to exceed that allocated amount.
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Examination 29 The Superintendent must, from time to time, make or cause to be made any examination and inquiry into the business and affairs of a corporation that the Superintendent considers to be necessary or expedient to determine whether the corporation is complying with sections 5 to 8 , 10 to 15 and 28 and the regulations related to those sections and may, after the conclusion of each examination and inquiry, report on it to the Minister.
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Notice to Minister 30 (1) If a corporation is not, or is not likely to remain, in compliance with any of sections 5 to 8 , 10 to 15 and 28 or the regulations related to those sections, the Superintendent must notify the Minister. Notice to management and board of directors (2) If a corporation is not, or is not likely to remain, in compliance with any of sections 5 to 8 , 10 to 15 and 28 or the regulations related to those sections, the Superintendent must notify the management or board of directors of the corporation.
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Court order to comply 31 If a corporation is not in compliance with a provision of this Act or the regulations, the Minister may apply to a court for an order directing the corporation to comply with the provision. On such an application the court may make the order and any other order that it thinks fit.
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Notice to Minister — section 27 32 The Superintendent must, from time to time but at least once in each calendar year, notify the Minister of the aggregate outstanding principal amount referred to in section 27 .
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Offence 33 Every corporation that, without reasonable cause, contravenes any provision of this Act or the regulations is guilty of an offence.
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False or misleading information 34 Every person who knowingly provides false or misleading information in relation to any matter relating to a provision of this Act or the regulations is guilty of an offence.