Protection of Residential Mortgage or Hypothecary Insurance Act

The Protection of Residential Mortgage or Hypothecary Insurance Act (PRMHIA) was enacted in Part 7 (section 20) of the Supporting Vulnerable Seniors and Strengthening Canada's Economy Act

S.C. 2011, c. 15.

What does the new Act do?

The Act authorizes the Minister of Finance to provide protection in respect of certain mortgage or hypothecary insurance contracts.  It authorizes, in certain circumstances, the making of payments or the purchase of replacement insurance in respect of which a winding-up order is made and to terminate certain agreements relating to mortgage or hypothecary insurance.  Basically, it is designed to support the housing finance market and the stability of the financial system in Canada.

While the PRMHIA does not change the level of government guarantee provided on privately insured mortgages, it formalizes in legislation the existing mortgage insurance arrangements with private mortgage insurers, including the rules for government-backed insured mortgages and the terms for the existing agreement between the insurance subsidiary and the Canadian government.

The government can establish by regulation various criteria for approved mortgage insurers. This includes, but is not limited to, the fee that the insurer will pay for the guarantee, the reinsurance activities that can be conducted, business activities beyond insuring eligible mortgages, and information made available to the public.

When did the Act come into force?

On June 26, 2011, the Supporting Vulnerable Seniors and Strengthening Canada's Economy Act received Royal Assent.  The Protection of Residential Mortgage or Hypothecary Insurance Act was brought into force on January 1, 2013 by PC 2012-1449.

Are there any regulations?

Yes, the Protection of Residential Mortgage or Hypothecary Insurance Regulations. They came into force on the day on which section 20 of the Supporting Vulnerable Seniors and Strengthening Canada’s Economy Act came into force, January 1, 2013.

See the Regulatory Impact Analysis Statement as published in the Canada Gazette, Part I, v. 146, No. 25, June 23, 2012 (available in the Vancouver Courthouse Library).

How will the government ensure compliance and enforcement?

As the regulator of federally regulated financial institutions, the Office of the Superintendent of Financial Institutions (OSFI) would oversee private mortgage insurers’ compliance with the Protection of Residential Mortgage or Hypothecary Insurance Regulations. OSFI will use its existing compliance tools, which may include compliance agreements and administrative monetary penalties, with regard to private mortgage insurers.

How do I cite it?

You can cite this act as: The Protection of Residential Mortgage or Hypothecary Insurance Act, SC 2011, c. 15, s. 20.

Is there any further reading?

Yes, the evidence given on June 20, 2011 to the House of Commons Standing Committee on Finance.

February 15, 2013