NEW HELOC regulations?

[dcaz4moores]

Has anyone heard about changes to HELOC's as of March and April this year?



Just speaking with a lender from a trust company and they said that due to new legislations that are to take effect April 18th, that HELOC's will no longer be CHMC backed...does anyone have further insight to this?



Regards,

 

[fumbrunner]

There is a thread in the real estate fourm.

 

[Thomas Beyer]

HELOC's will not be insured by CMHC anymore !



no big deal for most folks that get up to 80% LTV !

 

[AndrewMacDonald]

Here is a link to the Department of Finance explanation of the changes:

Backgrounder: Supporting the long-term stability of Canada`s housing market



Does anyone know if third party insurers such as Genworth will still insure HELOCs?

 

[RobMacdonald]

With past changes, Genworth and Canada Guaranty have to follow the same guidelines as CMHC. There are a few policies that the private insurers can stretch, but when it comes to programs and the products they offer, it's pretty much the same.



I've had a few lenders already advise they are following the new guidelines, plus one lender so far that says it will be likely that they follow the amortization changes on conventional financing. It will take a few days for more lenders to analyze the changes and assess the risk, but I expect we will be hearing some more news from other lenders on conventional financing.

 

[dcaz4moores]

Thanks Rob.



Does this mean if one has a house worth 400,000... they can secure a HELOC for 320,000 (80% max) without any CMHC backing, and use the available cash to do further investing?



Regards,

 

[RobMacdonald]

Absolutely. And when used as part of a strategy with capital from JV partners it becomes an endless supply of downpayment verification.