Michael Feldman Discusses New Mortgage Rules with Lexpert

March 22, 2017

At the end of November 2016 the federal government implemented new rules constricting mortgage eligibility. In an effort to prevent the possibility of a similar housing market crash as that of the United States in 2007 the federal government, with CMHC, is also considering regulatory changes, which will require lenders to “hold increased levels of capital” in order to alleviate some of the risk of mortgage insurance from taxpayers. Under the proposed regulatory environment alternative lenders will face the challenge of needing to find the capital necessary to fund mortgages. Lexpert sought out partner and Banking and Debt Finance expert Michael Feldman for his insight, in the excerpt below.

“These [mortgage] originators are really in it for service fees and an originator fee,” explains Michael Feldman, a Toronto partner with Torys LLP who has long experience in residential and commercial mortgage securitization. […]

Says Feldman, with the government planning to force more risk onto lenders, the better capitalized a mortgage lender is, the better it can absorb that additional risk: “That leads you to say the bigger banks are capitalized more sufficiently to absorb the extra risk.” Not so, though, for smaller financial institutions such as credit unions and trusts, who may feel they have insufficient capital to do that.

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