Protection of Residential Mortgage or Hypothecary Insurance Act (S.C. 2011, c. 15, s. 20)

Marginal note: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).

Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note:Public information

  (5) An approved mortgage insurer must make available to the public prescribed books, records and information.

Mortgage or Hypothecary Insurance Protection

Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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).

Marginal note: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.

• Marginal note: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).

• Marginal note: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).

Marginal note: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.

Marginal note: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.

Marginal note: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.

Marginal note: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.

• Marginal note: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.

• Marginal note: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.

Marginal note:Calculation of amount — event has occurred

22 The amount for the purpose of subsection 16(2) is the amount determined by the formula

Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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).

Marginal note: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.

• Marginal note: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.

Marginal note: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.

Marginal note: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.

• Marginal note: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.

Protected Loan Limit

Marginal note: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.

Marginal note: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.

• Marginal note: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.