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

Short Title

Marginal note:Short title

1 This Act may be cited as the Protection of Residential Mortgage or Hypothecary Insurance Act.

Interpretation

Marginal note:Definitions

2 The following definitions apply in this Act.

approved mortgage insurer

approved mortgage insurer means a mortgage insurer that is designated under section 4. (assureur hypothécaire agréé)

company

company means the Canada Guaranty Mortgage Insurance Company, the Genworth Financial Mortgage Insurance Company Canada, the PMI Mortgage Insurance Company Canada or any successor to any of those companies. (société)

court

court means

• (a) in Ontario, the Superior Court of Justice;

• (b) in Quebec, the Superior Court of the province;

• (c) in Nova Scotia and British Columbia, the Supreme Court of the province;

• (d) in New Brunswick, Manitoba, Saskatchewan and Alberta, the Court of Queen’s Bench for the province;

• (e) in Prince Edward Island and Newfoundland and Labrador, the trial division of the Supreme Court of the province; and

• (f) in Yukon and the Northwest Territories, the Supreme Court of the territory, and in Nunavut, the Nunavut Court of Justice. (tribunal)

eligible mortgage loan

eligible mortgage loan means a mortgage or hypothecary loan that meets the criteria established by regulations made under subsection 42(1). (prêt hypothécaire admissible)

Her Majesty

Her Majesty means Her Majesty in right of Canada. (Sa Majesté)

liquidator

liquidator means a liquidator appointed under the Winding-up and Restructuring Act or a similar official appointed under any other Act of Parliament relating to insolvency or bankruptcy. (liquidateur)

Minister

Minister means the Minister of Finance. (ministre)

mortgage insurer

mortgage insurer means a corporation referred to in subsection 13(1) of the Insurance Companies Act and that is approved by the Superintendent to sell mortgage or hypothecary insurance in Canada.  (assureur hypothécaire)

policy

policy means any written contract of insurance in respect of an eligible mortgage loan, whether contained in one or more documents, entered into by an approved mortgage insurer and a qualified mortgage lender that has been designated as such by the approved mortgage insurer. (police)

prescribed

prescribed means prescribed by regulations made under section 41. (Version anglaise seulement)

qualified mortgage lender

qualified mortgage lender means a mortgage or hypothecary lender that has been designated under section 10. (prêteur hypothécaire qualifié)

Superintendent

Superintendent means the Superintendent of Financial Institutions appointed under the Office of the Superintendent of Financial Institutions Act. (surintendant)

winding-up order

winding-up order means a winding-up order made under the Winding-up and Restructuring Act or a similar order made under any other Act of Parliament relating to insolvency or bankruptcy. (ordonnance de mise en liquidation)

Purposes

Marginal note: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.

Approved Mortgage Insurers

Marginal note: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.

• Marginal note:Term of designation

  (2) The designation or its renewal are in effect for any period that the Minister specifies.

Marginal note: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.

• Marginal note:Effective date and length

  (2) The notice must set out the effective date and the length of the suspension.

• Marginal note: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.

• Marginal note: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.

• Marginal note:Cancellation of suspension

  (5) The Minister may cancel a suspension if he or she considers it appropriate to do so.

Marginal note: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.

• Marginal note:Effective date of cancellation

  (2) The notice must set out the effective date of the cancellation.

• Marginal note: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.

• Marginal note: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.

Marginal note: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.

• Marginal note: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.

Marginal note: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.

• Marginal note:Adequacy determined by Minister

  (2) The adequate level of capital is to be determined by the Minister after considering the advice of the Superintendent.

Marginal note: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.

Marginal note: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.

• Marginal note:Term of designation

  (2) The designation or its renewal are in effect for any period that the approved mortgage insurer specifies.

• Marginal note: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.

• Marginal note:Effective date of cancellation

  (4) The notice must set out the effective date of the cancellation.

Marginal note: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.

• Marginal note: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.

Marginal note: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.

• Marginal note: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.

Marginal note: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.

• Marginal note: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.

• Marginal note: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).

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).