TORONTO Feb 23 Canada's financial watchdog has
warned regulated mortgage providers against teaming up with
unregulated rivals to sidestep rules designed to clamp down on
risky lending, a top regulator told Reuters.
Carolyn Rogers, assistant superintendent at the Office of
the Superintendent of Financial Institutions, said in an
interview that the regulator was taking action to stamp out
so-called "bundled" loans, which pair a primary mortgage with a
second loan from unregulated groups called Mortgage Investment
Reuters reported last month that the practice can circumvent
rules limiting how much mortgage providers can lend against a
property, and the arrangements have proliferated as Canadian
regulators have tightened lending standards to shield borrowers
in case a decade-long housing boom goes bust.
"They are rules. They are not guidelines, and they are not
principles. We absolutely expect regulated entities to be
adhering to them," Rogers said late on Wednesday.
"Anytime a regulated entity is or appears to be designing a
product or an approach that is, by its design, circumventing the
rules we would take issue with that," she added.
Home Capital Group and Equitable Group are
two listed mortgage providers that have told Reuters they
participate in bundled lending. Home Capital declined to comment
and Equitable could not be reached for comment.
(Reporting by Matt Scuffham; Editing by Cynthia Osterman)