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

Act current to 2024-05-01 and last amended on 2016-06-22. Previous Versions

Mortgage or Hypothecary Insurance Protection (continued)

Marginal note:Minister’s discretion

  •  (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

 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

 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.

  • 2011, c. 15, s. 20 “19”
  • 2014, c. 20, s. 314

Marginal note:Subrogation

 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)

  •  (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

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

A – B – C

where

A
is the total of the amounts payable to the beneficiary under the policy immediately before the winding-up order is made;
B
is the amount of any proceeds the beneficiary has received in respect of the policy since the making of the winding-up order; and
C
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:Replacement insurance

  •  (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

  •  (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.

 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)

  •  (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

 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

  •  (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.

Examination and Reporting

Marginal note:Examination

 The Superintendent must, from time to time, make or cause to be made any examination and inquiry into the business and affairs of a corporation that the Superintendent considers to be necessary or expedient to determine whether the corporation is complying with sections 5 to 8, 10 to 15 and 28 and the regulations related to those sections and may, after the conclusion of each examination and inquiry, report on it to the Minister.

Marginal note:Notice to Minister

  •  (1) If a corporation is not, or is not likely to remain, in compliance with any of sections 5 to 8, 10 to 15 and 28 or the regulations related to those sections, the Superintendent must notify the Minister.

  • Marginal note:Notice to management and board of directors

    (2) If a corporation is not, or is not likely to remain, in compliance with any of sections 5 to 8, 10 to 15 and 28 or the regulations related to those sections, the Superintendent must notify the management or board of directors of the corporation.

Marginal note:Court order to comply

 If a corporation is not in compliance with a provision of this Act or the regulations, the Minister may apply to a court for an order directing the corporation to comply with the provision. On such an application the court may make the order and any other order that it thinks fit.

Marginal note:Notice to Minister — section 27

 The Superintendent must, from time to time but at least once in each calendar year, notify the Minister of the aggregate outstanding principal amount referred to in section 27.

Sanctions

Marginal note:Offence

 Every corporation that, without reasonable cause, contravenes any provision of this Act or the regulations is guilty of an offence.

Marginal note:False or misleading information

 Every person who knowingly provides false or misleading information in relation to any matter relating to a provision of this Act or the regulations is guilty of an offence.

Marginal note:Punishment

  •  (1) Every person who is guilty of an offence under this Act is liable to

    • (a) on conviction on indictment, a fine of not more than $5,000,000; or

    • (b) on summary conviction, a fine of not more than $500,000.

  • Marginal note:Order to comply

    (2) If a corporation has been convicted of an offence under this Act, the court may, in addition to any punishment it may otherwise impose, order it to comply with the provisions of this Act and the regulations.

  • Marginal note:Additional fine

    (3) If a corporation has been convicted of an offence under this Act, the court may, if it is satisfied that as a result of the commission of the offence the corporation acquired any monetary benefits, order the corporation to pay, despite the maximum amount of any fine that may otherwise be imposed under this Act, an additional fine in an amount equal to three times the court’s estimation of the amount of those monetary benefits.

Marginal note:Liability of officers, directors, etc.

 If a corporation commits an offence under this Act, any of its officers, directors, agents or mandataries who directed, authorized, assented to, acquiesced in or participated in the commission of the offence is a party to and guilty of the offence and liable, whether or not the corporation has been prosecuted or convicted, to

  • (a) on conviction on indictment, a fine of not more than $1,000,000 or imprisonment for a term of not more than five years, or both; or

  • (b) on summary conviction, a fine of not more than $100,000 or imprisonment for a term of not more than one year, or both.

Marginal note:Limitation period or prescription

  •  (1) Proceedings by way of summary conviction in respect of an offence under this Act may be commenced at any time within, but not later than, two years after the day on which the subject matter of the proceedings became known to the Minister.

  • Marginal note:Certificate of Minister

    (2) A document appearing to have been issued by the Minister certifying the day on which the subject matter of any proceedings became known to the Minister is admissible in evidence without proof of the signature or official character of the person appearing to have signed it and is, in the absence of evidence to the contrary, proof of the matter asserted in it.

Marginal note:Appeal with leave

 An appeal lies to the court of appeal of a province from any order made under this Act by a court of that province, only with leave of the court of appeal in accordance with the rules applicable to that court.

Marginal note:Recovery and application of fines

 All fines payable under this Act are recoverable and enforceable, with costs, at the suit of Her Majesty, instituted by the Attorney General of Canada, and, when recovered, belong to Her Majesty.

Legal Proceedings

Marginal note:No liability

 No action lies against Her Majesty, the Minister, the Superintendent or any employee or agent of Her Majesty for anything done or omitted to be done in good faith in the exercise or performance of any powers, duties or functions that under this Act are intended or authorized to be exercised or performed.

Regulations

Marginal note:Regulations

 The Governor in Council may make regulations for carrying out the purposes and provisions of this Act, including regulations

  • (a) imposing conditions on an approved mortgage insurer in order to mitigate the risks to Her Majesty that arise from the provision of mortgage or hypothecary insurance protection under this Act;

  • (b) respecting the payment of fees under section 9, including the amount of those fees or the manner of calculating them;

  • (c) respecting the designation, by approved mortgage insurers, of mortgage or hypothecary lenders as qualified mortgage lenders;

  • (d) prescribing the exceptions to each of the requirements under section 11;

  • (e) prescribing the exceptions to each of the prohibitions under section 14;

  • (f) prescribing, for the purposes of subsection 15(1), the manner in which books and records are to be kept and retained and the manner in which information is to be retained;

  • (g) prescribing, for the purposes of subsection 15(5), the manner in which the books, records and information are to be made available to the public; and

  • (h) prescribing anything that is required or authorized by this Act to be prescribed.

 

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