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Down Payment VerificationSavings/RRSPs/Stocks & Securities/CSBs & GICs: 3-month bank statement and/or GIC/portfolio statement is required confirming down payment is from applicant's own resources andAll recent lump sum deposits in excess of 2% of the purchase price must be verified to confirm the moneys were not borrowed. The statements must reflect the account number, owner identification, banking institution and address as well as account number.Savings when the LTV is at or below 65%.When LTV is <= 65%, the most recent bankbook or statement from a Canadian Financial Institution showing the required funds are available will meet the documentation requirements if the following conditions are met:Full appraisal has been obtainedAll applicants have a minimum beacon score of 650All applicants have a minimum 2- year tenure at a current employer, ANDBroker arrears are within tolerance (if broker sourced).Sale of Property:A copy of the Agreement of Purchase and Sale and The Statement of Adjustments or Direction to Pay from the Solicitor is required to confirm the net proceeds. Retained Earnings: The mortgagor must confirm he/she is the sole owner by way of "Articles of Incorporation" and The financial statements and the company bank statements confirming that the cash is available must be provided and 25% will be deducted from retained earnings for the down payment calculation.Gift Letter:If the down payment is via a "gift", the giftor must be an immediate relative(i.e. parent, grandparent or sibling). Gifts from spouses are not acceptable.Conventional Mortgages: A letter must contain the following information: The amount of the giftA statement that the gift is non-repayable and is from non-borrowed funds The full names of the mortgagor and giftor(s),The relationship between the mortgagor and the giftor(s) andThe reason for the gift. the deposit or cheque confirming the funds have been received must be obtained. CMHC/Genworth Mortgages: In addition to the requirements outlined above for Conventional mortgages, CMHC/Genworth mortgages require the following information: A standard CMHC/Genworth gift letter must be obtained andThe gifted funds must have been deposited into the mortgagor account at least 15 days prior to closing. Deposit With OfferConfirmation must be obtained (via bank statements, GIC's, etc.) to ensure that these funds were not borrowed and came from the mortgagor's own resources. In the case of new construction and condominium purchases, where the deposits are incremental (also known as 'staged deposits'), verification that these funds were not borrowed and came from the mortgagor's own resources.Equity Take out from another owned propertyA copy of the mortgage terms and conditions (i.e. commitment letter).Secured Line of Credit A copy of the loan document from the financial institution outlining terms and conditions and the security used for the loan.Closing CostsMCAP will include the closing costs into the TDS calculation using 3% payment based on the Purchase Price times 1.5%If the TDS exceeds the maximum for the Product/Program selected, the closing costs are removed from the TDS and the borrower must confirm the funds are available and are from a non-borrowed source based on 3 months accumulated savings.Rent To OwnSigned Rent-to-Own Agreement (cannot be current dated) which includes:Supporting letter of economic rent from a certified appraiser that was done at the time of the agreementRegistration of the Agreement against the propertyProvision for the prospective purchase to be entitled to some refund of the amounts set aside as down payment in the event the sale does not proceed (demonstrates purchase price is not being over-stated to take into account the down payment)Confirmation that the purchaser(s) are entitled to refunds of amounts set aside as down paymentRent payments in excess of market rent are eligible as a source of down paymentValue is to be based on the sale price outlined in the Purchase Agreement and not on present value of the subject propertyMust be considered to be from a borrower’s own resources?Pre-Authorized Payment RequirementsTo set up pre-authorized payments on an MCAP mortgage, MCAP requires the completion of the Pre-Authorized Debit (PAD) Agreement which is included with MCAP's Commitment Letter or can also be found on MCAP's websites and Professor.In addition to the PAD Agreement, MCAP also requires either: 1. a void cheque or 2. proof of account ownership:1. If a void cheque is provided, it must be pre-printed, personalized and reflect the name of at least one of the mortgagors. Counter cheques and cheques drawn on business accounts are not acceptable. 2. If proof of account ownership is provided, it must be either an original or internet bank statement clearly displaying the financial institution's name and the name, branch & account number of at least one of the mortgagors. Business accounts are not acceptable for pre-authorized payments.Income OverviewMaximum Number of IncomesConventional: A maximum number of four incomes can be used on the same mortgage.Income TypesIf you receive income in addition to your base hourly/salary/commission rate, such as overtime or part-time income, MCAP is able to use this for qualification purposes granting the income has been received consistently for 2 years. If wishing to use this income, please see the section below entitled “Other Income”. This section breaks down the various types of income and provides information surrounding what documentation is requiredIncome Confirmation SalariedIncome Confirmation – SalariedA job letter is required which is dated on company letterhead and signed by someone of authority (i.e. immediate manager, HR department, and owner). The letter must confirm the following details:Name of the employee;Salary;Length of employment;Position;Overtime;Bonuses;Pending increases;Car allowances and ;Prospect for continued employment.The job letter must be supported by a current pay stub and verbal confirmation for all LTV'sA recent paystub may be accepted to confirm income when all of the following exist:Beacon is over 700Employment matches bureauFull Appraisals obtainedLTV is 65% or lessNote 1: Existing MCAP ClientsIf the existing MCAP borrower meets all of the following requirements, only the most recent Notice of Assessment is required at the time of refinance.Length of current employment is equal to or greater than the length of time at the current address AND Employment status is 100% commissioned AND Minimum Beacon of 680 AND Satisfactory MCAP repayment history If this is not the case, full verification is required as outlined above.Income Confirmation – HourlyA job letter is required which is dated on company letterhead and signed by someone of authority (i.e. immediate manager, HR department, and owner). The letter must confirm the following details:Name of the employee;Hourly rate;Regular guaranteed work week;Length of employment;Position;Overtime;Bonuses;Pending increases;Car allowances and;Prospect for continued employment.MCAP also requires one of the following: Current paystub showing hours worked and salary to date orMost recent year T4’s or Notice of AssessementGuaranteed Hours: 100% of base hourly income may be used provided: Hours are guaranteed, standard work week and not subject to lay-offsHours Not Guaranteed/Variable: 2 year average of income earned over the past 2 years must be used, provided:Income is confirmed to continue at the same level or expected to increase. Where variable income is declining from one year to the next, the most recent year must be used to account for the downward trendCommissionJob letter, which is dated, on company letterhead and signed by someone of authority (i.e. immediate manager, HR department, owner, etc.). Letter confirms the name of the employee, length of employment, position, year-to-date commissions, bonuses, pending increases, car allowances, and prospect for continued employment. Current paystubMost recent 2 years NOA’s for Conventional or Insured MortgagesLast year’s NOA if the LTV is less than 60% (purchase only)New Policy If income is decreasing year over year, with a 20 per cent or more decrease in any one year, the most current year's income is to be used. Otherwise, the average income may be used. Qualifying income must be based on the last 2 year average commission income Note: If the income in the most recent year is the highest, the average must be used. Note 1: Existing MCAP ClientsIf the existing MCAP borrower meets all of the following requirements, only the most recent Notice of Assessment is required at the time of refinance.Length of current employment is equal to or greater than the length of time at the current address AND Employment status is 100% commissioned AND Minimum Beacon of 680 AND Satisfactory MCAP repayment history If this is not the case, full verification is required as outlined above.Business for SelfProvided that the company has been in operation for 2 years or more, the following information is required:A minimum of 2 years Notice of Assessments (NOA's) from the previous 2 years, AND one of the following:Satisfactory Business Credit Report demonstrating 2 years operation, or2 years GST returns, orConfirmation of active business bank accounts indicating 2 year satisfactory operation, or 2 years audited or accountant prepared financial statements.Conventional Mortgages:Available to Ambassadors Plus Only:If LTV is lower than 65% and Beacon Score >= 680Most recent Notice of Assessment (NOA)No tax arrearsMaximum income to be used for qualification is 1.6 times what is disclosed on line 150To confirm minimum 2 years self employmentSole Proprietorships & Partnerships one of the following is required:Business LicenseGST/HST Return SummaryAccountant prepared T1 Generals and Statement of Business Activities for the last 2 yearsCorporations one of the following is required:Articles of IncorporationAudited Financial Statements for the last 2 years prepared & signed by a CAIf LTV is greater than 65%:A minimum of 2 years of financial statements and tax returns prepared by an accountant.If an accountant does not prepare these documents, notice of Assessments over the last 2 years are also required.The mortgagor has the option to: Gross up the total income by 15% (based on Line 150 of the NOA), orUse eligible add-backs to gross up the total income subject to the following:All eligible add-backs are to be confirmed by way of an accountant prepared Review Engagement or Audited Financial Statement The Business for Self applicant must have a minimum beacon score of 650 The loan to value ratio must not exceed 90% If Broker sourced, the Broker must have acceptable arrears levels with MCAP, AND All add-backs must be averaged over the same number of years over which the Business for Self income is being averaged. Eligible add-backs to Net Income Before Taxes are:Business use of home Motor vehicle Expense from business for self-applicant only and any related payments must be included in the TDS Depreciation/Amortization of equipment providing the equipment does not need to be replaced in the near future. Note 1: If there are any outstanding income tax arrears, the Underwriter must confirm that the outstanding amounts have been paid prior to advancing the loan.The mortgagor has the option to:Gross up the total income by 15% (based on Line 150 of the NOA) or, Use eligible add-backs to gross up the total income subject to the following:All eligible add-backs are to be confirmed by way of an accountant prepared Review Engagement or Audited Financial Statement The Business for Self applicant must have a minimum beacon score of 650 The loan to value ratio must not exceed 90% If Broker sourced, the Broker must have acceptable arrears levels with MCAP, AND All add-backs must be averaged over the same number of years over which the Business for Self income is being averaged.Note 2:If the mortgagor earns both salaried and self-employed income, only the self-employed portion of the income may be grossed up by 15%.Note 3: Eligible add-backs to Net Income Before Taxes are:Business use of homeCapital Cost AllowanceMotor vehicle Expense for business for self-applicant only and any related payments must be included in the TDSDepreciation/Amortization of equipment providing the equipment does not need to be replaced in the near future.Note 4: Existing MCAP ClientsIf the existing MCAP borrower meets all of the following requirements, only the most recent Notice of Assessment is required at the time of refinance and a 15% gross-up of income is permitted.Length of current employment is equal to or greater than the length of time at the current address ANDEmployment status is self employed ANDMinimum Beacon of 680 ANDSatisfactory MCAP repayment historyIf this is not the case, full verification is required as outlined above.Note 5:If income is decreasing year over year, with a 20 per cent or more decrease in any one year, the most current year's income is to be used. Otherwise, the average income may be used.Note: If the income in the most recent year is the highest, the average must be used.Note 6:If the LTV is lower than 65 per cent and the beacon scores for both applicants are greater than 700, income can be confirmed via one of the following: Current year's financial statements Current year's tax returnCurrent year's notice of assessmentLetter from an accountantThis policy applies to all MCAP mortgages, except the Home Account Plus product. Documents provided must confirm net income required to qualify clients under standard GDS/TDS guidelines.DisabilityNon-taxable disability income is acceptable, provided: Income is guaranteed for the life of the applicant (WSIB is not acceptable as it is usually paid on a short term basis) AND Income is eligible as non taxable as defined by the Income Tax Act of Canada (Canada Customs & RevenueAgency) Eligible Gross up is allowed per the following: If non taxable income is <$30,000 – maximum 25% If non taxable income is =/>$30,000 – maximum 35%DNDIf the borrower is a member of Canada’s Department of National Defence (DND), we can accept their most recent pay stub in lieu of a job letter and the employment can be confirmed on the credit bureau. Most recent pay stub must include all of the information that would normally be obtained in a job letter (e.g. the employee's name and salary). If the employment cannot be confirmed on the bureau, a secondary piece of confirmation is required. Second/Part-timeGuaranteed Hours: 100% of base hourly income may be used provided: Hours are guaranteed, standard work week and not subject to lay-offsHours Not Guaranteed/Variable or Secondary Source of Income: 2 year average of income earned over the past 2 years must be used, provided:Income is confirmed to continue at the same level or expected to increase. Where variable income is declining from one year to the next, the most recent year must be used to account for the downward trendAlimony/Child Support? 100% may be used provided income represents < 30% of gross incomeConsideration must also be given to:Age of the children for which child support is being received and likelihood the support will continueFully executed court order or separation agreement signed by both parties and executed by lawyer/notary, ANDConfirmation of support income via bank statements or income tax filing for the previous year showing:Low Ratio: 3 months history, consecutivelyHigh Ratio: 6 months history, consecutivelyFamily Business? Current paystub? Most recent 2 years NOA’s? 2 year average must be used Investment2 year average can be used when:Investment is not being liquidatedIncome is not from capital gainsIncome used does not exceed 5% of the total investmentsIf the most recent year’s income is less than than the previous year, the most recent year’s income must be used50% of the income derived from a mortgage receivable can be used to qualify only if the mortgage receivable has been in place for a minimum of 2 years and will continue for the term of the proposed mortgageIf the investments are being used for equity they cannot be used as incomeMost recent 2 years NOA’sIf the income is derived from a mortgage receivable:Copy of the mortgage document and confirmation of regular paymentsIf the investments are being used for equity they cannot be used as income Seasonal2 year average must be usedIf the most recent year’s income is lower than the previous year, the most recent year’s income must be used100% of EI income will be considered provided:70% of total income derives from the salary paid by the companyNo more than 30% comes from EILetter of employmentCurrent paystubMost recent 2 years NOA’s or T4’sUnion? 2 year NOA average:? If the most recent year’s income is lower than the previous year, the most recent year’s income must be used? Letter of employment from the current employer? If just started with their current employer through the Union, a letter from the union is required? Letter from the Union confirming applicant is a member is good standing? Current paystub? Most recent 2 years NOA’s? RRIFCurrent RRIF statement(s) to determine balance and annuitiesRRIF balance must support the annual draw for a minimum of 5 yearsMost recent 2 years NOA’s Underwriter Exception:RRIF income may be used provided the investment balance supports an annual draw for a minimum of 3 yearsCommitment PeriodMaximum Commitment Periods Based on "line of business", MCAP commitment periods are as follows: All Residential "A" Mortgages terms have a 120-day maximum commitment periodMin/ Max loan amountThe maximum and minimum loan amounts for conventional mortgages are as follows:Maximum Loan Amount: No specific maximum loan amount for Residential 'A' Conventional mortgages. However, in the case of large loan amounts, there are limitations as to what the maximum mortgage amount can be. Please refer to MCAP Product Fact Sheets or speak with your Regional Account Manager for complete details.Minimum Loan Amount: $50,000 (for all regions). The Home Account Plus Mortgage has a minimum loan amount of $10,000.00 Payment FrequencyFor qualified of payment frequency options. These payment frequency options include:Weekly * Bi-Weekly * Semi-monthly ** and Monthly.* Accelerated ** Semi-monthly means making only two mortgage payments per month. There must be 15 days in between the two payment dates. MCAP cannot have the 28th, 29th, 30th or 31st of any given month as a payment date. Example: Deal is closing 26th of month. Client selects monthly payments and wishes to make payments on 4th of month. IAD will be set on the 4th day of the following month and 1st payment commences one month later on the 4th of month. For bi-weekly or weekly payments, any day of the week may be selected by the customer. All payments must be paid via a Pre-Authorized Debit (PAD) plan. Privilege PaymentsMCAP offers two payment privilege options that allow mortgagors to pay down their mortgages at a faster rate: Lump Sum Payment Increase in Payment A mortgagor can take advantage of both privilege payments in any given mortgage year. Lump Sum PaymentsProvided there is no default, the mortgagor has the privilege of prepaying partial amounts of a mortgage principal, with no penalty, on any payment date.The payments must each be in a minimum amount of $100, and total no more than 20% of the original principal mortgage amount. The payments can be made during the 12-month period following the interest adjustment date, each anniversary date or renewal date.This penalty-free privilege cannot be carried over from previous years. Increase in Payment Provided there is no default, the mortgagor has the privilege of increasing the regular payment amounts to a maximum of 20% of the current mortgage principal and interest payment. This option is available once during the 12-month period following the interest adjustment date, each anniversary date or renewal date. RatiosRequired Debt Service Ratios (GDS/TDS)MCAP Product and Programs?GDS/TDSFixed Rate6 Month Convertible1 Year Open1-5 Year Closed7 & 10 year closedConventional Beacon < 680 = 35%/42% Beacon >= 680 = 35%/44% Insured 35%/42%Variable Interest and PaymentVIP M-PowerConventional Beacon < 680 = 35%/42% Beacon >= 680 = 35%/44% Insured 35%/42%Line of CreditHome Account FirstHome Account PlusBeacon < 680 = 35%/42%Beacon >= 680 = 35%/44% ProgramsExtended Amortization (Conventional Only)Small Rental (Conventional Only) Secondary HomeConventional Beacon < 680 = 35%/42% Beacon >= 680 = 35%/44% Insured 35%/42%Small RentalBeacon < 680 = 35%/42%Beacon >= 680 = 35%/44%Some exceptions are availableRevolving CreditUnsecuredMinimum 3% of outstanding balance in TDSRSecuredMinimum 1.25% of outstanding balance in TDSRRequalifying BorrowersBorrowers' requalification is defined as the process, which involves:Pulling a new credit report;updating loans and liabilities;recalculating GDS/TDS;setting the interest rate, and updating CMHC/Genworth and/or the investor, if applicable.Note: If the extension falls within the 120-day limit, the requalification process will involve:Recalculating GDS/TDS, where applicable;setting the interest rate, and updating CMHC/Genworth and/or the investor.Amortization Min/MaxConventional:Minimum Amortization5 yearsMaximum Amortizationup to 30 yearsInsured:Minimum Amortization5 yearsMaximum Amortizationup to 25 yearsPlease refer to individual product/program sheetsChanging or removing ConvenantsMCAP will permit a covenant to be changed or removed from an existing mortgage under the following conditions: The mortgage has an acceptable repayment history for a minimum of one year (no missed payments or NSFs)New covenant(s) and/or remaining covenant(s) qualify under MCAP's current underwriting guidelinesA $250 processing fee is requiredPlease ensure that all required documents are forwarded to the Refinance department to complete the covenant change. MCAP pays the broker a $250 commission for assisting with this transaction.Direction re: TitleA 'Direction re: Title' is a form that is often used to change the Purchasers on an already accepted Offer to Purchase.MCAP will not accept any changes to the original Purchase and Sale agreement via a 'Direction re: Title' as it is not signed and witnessed by all parties to the transaction.MCAP requires an amended Purchase and Sale agreement fully executed by the Purchasers. A full underwrite on all people taking title is required.GuarantorsMCAP will accept a mortgage application where one (or more) of the covenants is registered only as a guarantor. Full applications and credit reports must be obtained on guarantors and they must qualify based on normal underwriting standards. Provincial legislation shall determine if a mortgagor must be registered as a covenantor or guarantor. MCAP allows the use of qualifying guarantors that occupy the property and must be immediate family members. Restrictions/Exceptions to this may apply on some Products/Programs and this will be indicated on the individual Product/Program sheet. A guarantor may be considered to qualify if the primary mortgagor displays any of the following: Lacks job stability Has a satisfactory credit history, with explanation Has a minimum down payment by gift, or Has a high debt service ratio. If the guarantor is not going to be registered on title, the guarantors must obtain Independent Legal Advice (ILA). ILA is not necessary for a spouse when funding an owner-occupied property. Power of AttorneyMCAP will not accept any mortgage transaction whatsoever executed by Power of Attorney.Pension IncomeTaxable Pension: Taxable pension income (Federal and or Provincial programs - ie. CPP, OAS) is acceptable provided pension is permanentMCAP will use 100% of the pension income when qualifying a mortgage provided that the pension is permanent.If the source is Company or Government pension, MCAP will require one of the following:T4A for the most recent income tax year, OR 3 months bank statements reflecting automatic deposit.Non-Taxable Pension:Non-taxable pension income is acceptable, provided: Income is eligible as non taxable as defined by the Income Tax Act of Canada (Canada Customs & Revenue Agency) and is permanent Eligible Gross up is allowed per the following: If non taxable income is <$30,000 – maximum 25% If non taxable income is =/>$30,000 – maximum 35%Car AllowanceCar allowances are not acceptable unless the allowances are included in the T4 as income. Please provide a copy of the most recent years T4(s) showing the car allowance as a taxable benefit.Foster Care IncomeNew PolicyWhen qualifying a mortgage, 100 per cent of foster parent income will be considered subject to acceptable underwriting assessment and the following requirements:1. The borrowers must have at least two years' experience as foster parents.2. The only acceptable forms of income and employment verification for foster care parents are: A letter of employment or contract from the Ministry responsible for foster care, confirming income, tenure and current approved status, andA pay stub.3. The maximum number of children in care will not exceed six, including any of foster parents' own children.4. The borrowers must live on-site. Note: MCAP will not finance off-site operators. Properties should be located in an acceptable urban neighbourhood.5. Maximum GDS 30% as opposed to the usual 32%.6. Maximum TDS 40%.7. Maximum LTV 95%.Note: If foster care income accounts for more than 50 per cent of the borrowers' total income, MCAP will require a minimum down payment of 15 per cent.Maternity/Parental leave IncomePolicy on Maternity/Parental Leave IncomeFor a borrower on maternity/parental leave, MCAP will use 60 per cent of the estimated return to work income when qualifying a mortgage.Note: If the borrower is returning to work within?two months of the mortgage closing date, MCAP will use 100 per cent?of the estimated return to work income when qualifying a mortgage.The return to work income must be confirmed via a letter of employment indicating the following:The position the borrower is returning to,the expected start date, andthe salary/income the borrower will earn upon return. Separation AgreementWhen a Borrower declares the marital status of Separated or Divorced the Underwriter must review the application to identify:if any dependants exist ANDif the Borrower has indicated that they are paying or receiving Child Support and/or Spousal Support. TIP: For Broker sourced applications the number of dependants can be found in the 'Ingested Info All' memo. The same is true for Rapid App sourced applications.If the marital status is Separated or Divorced and/or dependants exist and/or the Borrower has indicated that they are paying or receiving Child Support/Spousal Support the following policy applies:When the Borrower is receiving Child Support and/or Spousal Support income and up to 100% of the income is being used to qualify:it must be fully confirmed by way of a Separation Agreement ANDadequate proof that the income is in fact being received ( a 6 month history is required for CMHC and Genworth insured loans, 3 months for conventional loans) by way of bank statements, cancelled cheques or tax filing (but 1997 legislation removed the requirement to file this income).When the Borrower is paying Child Support and/or Spousal Support it must be confirmed by way of:a separation agreement or court order AND The amount of Child Support and/or Spousal support must be included in the Borrower's liabilities when calculating GDS and TDS. On exception, Spousal Support can only be deducted from the borrower's gross income if required.When the Credit Bureau indicates 'spouse' but this is not acknowledged on the application:MCAP will condition for Spousal Consent to the subject mortgage transaction.When the Borrower is going through a separation or divorce at time of application:the separation agreement or court order must be obtained even if there are not dependants or support related issues ANDthe Underwriter must review the document to identify whether the Borrower is responsible for any spousal buy-outs or equalization payments and document how this payment will be made if one exists.TIP: Recently separated or divorced applicants can be identified via notes from the Broker or Customer (i.e.: buying smaller home due to marital split, refinancing to buy-out spouse, etc..)Separation Agreement are not required when:the Borrower's marital status is not separated or divorced ANDthere are zero dependants listed on the application ANDthe Borrower has not indicated anywhere that they are paying Child Support and/or Spousal SupportORthe Borrower has indicated that they are receiving Child Support and/or Spousal Support AND it is not being used to qualify the loan.ORthe Borrower has not given us any reason to believe there is an ex-spouse.Maximum LTV on Spousal buyout transactions:For applications with transactions related to spousal separation/buyout where one party is keeping the existing property. If:1) Both parties are currently on title to the property prior to the legal separation:Applications may be submitted as either:Refinance up to 80% LTV, orPurchase up to 95% LTV2) Only one party currently on title to the property prior to the legal separation:Applications may be submitted as:Refinance up to 80% LTVIf the party currently on title is remaining on titlePurchase up to 95% LTVIf the party currently not on title is purchasing the property from the one that isDocumentation Required:Finalized separation agreementOffer to purchase (N/A for refinance)Full appraisal required regardless of LTV:On high ratio loans the insurer may conduct their own internal appraisal (no cost to borrower). If not;Full appraisal from MCAP approved appraiser at cost to borrowerRental IncomeThe qualifying criteria and applicable rental income amounts are as follows.Income/Liabilities to be included for debt Servicing:Property TypeConventionalHigh RatioOwner Occupied with suite6 month, 1-5 year fixed and VIP MPower:Income: 80% rental offset7 & 10 year terms only:80% of Rental Income is added to applicants gross employment income50% of Rental Income is added to applicants gross employment income100% of Rental Income is added to applicants gross employment income for properties in Victoria and Vancouver regions provided the loan is Genworth insuredSubject Rental Property5 year fixed and VIP MPower:Income: 80% of rental income is added to applicants gross employment incomeLiabilities: P.I.T. and 50% condo fees, if applicable50% of Rental Income is added to applicants gross employment incomeOther Rental Properties6 month, 1-5 year fixed and VIP MPower:Income: 50% of Rental Income is added to applicants gross employment incomeLiabilities: P+I & 50% condo fees if applicable OR Net surplus/shortfall added to income or liabilities as applicable7 & 10 year terms only:50% of Rental Income is added to applicants gross employment income50% of Rental Income is added to applicants gross employment incomeDocumentation Requirements for 6 month, 1-5 year fixed and VIP MPower:Active Leases or Tenancy Agreements OREconomic Rent provided by a certified appraiser from MCAP's list of acceptable appraisers as posted on this website ORRecent 2 years T1 generals, inclusive of Statement of Rental Activities, when using net rental calculationsDocumentation Requirements for 7 & 10 year fixed:Active Leases or Tenancy AgreementsOvertime IncomeOvertime IncomeIf using overtime to qualify, a job letter is required which is dated on company letterhead and signed by someone of authority (i.e. immediate manager, HR department, and owner, etc.). The letter must confirm the following details:Name of the employeeHourly rateRegular guaranteed work weekLength of employmentPositionOvertimeProspect for continued overtimeBonusesPending increasesCar allowances andProspect for continued employmentIn addition to the above, MCAP will require current pay stubs showing overtime worked and T4 or T1A over the last 2 years. Qualifying income is based on the last 2 year average overtime income. The sustainability of the overtime income must be confirmed with the employer, provided: Over-time represents less than 25% of total incomeIncome is confirmed to continue at the same level or expected to increase. Where variable income is declining from one year to the next, the most recent year must be used to account for the downward trendBonusA minimum of 2 years Notice of Assessments (NOA's) or T4's from the last 2 years, employment letter confirming base salary and that the bonuses are expected to remain consistent at the level provided or is expected to increase. Qualifying income is based on the last 2 year average bonus income. The sustainability of the bonus income must be confirmed with the employer Acreage PropertiesProperty RequirementsMCAP will provide financing for acreage properties provided they are:Up to and including 5 acres (some exceptions may apply) Used for residential purposes only Not a working farm Zoned Residential or Rural/Country Residential Marketable Fully appraised Located in an area with properties having similar characteristics/size and land useDetermining Lending ValueNo consideration will be given to either the remaining acreage or value of any outbuildings (i.e. barns, sheds, stables, etc.) unless these additional requirements are met:Borrower has a minimum Beacon Score of 650Property is a maximum of 50 acres Clause in the Commitment LetterA clause must be inserted into the commitment letter and the mortgage documentation stating that the property will not be operated as a farm. In addition, MCAP requires that a satisfactory Well Certificate be obtained unless it is confirmed that the property is serviced by municipal water.CMHC/Genworth LoansCMHC/Genworth will not consider acreage properties that are zoned Agricultural.AppraisalsWhen an appraisal is conducted, the prime factor in determining the value of any property is based on the concept of "Fair Market Value" using "Costs" and "Market Sales" as guides.Defining Market ValueMarket Value can be defined as the probable price, at which a property would sell for at the date of appraisal, allowing for a reasonable time to find a purchaser.Furthermore, it is assumed that when defining Market Value the following conditions exist:Competitive market conditionsInformed buyer and sellerRational or prudent behaviour by buyer and sellerReasonable turnover periodMortgages being granted for additions or remodeling - appraisal must clarify whether the value is "as is" or "at completion"No undue pressure on either partyNormal financing is availableMarket value looks at the transaction from the viewpoint of the buyer andPeriodic inspections will be necessary to ensure stated work is complete. When Appraisals are RequiredMCAP is currently using fee appraisers in most transactions where an appraisal is warranted due to the degree of risk associated with the application. Appraisers should be designated as Certified Residential Appraiser (CRA), Accredited Appraiser Canadian Institute (AACI) or Designated Appraiser Residential (DAR) unless accredited appraisers are not available in the area. In such cases highly experienced non-accredited appraisers can be used on an exception basis. Appraisers must be on MCAP's Approved Appraiser List.An appraisal is not a substitute for sound and prudent real estate lending. Undue reliance should not be placed on the appraisal in lieu of the sound assessment of the borrower's capacity and willingness to repay.Percentage CompleteSubject property must be minimum 97% completeOnly landscaping and/or minor exterior completion items can remain outstanding (applicable to final inspection for new constructions)Statement of UseThe appraisal must state that its intended use is for mortgage lending purposes.Preferred FormatOriginal appraisals are preferred with original pictures. However, clear and readable fax and electronic copies are acceptable. The appraisal requirements may change based on "Line of Business" and investor requirements.When Appraisals are Required for Residential "A" Conventional Mortgages Appraisals are the cost to the borrower and are required for the situations described below in order to minimize MCAP’s risk associated with real estate market values:If the lending area (the lending area is defined as the 50km radius from the nearest urban center) has a population of less than 100,000If the transaction is a private saleIf the transaction is "non-arms-length" (the buyer and seller are related)If the lending area is unknown to the underwriterIf secondary financing (we will accept the subsequent mortgagees appraisal)If the property is a mobile home or modular (pre-fabricated) home If the property is on a main streetIf the property has an address coded as "Rural Route" (RR)If the property is not on municipal services (i.e. well and septic)If the lot size is greater than 2 acresIf the property is being purchased under "Power of Sale", in which MCAP is not the vendorIf the MLS listing indicates any derogatory information (i.e. deferred maintenance, location issues).If the product is a 7 or 10 year term conventional over $250,000, a full appraisal is required. (NOTE: the appraisal must confirm the remaining economic life of the subject property exceeds the amortization by 5 years)If the property in a condo type property (apartment, strip, stacked, row) full appraisals are required in the following circumstances:The loan does not have default insurance (paid for by the borrower) orThe monthly condo fee is >45% of the mortgage PITH monthly paymentPolicy Regarding the Release of Appraisal Originals or copies of appraisals are not to be given out to anyone by MCAP staff without the express written consent of the appraiser.Sign-off on Fee AppraisalsAll fee appraisals must be reviewed and initialled by an MCAP mortgage representative (i.e. approver of the loan).Sign-off confirms that the property meets MCAP’s criteria. This is not considered a formal review under Uniform Standard of Professional Appraisal Practices (USPAP) regulations.Drive-By AppraisalsUnlike a regular appraisal, a "drive-by" does not require an inspection of the subject property’s interior. All other requirements remain the same (see Appraisal Report Format above).The use of drive-by appraisals will be considered based on Manager discretion. An explanation for the use of a drive-by appraisal must be noted on the Loan Summary.The drive-by appraisal report must be completed by an accredited appraiser.Drive-by Appraisals - Residential "A" Conventional MortgagesDrive-by appraisals are acceptable for Residential "A" mortgages in lieu of a full appraisal for owner-occupied residences (including duplexes in which one unit is owner-occupied) where there is no secondary financing, and under the following conditions:Purchases - provided that the transaction is arms length, the property is listed on the Multiple Listing Services (MLS), and it is not double-ended (purchaser and seller must be represented by different agents), where:The loan to value (LTV) ratio is less than or equal to 50% in major urban centres where the population is 100,000 or more. Transfers where:The loan to value (LTV) ratio is less than or equal to 50% in major urban centres where the population is 100,000 or more. Refinances where:The loan to value (LTV) ratio is less than or equal to 50% in major urban centres where the population is 100,000 or more. Equity Take-Outs where: The LTV ratio is less than or equal to 50% in lending areas where the population is greater than 100,000.Appraisal Report Format The appraiser shall complete the report in accordance with the standard appraisal form (using Uniform Standard of Professional Appraisal Practices (USAP)) and shall make additional remarks about distinct/unique property features that affect marketability (either positive or negative effect).A Complete AppraisalThe following items are required for a complete appraisal:Appraisal documentation must be typed or legibly written in inkAt least two pictures (colour preferred) are required. Pictures should include the front and back of the structure, any additions or obvious deficiencies, and any outbuildings if included in the value for loan amounts requiring Head Office approvalA Statement regarding whether or not Urea Formaldehyde Foam Insulation (UFFI) is presentIf the house has a partial basement, the appraisal must clarify whether it is partial in height or it is under part of the houseAppraisal documentation must indicate comparable salesAppraisal documentation must indicate rental income if applicable and the documentation must be signed and dated by a CRA, AACI or DAR. When Appraisals are NOT Required for "A" BusinessThere are some situations where an appraisal is NOT required for Residential "A" business.In the instances where an appraisal is not required, the underwriter must be familiar with the values and marketability of properties in the general surrounding area of the subject property. When Appraisals are Required for "A" Insured Mortgages Appraisals are the cost to the borrower and are required for the situations described below in order to minimize MCAP’s risk associated with real estate market values:If the transaction is a private saleIf the property is being purchased under "Power of Sale", in which MCAP is not the vendorMultiple Listing Service (MLS) ListingsThe Multiple Listing Service (MLS) is a real estate marketing service in which many brokers pool all of their listings.Use of the MLS ListingMCAP underwriters use the MLS Listings as additional supporting documentation in the property valuation process and must be obtained on high ratio purchases.Required MLS InformationMLS Listings must be legible and include the following:A picture of the subject propertyOriginal list price of the subject propertyThe MLS number andDate of the listing.Co-operative HousingMCAP will not consider Co-operative Housing (Co-op's) for financing.CondominiumsFinancing for CondominiumsCondominiums must contain one bedroom and be 500 square feet or greater. Some exceptions may apply.Condo ConversionsCondo conversions are not acceptable. Some exceptions may apply.Default Insurance RequirementIf the loan has an LTV =/> 75%, mortgage default insurance is required (paid by the borrower).Condo Fee RatioIf monthly Condo fee is >45% of mortgage PITH monthly payment the following is required:Borrower paid mortgage default insurance is required with full disclosure of the Condo fee situation to the insurerFull appraisal required, regardless of the LTV ratioDown Payment must be from own resources.Title InsuranceAll Condo/leasehold type properties (apartment, strip, stacked, row and townhouses) require Title Insurance (at the borrowers cost).Condo Clause – Estoppel (All Provinces)A current Status / Estoppel Certificate or Condominium Declaration must be obtained by the solicitor / notary prior to closing. The solicitor / notary is responsible to review and notify MCAP of any deficiencies prior to advance.Condo Clause – MinutesThe last 6 months Strata and AGM minutes confirming no major leakage, structural damage or assessments is required. (For province of BC only)Cottages/RecreationalFinancing for Cottages/Recreational PropertiesMCAP will consider mortgages on cottages/recreational properties on an exception basis only. MCAP will consider mortgages on cottages/recreational properties if the properties have the following characteristics: The property has a LTV of 60% or less (confirmed by satisfactory appraisal); The property is winterized (i.e. not a seasonal residence);The property has year-round access; The property has water, central heating, plumbing, and electricity; and The property is marketable. If the property does not meet all of the above characteristics, MCAP will still consider the mortgage application provided: There is a blanket first mortgage registered against the mortgagor's principal residence and the recreational property;The loan application is a fully qualified and documented Residential "A" mortgage; Both the principal and the recreational properties are marketable; and The combined LTV is less than 65% (confirmed by satisfactory appraisal completed on both properties). Vacation, recreational, or cottage properties are eligible for the secondary home program as long as they meet all of the following property requirements:Property requirements:The property must be suitable for and available for year round occupancy (not seasonal). The borrower's ability to occupy the property must not be restricted or limited at any time. Some examples of features that a suitable property will typically have are:A permanent heat source,Acceptable year round water source,A permanent primary source of electricity (Note: Generators are considered a supplementary source of electricity),Insulated for year round occupancy,Indoor kitchen and bathroom facilities,Accessible year round by a vehicle that is licensed for use on municipal, provincial, or territorial roadways. Or, if the property is located on an island it must have year round bridge or ferry access (Water taxi not acceptable).Heating ComponentHeat Component in debt servicing calculation on all loans (regardless of LTV):<2000 sq ft = minimum $1,020 annually2000 – 3500 sq ft = minimum $1,140 annually3501+ sq ft = minimum $1,380 annuallyLeasehold LandsMCAP will not consider properties on leasehold lands.Exception: MCAP will consider leasehold properties in major centres (i.e. Vancouver and Toronto) provided: The lease is held by the federal, provincial or municipal governmentThe property is in a very marketable areaThe lease has a minimum of the mortgage amortization plus 5 yearsThe lease must contain a buyout price to convert to freeholdThe lease payment must be fixed for the mortgage termThe leasehold interest must be assignable to the mortgagee/mortgage insurer in the event of defaultThe lease must be convertible to freehold in the event of default and a legal action.Under no circumstances will a private lease or native land lease be considered.Lending AreasCondo conversions completed in the last 5 years in Alberta, Manitoba and Saskatchewan will not be eligible for financing at MCAPPopulation Guidelines For Residential "A" business MCAP will not lend in population centers less than 5,000 unless it is CMHC or Genworth insured. For Residential "B" business, MCAP will not lend in population centres less than 20,000. Maximum LTV RatiosMaximum LTVsThe maximum loan to value ratios are as follows: PRODUCTMAXIMUM LTVFixed Rate?- 6 Month Convertible ?- 1 Year Open ?- 1-10 Year Closed*?Purchase?- 95% for owner-occupied with 1-2 units?- 95% for owner-occupied with 1-2 units?- 95% for owner-occupied with 1-2 units, 90% for 3-4 unitsRefinance?- 80%?Please note that for 7 & 10 Year Closed, the maximum LTV for owner-occupied Condominiums and Region of Windsor subject properties is 75%.VIP?- VIP M-PowerPurchase?- 95% for owner-occupied with 1-2 units, 90% for 3-4 unitsRefinance?- 80%LINE OF CREDIT??- Home Account First?- Home Account Plus?- 65% for owner-occupied with 1-4 units?- 65% for owner-occupied with 1-4 units?Note: Combined LTV of MCAP 1st mortgage and Home Account Plus cannot exceed 80% LTV (HELOC portion cannot exceed 65%)PROGRAMS??- Small Rental?- Secondary Home?- Stated Income?- 80% for non owner-occupied with 1-2 units?- 95% for owner-occupied with 1-2 units?- 90% for owner-occupied with 1-2 unitsMinimum Square FootageMinimum Square FootageThe minimum square footage for a single-family home is 750 square feet.Exceptions will be permitted in regions in which smaller homes are the accepted norm: Condominiums must contain one bedroom and be 500 square feet or greater.Studio lofts will be considered, however they must be over 600 square feet and the underwriter must confirm CMHC/Genworth has approved the building for insurance purposes. This would only apply in major centres such as Toronto and Vancouver. Mobile and Modular HomesMobile homes and Modular (Prefabricated) homes are acceptable if: On a free-hold titled land; Contains no more than 1 unit; A satisfactory full appraisal is received; New Mobile/Modular homes are identified, certified and conform to Canadian Standards (CSA); Existing Mobile/Modular homes must conform to the applicable provincial jurisdiction or in the absence of the applicable Canadian Standards (CSA); Add-ons can be removed without unduly damaging the unit or affecting the warranty; No value consideration is given to add ons; The property is fully serviced for water and waste disposal; A chattel loan does not exist Set Up/Anchorage: Mobile Homes: ?Permanently affixed to a concrete foundation /anchored to concrete footings Modular Homes: Permanently affixed to a concrete foundationNew Home ConstructionNew Home Warranty registration is required for all new construction properties with the exception of self builds (owner is not contracting out more than 50% of the work to any single sub-contractor ). Please contact your Regional Account Manager for a list of approved New Home Warranty providers.Holdbacks as per provincial law requirements (in the province of Quebec, title insurance is required).U-Curve Rate Hold PolicyFor most fixed rate Residential "A" deals, MCAP will provide the best rate during the commitment period of the mortgage to the broker/borrower. This rate will be set by MCAP two days prior to funding and no other rate changes will be allowed.Blended and Increase MortgageThe purpose of blends is twofold:Blends allow the mortgagor to avoid a penalty being charged for an uncompleted term and Blends enable the mortgagor to retain the existing rate that had been previously secured with MCAP. There are two types of blends: Interest Rate Differential (IRD) Blends An IRD blend occurs when the mortgagor(s)' existing mortgage rate is greater than the current rate for the term remaining.Credit Blends A Credit blend occurs if the existing mortgage rate is less than the current rate for the term remaining.Penalty Chart MCAP Fixed Rate Term Mortgages?Terms / Time RemainingPay-outRefinanceLonger Fixed Rate TermLess than 90 days from true maturity date?Daily interest to maturity?No penalty?6 month convertible?Greater of IRD or 3 mo interest penalty?No penalty?1 year open?No penalty?No penalty?1, 2 & 3 year closed term?Greater of IRD or 3 mo interest penalty?Greater of IRD or 3 mo interest penalty, less 10%?4, 5, 7 & 10 year closed term??See chart below?See chart below, less 10%?*1 year open and Home Account are Excluded??Advance Date, before March 1st, 2004?Advance date between March 1, 2004 OR Committed OR Advanced before December 10, 2004?Committed date on or after December 13, 2004?InsuredCMHC/Genworth?Greater of 3-month interest penalty or IRD up until the 3rd anniversary. After the 3rd anniversary, the 3-month interest penalty would apply.?Greater of 3-month interest penalty or IRD up until the 3rd anniversary. After the 3rd anniversary, the 3-month interest penalty would apply.*The above would apply if commitment is signed prior to Dec 20th, 2004.?Greater of 3-month interest penalty or IRD up until the 5th anniversary. After the 5th anniversary, the 3-month interest penalty would apply.?Conventional?Greater of 3-month interest penalty or IRD up until the 5th anniversary. After the 5th anniversary, the 3-month interest penalty would apply.??Note:?????????? Less than 90 days to maturity - loans are not eligible for a blended rate?Currently in VIP (time remaining)Pay-outEarly Renewal, RefinanceShorter Term*Early Renewal, Refinance Longer TermFixed Term – no penalty (provided new term plus time elapsed in VIP is 3 years)Another VIP – 2-month interest penalty if the rate of the new VIP is lower. Another VIP - No penalty if the rate is the same or higherVIP Select after 3rdAnniversary?No penaltyFixed Term - no penalty (provided new term plus time elapsed in VIP >= 5 years)?Currently in a Fixed Term Converting to a VIP or Home Account (time remaining)Pay-outEarly Renewal, RefinanceShorter Term*Early Renewal, Refinance Longer TermSee chart below??Advance Date, before March 1st, 2004?Advance date between March 1, 2004 OR Committed OR Advanced before December 20, 2004?Committed date on or after December 20, 2004?InsuredCMHC/Genworth?Greater of 3-month interest penalty or LOI up until the 3rd anniversary. After the 3rd anniversary, the 3-month interest penalty would apply.?Greater of 3-month interest penalty or LOI up until the 3rd anniversary. After the 3rd anniversary, the 3-month interest penalty would apply.*The above would apply if commitment is signed prior to Dec 20, 2004.?Greater of 3-month interest penalty or LOI up until the 5th anniversary. After the 5th anniversary, the 3-month interest penalty would apply.Conventional?Greater of 3-month interest penalty or LOI up until the 5th anniversary. After the 5th anniversary, the 3-month interest penalty would apply.??Existing Clients - Portability Portable Mortgage Types There are three types of Portable Mortgages offered by MCAP: True Portable;Increased Portable; and Decreased Portable. True Portable:The existing mortgage balance and terms and conditions are transferred to the new property without change. Increased Portable: The mortgage balance is increased as the existing funds and the new funds are combined and ported to the new property. Decreased Portable: The existing mortgage balance is reduced and transferred from existing property to the new property. No penalty is required on the reduction itself if the reduction is within the unused privilege payment allowances for the mortgage for the current year. A penalty is required on any reduction that exceeds any privilege payment allowance and is the greater of the IRD or three months interest on the applicable portion. Portable Mortgage OptionsMCAP offers the mortgagor four portable mortgage options to choose from: Port the mortgage;Extend the mortgage;Shorten the mortgage; or Pre-pay the mortgage. Port:The mortgagor has the option to port the existing terms and conditions (i.e. the interest rate and the remaining term) of the existing mortgage "as is" to a new property. Extend: The mortgagor has the option to extend the mortgage maturity date through the creation of a new mortgage. The resulting interest rate in the new mortgage will be calculated based on a blending of the existing and the new interest rates (also know as a "blend and extend") and is applied to the new property. Shorten: The mortgagor has the option to shorten the maturity date to be less than the remaining term on the existing mortgage. If applicable, the mortgagor may have to pay a pre-payment penalty. Pre-Pay:The mortgagor has the option to pre-pay the mortgage and renegotiate the terms and conditions for a new mortgage. If applicable, the mortgagor may have to pay a pre-payment penalty. LTV RatiosThe maximum loan to value (LTV) for a portable mortgage is: Conventional loans - 80% CMHC/GE Capital Insured loans - 95% Skip a PaymentThe recently updated Skip a Payment Program is intended to provide Borrowers in financial difficulty with a solution to prevent a mortgage default.This revised policy came into effect on July 1, 2011.What is the impact to the mortgagor?The interest due is capitalized to the mortgage loan.Fee$82 per payment skippedCriteriaMortgage is in good standing.Customer must show goodwill by having good repayment and good credit. Customer must demonstrate that future payments will be madeLTV not greater than 90%. ................
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