CMHC announced the details of the legal framework for Canadian covered bonds. The framework establishes high disclosure standards and recourse specifications that strike a balance between the needs of issuers and investors and takes into account evolving international best practice. CMHC is charged with administering the legal framework for covered bonds under the recent amendments of the National Housing Act. The framework will operate on a cost-recovery basis.
Assets which may be held as covered bond collateral include loans secured by one to four unit residential properties located in Canada. Insured mortgages are not permitted to be used as covered bond collateral and covered bond issues are not guaranteed by CMHC or the Government of Canada.
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Canada Mortgage and Housing Corporation
National Housing Act
Canadian Registered Covered Bond Guide
Benefits of Legal Framework