Ongoing Evaluation: Maintaining Vigilance Throughout the Insurance Lifecycle
FRFIs must continuously evaluate their mortgage insurance counterparty throughout the contract's lifespan.
Evaluation should extend beyond contract expiration to assess potential insurance recoverables from expected future claims, particularly for material unreported losses. Compliance with the mortgage insurer's underwriting, valuation, and information requirements is essential to maintain insurance validity.
Technical Research Verification
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Related Questions
How does the stress test differ for fixed vs. variable in 2026?
Both are stress-tested at the higher of the benchmark (5.25%) or the contract rate + 2%.
Why are 3-year fixed rates dominating the 2026 market?
Borrowers are hesitant to lock in for 5 years at current levels, but find 1-2 year rates too expensive.
Fixed vs. Variable Comparison Table
Fixed locks a 5-year rate with IRD penalty risk; variable floats with prime and typically caps break fees at 3 months interest.
What is the 'IRD' penalty risk for 5-year fixed borrowers?
The Interest Rate Differential (IRD) can cost tens of thousands if you break a fixed mortgage when market rates have dropped.