Lender Roles and Responsibilities
Before transmitting an application to Sagen, each Lender is required to perform its normal underwriting procedures. Prior to funding, the Lender must complete all required confirmations, verifications, validations, and due diligence. The Lender’s underwriting procedures will ensure that only applications that meet the Lender’s and Sagen’s usual underwriting standards and product definitions are electronically forwarded to Sagen. Verifications or other information must be available to Sagen upon request, when required for the following purposes:
- Underwriting decisions on new applications, or requested amendments.
- Quality Assurance reviews; and
- To comply with all applicable legal requirements and guidelines.
As well, each Lender is responsible for:
- Ensuring the continued accuracy and integrity of the application data submitted electronically to Sagen, inclusive of application amendments following Sagen’s approval up to the date of the mortgage certificate issuance; and
- Timely advice as to future material Lender underwriting policy changes.
In advance of the transmission of the application electronically to Sagen, the Lender must provide the borrower(s) and, if applicable guarantor(s) with written notice, a copy of which must be signed by the borrower(s) and guarantor(s) in acknowledging of having understood and consented to its contents which states as follows:
“The granting of the Loan or any part thereof by a Lender, or approval for mortgage insurance by Sagen is not to be construed or relied on by the borrower (s) and any guarantor(s) as representing a confirmation of the value or condition of the underlying property, whether or not appraisals or inspections are carried out by or for Sagen; nor is it to be construed or relied on by the borrower(s) or any guarantor(s) as representing a confirmation of the ability of the borrower(s) and any guarantor(s) to repay the Loan.”
Lenders also need to include all appropriate disclosure to borrowers required by applicable laws. In Alberta for example, Lenders are required by the Law of Property Amendment Act, 2003 (as it may be amended or replaced from time to time) to include the following disclosure:
“This mortgage is a high ratio mortgage to which sections 43 (4.1) and (4.2) and 44 (4.1) and (4.2) of the Law of Property Act apply. You and anyone who, expressly or impliedly, assumes this mortgage from you, could be sued for any obligations under this mortgage if there is a default by you or by a person who assumes this mortgage.”
Borrower’s Personal Information
Prior to submitting an application to Sagen for consideration, the Lender must ensure that the borrower(s) or guarantor(s) have executed, in writing, an appropriate disclosure and consent form, in accordance with all laws of the applicable jurisdictions, which authorizes Sagen to receive (or obtain) personal and credit bureau in formation for Sagen’s mortgage insurance underwriting purposes, as well as to allow Sagen to service the insured loan, enforce the loan and mitigate losses throughout the life of the loan or subsequent judgment. All personal information obtained by Sagen will be held in confidence by Sagen or its applicable third -party service providers and will not be released to any other third -party except where required by law. An example of an acceptable form of consent is as follows:
“The Borrowers hereby consent to the disclosure or receipt of personal and credit bureau information by Sagen, throughout the life of the loan, for mortgage insurance underwriting purposes, as well as to allow Sagen to service the insured loan, enforce the loan and for loss mitigation planning and initiative purposes.”
It is the Lender’s responsibility to ensure the accuracy of the data being sent to Sagen. In the event that changes in the application characteristics occur at or after Sagen approval, but prior to advance, these changes must be provided to Sagen. A list of changes that do not require resubmission are referenced in the “Updates After Approval” section in Chapter 3– Underwriting Documentation.
Enhanced Due Diligence
Periodically, the Lender maybe requested by Sagen to conduct enhanced due diligence on a loan application. The Lender is expected to review the loan application in its entirety and scrutinize the existence of any discrepancies or anomalies as well as conduct a thorough and reasonable validation of all documentation to be retained in the Lender’s file in accordance with Sagen’s Data Submission and Retention Schedule or applicable legal standards. For reference, Sagen’s Data Submission and Retention Schedule can be found at: www.sagen.ca –Lenders–Policies.
Lender Delinquency Reporting
When a borrower defaults and it is determined there are no viable options to resolve the arrears after consultation with the borrower, the account should be reported as soon as possible to Sagen. Sagen will evaluate the file to determine if there are any additional steps that could resolve the arrears.
In all cases, the Lender should report the delinquency to Sagen within 15 days once the loan is in arrears greater than three months (90 days), or, when the total arrears (including unpaid taxes and/or condo fees) equal three-monthly mortgage payments, or at any time a loss is expected.
In addition, second mortgage agreements must contain a cross-default clause where default on one mortgage constitutes default on the second mortgage and are reported to Sagen.
Fraudulent / False / Misleading Information
All Lenders should have adequate mechanisms in place for the detection and prevention of fraud and misrepresentation. Lenders are required to disclose if misrepresentation is suspected as early as possible using the Sagen Stop Fraud Notification form (or Lender equivalent) found at: www.sagen.ca –Lenders – Mortgage Fraud. Information that must be reported to Sagen includes, but is not limited to, any potential misrepresentation. Examples can include misrepresentation of:
- Employment / income
- Intended use of property ( i.e.,used for illicit purposes)
- Occupancy ( i.e.,straw borrowers)
- Offer to purchase.
- Down payment source
- Property value
- Outstanding debts
- Property attributes
Any indication of identification theft or title theft must also be reported to Sagen. The notification should be sent to a Sagen Fraud Specialist:
Email: StopFraud@sagen.ca or
Fax: (905) 287 5301 or (877) 246 5509
Outstanding Mortgage Loan Reporting
All outstanding mortgage insurance loans are to be reported as outlined in the Sagen Outstanding Mortgage Reporting Guide.
Sagen’s Role and Responsibilities
- Verify that the minimum required electronic data is received and conforms to Sagen’s information requirements.
- If required request and receive any additional required information/documentation for underwriting
- purposes (over and above electronic data) from the Lender prior to approval.
- Underwrite and provide a response to the Lender on the final underwriting decision.
- Provide the Lender with timely written advice of any future changes in underwriting policy or including updates to this Underwriting Guideline and/or Lender updates; and
- Upon receipt of timely payment of the full premium, will electronically issue a Certificate of Mortgage Insurance.
The Lender will submit application data electronically to Sagen, with required data elements and in the format previously determined by the Lender and Sagen. Sagen can receive mortgage insurance applications from a Lender 24 hours a day, 7 days a week. The electronic adjudication of applications is performed from 6:00am to 1:00am Eastern Time (ET), Monday to Sunday. All applications received will be evaluated for mortgage insurance eligibility in accordance with these Underwriting Policies and Standards. The level of Sagen’s underwriting will vary commensurate with individual application risk characteristics.
All new requests for direct connectivity should be made through the Vice President, Business Development. Once the request has been made, Sagen will provide assistance and testing support to the Lender.
For all other inquiries, please contact:
The Sagen National Underwriting Centre at 1 (800) 511 8888:
Monday – Friday 8:00am – 9:00pm (ET)
Saturday 10:00am – 6:00pm (ET)
The Sagen Quebec Underwriting Centre at 1 (877) 470 4144:
Monday – Friday 8:30am – 5pm (ET)
Tuesday, Wednesday, Thursday 8:30am – 6pm (ET)
Sagen insured mortgages and hypothecaries are to be secured on Good and Marketable Title (as such term is defined in the Master Policy of Sagen) by a mortgage in first position. Mortgages in second position may be eligible under Sagen’s Second Mortgage Program. Sagen will insure mortgages placed under a standard charge or collateral charge. The following requirements must be met:
- The approved Lender must ensure that for each mortgage, the borrower has good and marketable title, and the Lender has enforceable security. Sagen will accept a title insurance binder or commitment issued by a title insurer, or a solicitor’s or notary’s certification as evidence of good and marketable title.
- Sagen will permit title to property to be registered as either tenants in common or joint tenancy. Irrespective of how title is taken ( i.e.,tenants in common or joint tenancy), Sagen requires that all parties on title be on the mortgage, liable for payment of the entire mortgage amount and obligated to adhere to all of the corresponding responsibilities and obligations under the mortgage.
- Adjacent properties that are on separate titles by the same borrower(s) are eligible for coverage under Sagen home -ownership programs, subject to the following:
- One blanket mortgage is registered over both titles.
- Guidelines to be followed will be based on the total number of legal suites contained in both properties. If there are more than 2 units, the application must meet the 3-and 4-unit requirements under the Homebuyer 95 Program. See Chapter 6 –Product Specific Underwriting Guidelines –Homebuyer 95 Program for additional details.
Default Management Tools
In the event an insured mortgage goes into default, the Lender is expected to follow all internal procedures to bring the mortgage current. Additionally, the Lender and borrower are both encouraged to work with Sagen to establish alternative arrangements when circumstances occur that may affect mortgage repayment.
Sagen’s Homeowner Assistance Program (“HOAP”) is designed to help homeowners who are experiencing temporary financial difficulties due to an unexpected life event that may put their mortgage at risk. If the borrower has a Sagen insured mortgage, they may be eligible for the Sagen Homeowner Assistance Program. Sagen has a dedicated team of Homeowner Assistance Specialists who are trained in identifying the best workout solutions for borrowers. There are a number of options that may help borrowers keep their home when faced with financial hardship.
For additional information please refer to the Sagen Homeowner Assistance section at www.sagen.ca – Homebuyers –Homeowner Assistance.
Mortgage Insurance Payment Deferral Option
Over the life of the mortgage, the Lender may defer up to four (4) monthly payments in aggregate on a Sagen insured mortgage without Sagen’s approval. Payment deferrals must be in line with the Lender’s own internal policy and any requests beyond four monthly payments must be sent to Sagen for review.