Weekly Squeeze - Underwriting Updates - TD

To: All Brokers

As TD continues to unlock value, simplify policy requirements, and work to improve our customer experience, there are updates coming to several RESL policies.

Why is this change being made?

• Policies are reviewed on a regular basis to ensure we continue to meet the evolving needs of our customers. RESL is updating our New to Canada (N2C) policy and Temporary (Non-Permanent) resident policy to help our customers feel comfortable and confident banking in Canada, while making us more competitive in the New to Canada RESL market.

What you need to do

• Please review sections 4.3, 4.4 and 4.5 of the Broker Information Kit (BIK) for more information.

What you need to know

• Effective May 27, 2024, the following updates will be made to the New to Canada (N2C) policy and Temporary (Non-Permanent) Resident policy:

Conventional Applications – New to Canada (N2C) Policy Changes:

1. Update Amortization: Maximum amortization will be increased to 30 years for both Mortgage and TD Home Equity FlexLines.
2. Exceptions to the 3-month Full-Time Employment Requirement: In specific scenarios, exceptions with rationale to the 3-month full-time employment in Canada can be considered. Appropriate rationale must be included in the comments. Please review the policy and job aid for additional details.
3. Updated N2C Business for Self (BFS) Guidelines: If a N2C customer has BFS status for a minimum of one year but less than two years, the most recent one-year Notice of Assessment (NOA) and full T1 Generals can be used as income confirmation. Appropriate rationale and confirmation of BFS tenure must be included in the comments. The minimum income must be $15,000 and would not be eligible for gross up. There will be no exceptions to this requirement. Please review the policy and job aid for additional details.
4. Waiver for N2C Annual Income Document Requirement: A Letter of Employment (LOE) and current income document are required if a 'New to RESL' New to Canada customer's annual document for fixed employment income is not available due to job tenure (i.e., employment tenure in Canada has been less than one year). Appropriate rationale must be included in the comments.
5. Updated Total Debt Service (TDS) Ratio thresholds and Liquid Asset Requirements:

• Owner-occupied homes: Maximum TDS thresholds will be 100% and will require 35% down payment and equivalent of 12 months of principal, interest, and property taxes (PIT) in liquid savings in Canada.
• If TDS is greater than or equal to 100%, in addition to the 35% down payment and 12 months PIT liquid savings, there will be an additional liquid asset requirement dependent on the loan amount. Please review the policy for additional details. There will be no exception to this liquid asset requirement.

1. Non-Owner-occupied homes: Maximum TDS thresholds is 80%. There will be no exception to the TDS threshold.
2. Liquid asset requirement for loan amounts less than or equal to $500,000 reduced to $250,000.
3. Liquid asset requirement for loan amounts greater than $500,000 remains unchanged at $500,000.
4. Liquid asset requirement for non-Owner-occupied homes cannot be gifted.

There will be no exception to this liquid asset requirement.

1. New Canadian Criteria: We are redefining the 60-month requirement to be based on the ‘since date’ on the Permanent Resident card or document date, even if credit bureau is greater than 60-months. Please note the 'PR since' date can be found at the back of the PR card.
2. Income Growth Expectation: Sales Channels & Underwriters will continue to require a narrative in the submission comments supporting reasonable income growth prospect to align with standard TDS guidelines; however, there is no longer a requirement to illustrate this within a two-year time frame.

Insured Applications – New to Canada Policy and Temporary (Non-Permanent) Resident Policy Changes:

1. Increased # of Units: Allow properties up to 4 units. Rental income from the subject property can also be included to support the application.
2. Increase Loan-to-Value: Maximum Loan-to-Value (LTV) will be increased to 95% for properties with 1-2 units and 90% for properties with 3-4 units.
3. Expand Eligible Purpose: Purchase plus improvements will be added as an eligible purpose.

Additional Options to Verify Credit Worthiness:

1. For applicants with a US address and social security number: a copy of Equifax US credit bureau.
2. For international applicants (excluding US): an international credit report, or rent payments and a payment of an additional financial obligation (i.e., recurring bills such as utility, cable etc.) over the past 12 months.
3. For Sagen and Canada Guaranty only, if unable to obtain the 12-month history of rent and 12-month history of additional financial obligations, LTV will be limited to 90%. CMHC will continue to support 95% LTV and one the following may be accepted:

• Satisfactory Letter of Reference from a recognized Financial Institution outlining history and past credit experience. Must be dated within 60 days of approval or;
• 6 months of satisfactory Bank Statements from Primary Account

Reminder: Borrowers and/or property must meet the requirements under the Prohibition on the Purchase of Residential Property by Non-Canadians Act, where applicable.

Contact

If you have any questions, please contact your Regional or Inside Sales Manager.

To: All Brokers

Effective May 27, 2024, TD's Property Valuation/Appraisal Policy will be updated to redefine which assets can be included in the value of a property on the appraisal report. These policy updates unlock more value for customers with more comprehensive residential property valuations.

What you need to know:

The policy changes include the following:

• Outbuildings
  • Residential outbuildings can be included in property valuation.
  • Outbuildings used for commercial purposes will continue to be excluded in the property valuation.
• Laneway Home
  • There is no longer a restriction for Laneway homes to be located in a backyard or built above/within the space reserved for a garage with access via a laneway only.
  • Laneway homes can be in any location on the property and can be accessed via a driveway or laneway or have no access (garden suite); they can be included in the property valuation.

What you need to do:

• Review section 8.1 (Basic Criteria) of the Broker Information Kit (BIK) to familiarize yourself with the changes.

Contact

If you have any questions, please contact your Regional or Inside Sales Manager.