Canada Bans Insured Mortgages From Covered-Bond Collateral
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Canada will prohibit banks from using insured mortgages to back their covered bonds while increasing oversight of the federal housing agency to cool off the country’s real-estate market.
Under rules in a budget bill that Finance Minister Jim Flaherty introduced in Parliament today, banks will only be able to use uninsured mortgages as collateral on covered bonds, which are notes usually backed by mortgages. The government will also strengthen oversight of Canada Mortgage & Housing Corp. through Canada’s banking regulator.