Only a Patchwork of Lenders Support No-Stress Conventional Mortgage Switches

The new federal stress test exception on uninsured straight switches has been one of the most confusing regulatory changes in recent memory. Following its November 21 launch, lenders and mortgage pros were left wondering everything from whether mortgage finance companies were allowed to use the exemption to whether it applied to collateral charges to what the minimum allowable stress test rate was.

We seem to grumble about incomplete federal guideline announcements every time there's a federal guideline announcement. Yet, they keep coming. Regulators refuse to let trusted mortgage professionals preview embargoed policy releases to help avoid needless industry confusion.

Policymakers aren't the only ones playing hide-and-seek with clarity. Three months after OSFI's MQR exemption announcement for straight switches, many lenders remain mysteriously silent on their stress test guidelines. That's despite the fact that virtually every originator—plus numerous borrowers with TDS ratios north of 44%—wants to know who supports the measure.