On May 15th, 2014, CMHC announced the following changes to the NHA MBS program:
- Standardization of the calculation methodology for indemnity amounts due to investors;
- Changes to loan eligibility requirements for 965 pools;
- Enhancements to the 2834 form (Information Circular).
As detailed in the respective advices, these changes are mandated for implementation on November 1st, 2014.
TAO Solutions is committed to implementing these changes in a timely manner and anticipates initial delivery to users of both PoolMaker/Manager and mortgageHUB on or before September 5th, 2014. While these changes are material in nature, the effort to test them is significantly less than the recently implemented 2840 changes. As a result, the eight-week window of client testing provided by TAO will be more than sufficient to successfully complete localized testing activities.
TAO will address these changes with the following PoolMaker/Manager and mortgageHUB updates.
- mortgageHUB – TAO will implement a comprehensive pool cash flow engine in mortgageHUB that automatically calculates indemnity prices/factors in the manner as set out by CMHC as part of the monthly remittance process. Users will still be responsible for providing the correct GOC yield curve through the existing yield curve upload mechanism in the product today. The pool cash flow engine will validate that the curve has the correct effective date. This enhancement will allow users to seamlessly execute the remittance process and indemnity calculations in one single unified process. Users who prefer external pricing tools will still be able to bulk upload prices for indemnity calculation purposes, and thereby configure mortgageHUB to suppress the internal pricing mechanism.
- PoolMaker/Manager – TAO will continue to provide users with the ability to upload externally derived indemnity pricing data for each pool. As the application does today, it will use the uploaded prices to calculate the indemnity factor and compute the amounts due to the investor reflected in the 2840 accounting. No further modifications to the program will be made on this matter. TAO is not committed to, but may offer Pool Maker/Manager clients an external or web-based utility to calculate indemnity prices with client-provided pool and yield curve data. TAO will be making further announcements regarding the availability of such a tool over the next few months.
965 Pool Loan Eligibility
- Both TAO Solutions products are already equipped to deal with this change using configurable eligibility requirements in the software today. Further product-specific documentation will be provided at the time of the September 2014 release.
2834 Information Circular Enhancements
- TAO Solutions will release new versions of the form in September 2014 with all of the changes mandated by CMHC as contained in the revised Circular document available on their website.
TAO does not anticipate any modifications to servicing system data requirements for any of these changes. More detailed implementation information will be confidentially disclosed to clients over the next several months.
Please feel free to contact your designated TAO Solutions account manager if you have any questions related to these changes.