National Housing Act

Marginal note:Eligible assets

• 21.6 (1) Only the following assets may be held as covered bond collateral:

  • (a) loans made on the security of residential property that is located in Canada and consists of not more than four residential units; or

  • (b) any prescribed assets.

• Marginal note:Substitute assets

  (2) Despite subsection (1), covered bond collateral may include securities that are issued by the Government of Canada and any prescribed assets.

• Marginal note:Maximum ratio

  (3) Unless regulations have been made under paragraph 21.66(g), the value of the assets described in subsection (2) must not exceed 10 per cent of the total value of the loans or other assets held as covered bond collateral.

• Marginal note:Exceptions

  (4) Despite subsections (1) and (2), the following loans must not be held as covered bond collateral:

  • (a) a loan made on the security of residential property if the loan is insured by the Corporation;

  • (b) a loan made on the security of residential property if the loan is insured by the Canada Guaranty Mortgage Insurance Company, the Genworth Financial Mortgage Insurance Company Canada, the PMI Mortgage Insurance Company Canada or any successor to any of those companies; and

  • (c) a loan made on the security of residential property if the amount of the loan, together with the amount then outstanding of any mortgage or hypothecary loan having an equal or prior claim against the property, exceeds 80 per cent of the value of the property at the time of the loan.