Canada Guaranty has announced that it is introducing new requirements for information used to verify the reasonability of the incomes of self-employed borrowers. The changes follow OFSI’s Guideline B-21 and will be effective August 1 2015.

The Low Doc Advantage program is designed for borrowers with an established history of self-employment and a strong credit profile. In addition to ensuring the borrower’s income is reasonable for the nature and tenure of the business:
  • Lenders are required to obtain the Notice of Assessment (NOA) from the most recent tax year, at the time of application, to confirm no income tax arrears and the income from line 150 for each self-employed borrower.
  • The following information must be included in the submission notes of the application, for each self-employed borrower:
    1. Income amount confirmed by line 150 on the most recent NOA.
    2. Gross revenue of the borrower’s business.
    3. Type of business being owned and operated (e.g. landscaping, bookkeeping, etc.).
    4. Ownership structure (e.g. sole proprietor) and the percentage of ownership.
Canada Guaranty says that all Low Doc Advantage applications will be reviewed by a senior underwriter.

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