OSFI issues guidelines on how to determine the actual cost of mortgage insurance

The Office of the Superintendent of Financial Institutions (OSFI) has issued guidelines on implementing a new regulation that is designed to make sure that borrowers “do not pay a price for mortgage insurance that exceeds the true cost to the lender.”
Under their governing statutes, federally regulated financial institutions (FRFI, including banks and P&C companies) are generally restricted from lending more than 80% of the value of a residential property unless they insure the loan against default with a mortgage insurer.
The usual market practice for high-ratio mortgages is for FRFIs to charge borrowers for insurance premiums on insured mortgages, and to choose which insurer provides the coverage.
The new regulations, which come into force on July 1, 2010, establish how the actual cost of mortgage insurance is to be determined.
“OSFI expects that all FRFIs offering insured mortgages will establish policies and procedures with respect to their calculation of the actual cost of mortgage insurance, where the institution charges borrowers an amount for the insurance,” OSFI says in a post on its Web site. “Such policies and procedures should be available upon request by OSFI.” 
The full guidelines are available at:
http://www.osfi-bsif.gc.ca/osfi/index_e.aspx?ArticleID=3640