The MBSIA sent a letter to CMHC to recommend alignment in the calculation methodology for CORRA. As noted in the letter, the MBSIA became aware that the CDOR fallback rate (i.e., Fallback CORRA) applicable to the CDOR-based NHA MBS pools could differ from the One-Month Daily Compounded CORRA applicable to CORRA-based NHA MBS pools. This discrepancy is due to a technical issue in how observation periods for each interest period are determined.

The CARR recommended fallback language applicable to NHA MBS contains a conforming changes provision that would allow alignment of the calculation of the fallback rate to the accepted market practice for the CDOR alternative. Therefore, it is the view of the MBSIA that the alignment of the CORRA calculation methodology used in NHA MBS is consistent with the CARR recommendations.

The MBSIA recommends that CMHC utilize the conforming changes provision in consultation with issuers to calculate the fallback rate for CDOR NHA MBS using One-Month Daily Compounded CORRA together with the CARR recommended spread adjustment of 0.29547% instead of using Fallback CORRA. This recommendation is applicable for the CDOR NHA MBS with the interim fallback language as well as for the legacy CDOR NHA MBS that did not contain fallback language.

The letter has also been posted on the MBSIA website .

In Budget 2023, the government announced that it is considering consolidating Canada Mortgage Bonds (CMBs) into the regular Government of Canada (GoC) borrowing program. On June 6, 2023 the government opened formal consultation process to engage stakeholders in consideration of this proposal. The detailed description of this consultation can be found in the link below:

Consultation on the Proposal to Consolidate Canada Mortgage Bonds - Canada.ca

MBSIA has formed a working group and engaged its membership to determine if a formal response from MBSIA to the Ministry of Finance would be warranted for this consultation and discuss considerations that MBSIA community would like to raise in such a response. 

To that extent, the board has submitted a formal response letter to the Ministry, based on the discussion with our members.