Message from the President Changes to the Government Guarantee of Mortgage Insurance July 9, 2008 I would like to inform you that the Government of Canada announced today new parameters, or rules regarding the application of the government guarantee backstopping the Canadian mortgage insurance industry. These rules will apply to CMHC as well as to government guaranteed mortgages of all private mortgage insurers. In particular, there are three key features of the new mortgage insurance guarantee framework that will affect CMHC's insurance products: The loan-to-value ratio for government-backed insurance for mortgages is being reduced from 100 per cent to 95 per cent. The maximum amortization period for mortgages insured with government backing will be reduced from 40 years to 35. High-ratio home equity lines of credit (HELOC) will no longer be insured by CMHC, but low-ratio lines of credit will still be permitted. CMHC will no longer offer mortgage loan insurance for mortgage products or features falling outside the scope of the new parameters as of October 15, 2008. Only mortgages that fall within the new parameters will be eligible for CMHC's securitization programs - the National Housing ActMortgage-Backed Securities (NHA MBS) Program and the Canada Mortgage Bonds (CMB) Program. Our mortgage loan insurance and all of the corresponding benefits to lenders will continue to be available for mortgage loans where the government guarantee remains applicable. Our commitment to providing Approved Lenders with fast, efficient, quality service remains unchanged. To ensure a smooth transition, a considerable amount of work needs to be done in adjusting our products, systems and collateral. In addition, we will be working closely with lenders, addressing questions and providing assistance as required. For more information, please consult the Department of Finance's news release or backgrounder . Any inquiries about how this change affects CMHC's mortgage insurance products should be directed to Steve Mennill, Director, Products and Strategic Direction, Insurance, at 613-748-2772. Media inquiries should be addressed by Stéphanie Rubec, Manager, Media Relations, at 613-748-2300, extension 3064.