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The Canada Mortgage and Housing Corporation complex in Ottawa on Thursday Oct. 9, 2008.Sean Kilpatrick

Canada's primary lender of taxpayer-backed mortgages is coming under tighter oversight, as new legislation will require Canada Mortgage and Housing Corp. to report to the national banking regulator.

Finance Minister Jim Flaherty tabled a 421-page budget bill Thursday that provides new detail on a wide range of measures only hinted at in the Conservative government's March 29 budget.

One of the most anticipated aspects relates to the government's decision to change the oversight structure for CMHC, which is expected to see its portfolio of mortgages grow well beyond $500-billion this year.

Under the current structure, CMHC is primarily overseen by Human Resources Minister Diane Finley. The budget legislation would give the finance minister a greater role in oversight and would make the Office of the Superintendant of Financial Institutions the main watchdog for CMHC.

"I've been concerned about CMHC for some time," Mr. Flaherty told reporters in explaining the move.

The agency has "become an important financial institution in Canada and it was not subject to the same supervision by the Office of the Superintendent of Financial Institutions, so I think this is an important step forward that OSFI will have that prudential responsibility with respect to CHMH."

The legislation expands the objectives of CMHC to ensure its commercial activities promote and contribute to stability of the financial system, including the housing market. It would also require OSFI to review the safety and soundness of CMHC's activities and report to the CMHC board of directors, as well as the ministers of finance and human resources.

Mr. Flaherty said the changes will not affect CMHC's responsibilities for social housing.

The legislation includes a wide range of changes to federal environmental laws in an effort to speed approval of major economic projects. It also contains the legal measures required to increase the age of eligibility for Old Age Security from 65 to 67 starting in April 2023.