Concerned over the activities of the country's dominant mortgage insurer, the federal government is set to announce how it will toughen the over-sight of the massive and economically vital organization.

In late March, the federal budget took aim at Canada Mortgage and Housing Corp., the Crown corporation that controls about 75 per cent of the mortgage-default insurance market. In Thursday's budget implementation bill, the government will say how this over-sight will change.

CMHC currently falls under the jurisdiction of the minister responsible for Human Resources and Skills Development Canada. But Ottawa has been examining putting the Crown insurer under direct supervision of the Office of the Superintendent of Financial Institutions - a powerful financial regulator with the power to enforce a broad range of changes. CMHC is backstopped by the federal government but is coming close to breaching its mandated insurance limit of $600 billion because of the red-hot housing market and so-called portfolio insurance for the banks.

It's this portfolio insurance - also dubbed "bulk insurance" and often referred to as "commercial activities" by the government - that the Finance Minister is most concerned about.

The government said Tues-day it plans to introduce a law "to implement certain provisions of the budget," according to a document known as the Notice Paper. Under parliamentary rules, the legislation can be introduced in the House of Commons as early as Thursday.

While speaking to reporters in February, Finance Minister Jim Flaherty criticized the extent to which this commercial function of the CMHC had commandeered its lending capacity and core function.

"The issue that pushes them near their lending limit is the desire of some of the financial institutions to purchase port-folio insurance for their low-ratio mortgages," Flaherty said.

"That's not the way most people usually think of CMHC."

Just three years ago, CMHC had $450 billion in loans it was backstopping and had to go to the government to get that increased to $600 billion.

The budget document itself provided few details about what action would take place, but suggested the government was concerned about the Crown corporation's dealings with the banks and how it could affect the broader economy.

"The government will pro-pose legislative amendments to strengthen oversight of CMHC and to ensure its commercial activities are managed in a manner that promotes the stability of the financial system," the budget said.