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Mortgage Broker News | 07 Nov 2014, 11:37 AM Agree 0
Brokers have already suggested it and now the deputy governor of the Bank of Canada, Lawrence Schembri, has suggested the creation of a “private-label mortgage securitization market.”
  • Warren Ross | 07 Nov 2014, 02:25 PM Agree 0
    This guy is suggesting to move mortgage and housing risk from the government to the private sector. However, when the s**t hits the fan, and no one in the private sector is willing to buy or insure secured loans, it'll be up to the government to bail us out, and the cost will be way greater than under our current government regulated system. If the government is concerned about risk in markets like Vancouver and Toronto, they should come up with regional policy's to deal with those areas. Keep the system the way it is.
  • Rob Chandler | 07 Nov 2014, 02:56 PM Agree 0
    Reading between the lines - 1. let's adopt something that didn't work in the US; 2. let's provide no government of Canada guarantee and hope to attract current buyers of CMB and NHA-MBS; and 3. let's take away current funding sources for smaller institutions and provide this more expensive and unspecified source for them.

    Wouldn't it be simpler for the mortgage default insurers to charge a premium that corresponded to the economic risk inherent in this business? I guess Canada Guaranty and Genworth already think they do.
  • Janice Ashworth | 07 Nov 2014, 03:07 PM Agree 0
    I can not even make a educated comment without knowing at minimum - what were the stats from the last recession. Did many insured mortgages go into foreclosure? Did the insurers lose money during that time? Was it because of more lax underwriting guidelines at the time? Did the no down mortgages, BFS stated, and 5% rental purchase products offered at that time make an impact on those stats? How can we guess at what should be done now when we have no idea what happened in the past? I strongly feel that CMHC and the other insurers should release this data. What "sensitive information" excuses them from providing this? Are they just making too much money? Janice Ashworth - Jencor Mortgage
  • Janice Ashworth | 07 Nov 2014, 03:07 PM Agree 0
    I can not even make a educated comment without knowing at minimum - what were the stats from the last recession. Did many insured mortgages go into foreclosure? Did the insurers lose money during that time? Was it because of more lax underwriting guidelines at the time? Did the no down mortgages, BFS stated, and 5% rental purchase products offered at that time make an impact on those stats? How can we guess at what should be done now when we have no idea what happened in the past? I strongly feel that CMHC and the other insurers should release this data. What "sensitive information" excuses them from providing this? Are they just making too much money? Janice Ashworth - Jencor Mortgage
  • JSydneyH | 07 Nov 2014, 03:15 PM Agree 0
    The issue around government exposure to the housing market was caused by this very same government asking CMHC to bring more revenue to the table i.e. non-tax revenue, and when they did - by selling more insurance to the banks in bulk - they exposed the government to the housing market.

    The number of mortgages with less than 20% doesn't appear to have changed much over the past 25 years on a percentage basis, so we aren't really exposed to more risk in the key area CMHC was designed to address

    Not sure if I missed anything here, but it looks like the double edge sword coming back to get us.
  • Versico | 08 Nov 2014, 01:22 PM Agree 0
    CMHC was not established as a profit centre with a billion a year. It was created to help with home ownership. Originally if one was fortunate to have a CMHC insured loan your mortgage rate was discounted off the market rate. The crown corporation morphed into an insurance business with little regard paid to risk and its consequences.
    As for the comment on there not being enough data or information to make an informed decision there is in fact data and history behind past missteps.
  • tom adamson | 10 Nov 2014, 08:48 AM Agree 0
    I touched on this issue some 6 months back. Securitized mortgage product (in my opinion) is commercial trade and CMHC has/had/should never have been in this market.
    I am not slamming the securitized marketplace, there are many a great institution that got there start and still today provide excellent product to this industry.
    Think about it for 10 seconds. A private company bundles a billion dollar mortgage portfolio. Why, to make money. They go the market and find out they cannot get the premium (discount) they expected because to much of its portfolio is over exposed. The next product they bundle becomes insured, why, to make the money they were expecting. No one does this without financial reward.
    Surprise surprise 20 years later we have a problem. Why? Profit taking leaves the marketplace to thin and I agree with the deputy Governor. CMHC should not, never should have been, and does not belong in this commercial part of trade that this industry has grown to become.
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