“It is impossible to police a mortgage broker who holds seminars on how to get around CMHC rules such as secondary homes; who asks their clients to sign non-disclosure agreements when inviting them to these seminars, and who tells them to close the deals on the same day so that no other lender or insurer know that these "second home" applicants are actually savvy and sophisticated investors getting around the 20 per cent rule,” Blair Anderson of Anderson Associates said on MortgageBrokerNews.ca. “But, it does happen.”
According to CMHC, 82.9 per cent of condominium owners reside in their unit while 17.1 per cent are owned by condo investors.
The survey also found that “about half” of condo investors in Toronto and Vancouver currently rent out their last purchased unit.
However, one glaring omission from the survey are foreign investors, as it only included condo owners who reside inside their CMAs.
And, as several brokers have pointed out, the survey assumes all participants truthfully filled out their paperwork at time of funding.
“I believe that this report is based on a survey or condo owners and is also based on what was reported at the time of funding; So in reality we have no idea how accurate these numbers are,” commenter M. Robertson said on MortgageBrokerNews.ca. “From experience as a lender I can tell you that a lot of brokers will put owner occupied on an application so that they can get it approved. A lot of lender underwriters also turn a blind eye.”
CMHC recently released a breakdown of what percentage of condos in Canada’s two biggest markets are owned by investors but brokers aren’t sold on the methodology used, with many raising questions about how many investors circumvent CMHC rules.