Brokers: Rein in CMHC

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Many brokers and industry pundits alike believe the CMHC has strayed too far from its roots and one player believes the Crown Corporation should never have entered the securitized mortgage market.

“Securitized mortgage product, in my opinion, is commercial trade and CMHC has/had/should never have been in this market,” mortgage broker Tom Adamson wrote on “I am not slamming the securitized marketplace; there are many great institutions that got their start and still today provide excellent products to this industry.

“CMHC should not, never should have been, and does not belong in this commercial part of trade that this industry has grown to become.”

Originally established to give a helping hand to Canadians who otherwise would not be able to afford a home, CMHC has, more recently, made moves to help stimulate the economy; moves that are oft-debated among industry professionals. Many of whom believe the Crown corporation has outgrown its initial intention.

“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,” one anonymous commenter wrote on “The crown corporation morphed into an insurance business with little regard paid to risk and its consequences.”

And it’s an opinion that was shared by the late Jim Flaherty.

“Regrettably, CMHC became something rather more grand, I think, than it was intended to be,” Flaherty told reporters in December. “We’ll see over time what that role should be.”

CMHC to get back to its roots
  • Angela Wong-Liao - Invis on 2014-11-10 12:07:26 PM

    CMHC was founded and established after World War II to assist Canadians in home ownership, its time to go back to the basic.

  • LanceH on 2014-11-10 2:34:09 PM

    I agree Angela. My real concern if they do so, is that they do it right, and things don't go from bad to worse, as "dozens of ideas" fly around the halls of politics, ie, the talk of privatization, yet still backed by the Gov. That is a recipe for disaster!!! We have to acknowledge, that once a company - private or gov - gets "too big to fail", selling it won't change that designation, so we might as well keep it and the avg 2B / yr profits, which are better in Gov coffers than that of private individuals, and simply shed some of the excess role it's taken on.

  • Daryl French on 2014-11-12 11:59:47 AM

    Many seem to want to toss the baby out with the bath water, yes CMHC needs to be tweaked, but going back to what it was decades ago makes no sense. Is Apple what it was when it was founded? Corporations need to grow and change with the times and seek out opportunities in new markets or die.

    We have a crown corp that is actually profitable, lets celebrate this and see how to move forward within some clearly defined boundaries.

    If the securitization market creates more competition the end consumer will win. So lets take a look at how CMHC can be a part of this within tolerable risk levels???

  • Paul Therien - CENTUM on 2014-11-12 3:25:30 PM

    A lot of good points made here, and with recent changes we have already seen CMHC move towards their original mandate.

    CMHC is a Crown Corporation true, but they should also be applauded for being a profitable one. Too many crown corps are run as unprofitable ventures and end up being a burden on the tax payer. That being said, we talk about CMHC being "out" of securitization to protect tax payers... does that suggest then that people also think that the government should not offer guarantees to Genworth or Canada Guarantee? remember, these are "private" companies that receive 90% backing from the government.

    CMHC playing a part in this market also allowed our government and regulators direct oversight on quality and risk tolerance. Something that in 2008 and beyond served us very well to protect us from the collapse. Something that countries around the world are still trying to recover from.

    I agree with Daryl, let's not throw the baby out with the bath water.

  • Ron Butler on 2014-11-12 6:50:44 PM

    I am with Daryl and Paul on this one. In 2008 without CMHC's intervention in the mortgage market we like would only have one or two monoline lenders here today and likely only two banks working with brokers. We could have been down to just a handful of lenders and we all know what that would mean in terms of competitive mortgage rates for Canadians.

    It is reasonable to try to achieve a good balance in the securitization market but CMHC has been doing too good a job for too long to go back to the 50s.

  • Moray tawse on 2014-11-13 7:42:59 AM

    No Securitization, no mortgage banks, no competition for the big 5 banks, no need for mortgage brokers. Have you been around long enough to remember when the brokerage share of the market was about 3% That was before securitization gave brokers a competitive product to sell against the banks.

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