Brokers support CMHC foreclosure policy

Brokers support CMHC foreclosure policy

Brokers support CMHC foreclosure policy

CMHC’s request Realtors refrain from labelling properties as "in foreclosure" on MLS was, in fact, designed to protect the market from the kind of collapse the U.S. is still recovering from, suggest brokers supportive of the policy.

“If the CMHC disclosed all of their foreclosures to a client, they would get low-balled on all the offers,” says Bruce Flanagan, with Verico Premiere Mortgage Centre. “Why should they (the investors) take a loss on the property – and by extension, the taxpayers as well?”

CMHC, as the leading provider of mortgage loan insurance and mortgage-backed securities, effectively controls 75 per cent of the default insurance business. This year, its nationwide policy, or request, was challenged by some Quebec Realtors who feared they would be guilty of an ethical breach in keeping consumers in the dark as to whether properties were under power of sale.

Those concerns were brought to the Quebec Federation of Real Estate Boards, which in turn challenged the CMHC.

Ultimately, CMHC and the Quebec Federation resolved the conflict by no longer making the foreclosure disclosure mandatory, based on the seller’s instructions.

Still, many industry players, including brokers, argued the original CMHC policy provided the housing market more protection, especially if the economy hits a rough patch and defaults rise. Any appreciable rise in "foreclosure" listings on MLS might further cool sales and challenge buyer confidence, say proponents of the policy.

 

6 Comments
  • Paul Jackson 2013-03-01 5:00:27 AM
    I work as a real estate broker and a mortgage broker. Not agent and not agent! Anyway, I understand that CMHC and even realtors don't want the fact that a property is in forclosure to translate to low ball offers. The impacts are obvious and we all understand them. However, CMHC have to realise the reality.
    1. When a property is listed under POS the bank is the seller and is shown as such on the realtors data sheet.
    2. Even if the realtor manages to keep the POS a secret - the banks name appears as the seller on any agreement of purchase and the game is up at that stage for sure.
    3. There's usually stickers all over the windows of the home either from the bank saying that it is POS or a management company stating that they are looking after the property.
    4. There's often two lock boxes, the realtors and the property managers - a dead give away!

    The point is - if you're trying to stop low ball offers then you have to make it appear that the property is a regular listing which is virtually impossible. Plus, the homes are often trashed!
    I think being listed on the MLS is the least of a forclosed homes problems.
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  • Paul Jackson 2013-03-01 5:12:31 AM
    Further: My comments above relate to regular bank first mortgages. If the seller is in fact a private lender taking the property back then his or her name would be on the listing in which case no one would know that this is a forclosure. I also don't know what name CMHC uses if they are selling the property. All I have ever seen as a realtor is the banks name being used as seller.

    Paul

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  • @mortgagepro10 2013-03-01 11:57:15 AM
    Hi Paul,

    I've actually just recently worked on two separate files, one being sold by Genworth Financial and the other by Canada Mortgage & Housing Corp. The fact that properties are being sold "as-is where-is" is usually another sign that it's a foreclosed property.
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