“The mandate of CMHC is to get smaller,” the source told the Post.
The crown corporation announced last week it would be axing its second home program while also requiring self-employed homebuyers to provide third party income verification. The goal, according to the source, is to offload some its business – and its risk – to the two private insurers, Genworth
and Canada Guaranty.
“CMHC helps Canadians meet their housing needs and contributes to the stability of the housing market and finance system” Steven Mennill, Senior Vice-President, Insurance with CMHC says in an official release. “As part of the review of its mortgage loan insurance business, CMHC is evaluating its products and services to ensure they are aligned with these objectives.”
Moreover, effective May 1, each of the three insurers hiked their insurance premium by 15 per cent. The CMHC was the first to announce the increase – a move some brokers believe is necessary to ensure the long-term viability of the corporation.
“A lot of brokers don’t remember that (in 2005) ago the premium with five per cent down (were lowered to) 3.75 per cent so it went down and it’s gone back up again and our CMHC is pretty much guaranteeing as much mortgage debt as our government of Canada has in complete debt,” Tim Brierly of KCR Mortgages told MortgageBrokerNews.ca. “The mortgage premium is such a minimal amount of what you make in your monthly if the premium has to go up to make CMHC a more viable option – and able to cover the obligation it is sitting on – I don’t think it’s a big deal.”
According to a Financial Post source, the CMHC's decision to cut two of its programs moves it one step closer to potentially privatize the crown corporation.