CMHC declines raise underwriting questions

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CMHC’s balance sheet is now revealing the full impact of Jim Flaherty’s tinkering, although brokers want to know if the scale of that decline also reflects more rigid underwriting.

In real terms the drop means CMHC wrote $8.2-billion in insurance during the first three months of the this year, less than half of the almost-$19-billion it did during Q1 2012. The number of housing units that it insured fell 54 per cent to 52,078, from 114,045 in the first three months of last year.

While analysts are already blaming any decline in new policies on tighter mortgage rules introduced in July, some brokers are openly suggesting the drop also reflects CMHC underwriting that may be more rigid than its two competitors.

They’re also pointing the Crown corp.'s pull back from bulk insurance.

While other mortgage professionals haven’t seen a gap in underwriting between CMHC and Genworth and Canada Guaranty, they are looking forward to taking a look at the Q1 financials of those two private-sector competitors.

“Overall I see that deals are getting more and more difficult to approve, but I think that’s at the lender level and not necessarily at CMHC or the other mortgage insurers, Dan Page, with Mortgage Intelligence in Halifax, told MortgageBrokerNews.ca. “It will be interesting to see the stats from the other mortgage insurers, though, to compare declines against CMHC.”

Still, officials at the Crown corporation are cautioning against reading too much into any one quarter’s results.

“The numbers here are highly variable,” Brian Naish, CMHC’s CFO, told reporters. “As a result, there’s no significant trend you could see, whether it’s in condos or rural or multi-units or nursing homes.”
 

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