CMHC’s loss may ultimately be Genworth’s gain, with the country’s number two default mortgage insurer suggesting it has “lots” of lending capacity, even as the Crown corp. raises a cautionary note about its own future capabilities.
“There is plenty of runway." said CEO Brian Hurley, last week on a conference call, pointing to the insurer's willingness and, indeed, its ability to write new business.
Genworth, including Canada Guaranty, taps into another government-backed fund capped at $250 billion – and not the CMHC’s $600 billion pool, now nearing its lending limit.
Those Q4 results suggest Genworth needs to attract as much new business as possible.
Some $5.2 billion in new insurance on high loan-to-value mortgages written during the period represented a decline of 21 per cent from the previous period and a 9 per cent drop from a year ago.
Genworth still hasn’t indicated what if any of the slack it can pick up being created by CMHC’s effective rationing of portfolio insurance for lenders. The practice allows them to gain insurance on their conventional mortgages, which, in turn, allows them to securitize and sell them off. That clears up funds for new lending.
The first casualty of any loss of access to that insurance could be stated-income A mortgages offered by non-bank lenders.
While CIBC will continue offering stated-income programs through its branches and road reps, it has removed that item from its FirstLine menu.
“As far as I am concerned as a broker who has used FirstLine for 14 years, I am simply sad,” Ron Butler, with VERICO Butler Mortgage Inc., told MortgageBrokerNews.ca. “Although top CIBC executives feel they have done the right thing for their shareholders and they think their future strategy is sound, I believe that what is clearly a move away from support of the broker channel is a mistake.”
He’s not alone with brokers from across the country expressing the same concerns following FirstLine’s announcement it would kill a slew of loan programs associated with stated-income lending and new immigrants hampered by credit history requirements associated with traditional A deals.