Karen Kinsley, president and CEO of the Canada Mortgage and Housing Corporation (CMHC), recently voiced her "disappointment" at the Financial Post for suggesting that the mortgage insurer was "reckless" while at the same time comparing it to Freddie Mac and Fannie Mae in the U.S.
In a letter to the Post published Oct. 30, Kinsley points to some key differences between the Canadian and American economies, such as a "lack of subprime issues, strong economic fundamentals," and low interest rates in Canada.
She then goes on to note that while CMHC is entitled to insure up to $600 billion in mortgages, it only insures $480 billion now; that it maintains capital reserves for future losses that are twice the minimum requirement set by the Office of the Superintendant of Financial Institutions (OFSI); and that it is "subject to stringent government oversight" that includes regular reporting to Parliament.
Brokers also had a chance to weigh in on the Mortgage Broker News forum and showed a large amount of support for CMHC.
"The facts are that Canada/CMHC and lending institutions here have always maintained higher lending standards than many other governments and continue to do so in the environment coming out this recession," wrote Brian Matthey.
"[CMHC] tends to underwrite their loan insurance in a conservative manner and relies on the lender to be prudent and check for falsified information," wrote a reader simply referred to as John. "Last time I checked, CMHC was still a Crown Corporation and Freddie and Fannie were privately held bankrupt corporations."
Or as Kelly Rowe summed it up: "As a broker I'm not always all that happy with them ... but as someone who works in this industry, I can assure you CMHC is not giving away the farm."