SCHL : Le lapin sort de son chapeau

Le Financial-Post a fait un cahier spécial sur la SCHL.

Je vais extraire des points forts de ces articles, on remarque la pertinence des blogues, des vérités qui sont foncièrement évidentes prennent des fois des années politiquement à être acceptés.

1)      Finance Minister Jim Flaherty would consider taking Canada Mortgage Housing Corp. out of the mortgage default insurance business

Bravo, ça fait des années que je le dis, ce n’est pas au gouvernement (peuple) de garantir les prêts immobiliers, sauf on est pognés avec une patate chaude de 600 milliards. (1)

2)      CMHC closing in on the $600-billion limit the government has for how much of its portfolio will be backstopped by the taxpayer, three years ago it was $450-billion.

En 3 ans, le peuple est devenu responsable de plus de 150 milliards de prêts additionnels immobiliers les plus à risque.

3)      The government has now effectively shut down that market by not allowing insured loans into what are covered bond contracts. CMHC can only guarantee covered bonds with the approval of the finance minister.

Vous connaissez l’avidité de nos banques, il utilisait la SCHL pour sécuriser leurs propres prêts et revendait ces prêts aux étrangers avec la sécurité de la SCHL, évidemment ce qui était tout à fait en contradiction avec l’orientation initiale de la SCHL.

«CMHC is being slapped around the ears. The message is being sent out that it has been distorted from the original purpose of a social housing organization.»

4)      Problem is, Canadian real estate is anything but a normal market. CMHC insured mortgages are actually safer for lenders than conventional uninsured home loans, requiring less capital.

«Imagine two customers trying to borrow the same amount to buy a house, except one customer wants to make a 40% downpayment while the other can afford only 15% which means he has to take out insurance. All else being equal, the less credit-worthy borrower will be the more likely to get the loan, according to Mr. Routledge, because it’s more profitable to the lender.»

Encore là, c’est exactement ce que je vous avais dit: (2)

Ne trouvez pas cela ridicule :

Que ce sont les banques qui font le profit, et c’est le peuple qui prend le risque.

Pour une banque il est préférable de passer de l’argent à un individu qui a une mise de fonds inférieure à 20 %, contrairement à celui qui dépasse le 20 %, car celui qui a moins de 20 %, ils le font passer sous la garantie de la SCHL ne prenant ainsi aucun risque, car c’est le peuple qui prend le risque à leurs places.

Et ça fait des décennies que ça dure, pas besoin de vous demander pourquoi nos banques font plus de 24 milliards de profit et sont considéré les plus sécuritaires au monde, car ce sont 34 millions de crétins qui sécurisent leurs prêts.

5)      Mr. Carney said the average home price in Canada is about 4.75 times people’s income, while the historic average is closer to 3.5 times. Household debt to disposable income, meanwhile, is running at about 152.9%.

Ces assurances déresponsabilisent le risque des banques, engendrent du crédit facile et une bulle immobilière. Potentiel d’un risque d’une crise immobilière, comme aux : États-Unis, l’Irlande, l’Espagne.


Extrait de: Finance Minister Jim Flaherty would consider taking Canada Mortgage Housing Corp. out of the mortgage default insurance business he told the National Post’s editorial board., Garry Marr  Apr 27, 2012

‘I don’t think it’s essential that a government financial institution provide mortgage insurance in Canada’

“Over time, I don’t think it’s essential that a government financial institution provide mortgage insurance in Canada. I think what’s key is that mortgage insurance is available at a reasonable cost in Canada. I think there is a role to regulate but whether we, the Canadian people, have to be the owners and shareholders of a financial institution to do this is a question. I don’t think it’s essential in the long run.”

He offered no timetable on when the government could get out of mortgage default insurance business, just offering it up as a possibility. “We have a list of Crowns, Crown agencies that are being reviewed,” said Mr. Flaherty.

In a wide-ranging discussion on the housing market, he said he has no plans to increase CMHC’s current $600-billion loan limit, ruled out any possibility of regulating foreign real estate investment and made it clear his focus is on the governance of Crown corp. which controls about 75% of the mortgage default insurance business in the country.

“For some time now I’ve had concerns about the large commercial role that CMHC now plays. CMHC has become a significant Canadian financial institution. As you know, historically it was created with a mandate post-war to advance housing in Canada. It’s become much more that.”

The finance minister moved this week to tighten control of CMHC, placing it under the authority of the country’s banking regulator, the Office of the Superintendent of Financial Institutions. Previously, it fell under the watch of the Department of Human Resources and Skills Development.

The shift comes with CMHC closing in on the $600-billion limit the government has for how much of its portfolio will be backstopped by the taxpayer. Three years ago it was $450-billion.

By law, consumers must buy mortgage default insurance if they have less than a 20% down payment on a home and are borrowing from a federally regulated financial institution.

But CMHC has not been insuring just those loans, it has agreed to step in and insure loans — with the premiums paid by financial institutions — for lower-ratio mortgages, or what is called “portfolio” or “bulk insurance.”

He said the head of OFSI will now have the power to look at the books of CMHC the way she looks at the books of other private financial institutions in Canada. Already, the government has placed the deputy minister of finance on the board of CMHC.

“We have quite a bit of information about what the banks do and don’t do. [Superintendent] Julie Dickson had to go to some of them in the last year and say ‘you must ensure that your board policies on residential lending mortgages are carried through,” he said. “She’s quite a strict supervisor which is good for our country.”

OSFI has already been looking into CMHC and established one of the key issues for the organization is governance. “OFSI are certainly of the view there are necessary governance improvements we can do,” said Mr. Flaherty.

He made it clear there are no plans to extend CMHC’s $600-billion limit. “For a while,” said Mr. Flaherty, about how long the Crown corporation would have to exist under that limit. It was at $541-billion at the end of the third quarter of last year but business has slowed as the agency culled its portfolio business.

Mr. Flaherty’s own opinion on the housing market is that has been fuelled by low interest rates which he says he does not control. “Cheap money,” he said, noting he did talk to the banks about being unhappy about their mortgage rate wars earlier this year which had reduced the rate on a five-year closed mortgage to below 3% — an all-time low.

As to whether the market has been in part fueled by foreign buyers, as many in the real estate industry have suggested, Mr. Flaherty said his government will not get involved in that aspect of the market. “No,” he said, pausing to emphasize the point. “I don’t think there is [a role]. They key in housing from my point of view is to get the best information on housing.”


Extrait de: How CMHC morphed into a $600-billion financing juggernaut, Garry Marr, Financial Post, Apr 26, 2012

Canada Mortgage and Housing Corp. has come a long way in its 65 years.

Established in 1946 to “house returning war veterans and lead the nation’s housing program,” as the Crown corporation’s website states, it’s now a multibillion operation. By CMHC’s own calculation, it has contributed over the years more than $14-billion to reduce the government’s annual deficit.

It’s a behemoth and apparently one that needs to be reined in, with the government’s announcement, first reported in the Financial Post, that CMHC will now be under the eye of country’s banking regulator, the Office of the Superintendent of Financial Institutions. Previously, it fell under the watch of the Department of Human Resources and Skills Development.

“I’ve been concerned about the CMHC for some time in the sense that it’s become an important financial institution in Canada, and it was not subject to the same supervision by the Office of the Superintendent of Financial Institutions,” said Jim Flaherty, the Minister of Finance.

“These proposed changes are part of the government’s continuous efforts to strengthen the housing finance system. They will contribute to the stability of the housing market and benefit all Canadians.”

The move comes in the wake of CMHC closing in on the $600-billion limit the government has for how much of its portfolio will be backstopped by the taxpayer. Three years ago it was $450-billion.

By law, consumers must buy mortgage default insurance if they have less than a 20% down payment on a home and are borrowing from a federally regulated financial institution.

But CMHC has not been insuring just those loans, it has agreed to step in and insure loans — with the premiums paid by financial institutions — for lower ratio mortgages, or what is called “portfolio” or “bulk insurance.

Banks bought the insurance because it made it easier to securitize those mortgages at better prices but it also pushed CMHC closer to its funding limit.

Mr. Flaherty showed his feelings about the practice as early as January in a conference call with reporters.

“The issue that pushes them near their lending limit is the desire of some of the financial institutions to purchase portfolio insurance for their low ratio mortgages,” he said at the time.

“That’s not the way most people usually think of CMHC.”

The government has now effectively shut down that market by not allowing insured loans into what are covered bond contracts. CMHC can only guarantee covered bonds with the approval of the finance minister.

Author Garth Turner, a former federal minister and sometimes critic of CMHC, applauded Ottawa for its move yesterday.

“CMHC is being slapped around the ears. The message is being sent out that it has been distorted from the original purpose of a social housing organization,” he said. “It turned into an organization that helps yuppies in Toronto buy $1.4-million McMansions. [CMHC] is a major financial institution now and yet it’s run like some government slush fund. The board of directors is low quality and their reporting is substandard and the regulation has been nudge-nudge.”

Finn Poschmann, vice-president of research with the C.D. Howe Institute, said there is little doubt the Minister of Finance now has CMHC in his sights.

“He wants to be crystal clear CMHC’s lending authority, its terms and conditions under which insurance are offered, are explicitly within the domain of the Finance Minister,” said Mr. Poschmann. “Putting the deputy minister on the board of CMHC is a move intended to cement that view.”

On a practical level, many expect that the change will tighten rules on what CMHC will underwrite in the future.

“I would expect CMHC might get a little more conservative in some ways, which ways are yet to be seen,” said Rob McLister, editor of Canadian Mortgage Trends. “Anything with a slightly higher risk level, might see some tweaks.”


Extrait de: Government fixes mortgage market, but will it work?, John Greenwood. Financial Post, Apr 26, 2012

Since the financial crisis Finance Minister Jim Flaherty has tightened the rules around CMHC insurance three times, shortening the maximum amortization, raising the minimum down payment and various other tweaks.

Once again Ottawa has stepped in to slow what it believes is an overheated housing market, this time by putting the Canada Mortgage and Housing Corp. under tighter oversight and banning the use of CMHC insurance on covered bonds.

But what are the odds the measures will succeed? Certainly the last few efforts haven’t had much impact.

Since the financial crisis Finance Minister Jim Flaherty has tightened the rules around CMHC insurance three times, shortening the maximum amortization, raising the minimum down payment and various other tweaks. Last month the federal banking regulator announced proposed new guidelines requiring banks to take a lot more care around real estate lending, especially home equity lines of credit (HELOCs), one of the most successful products in the history of the industry.

Yet home prices continue to rise, grinding steadily higher in most major markets and prompting  commentators such as Bank of Canada Governor Mark Carney to warn of a possible bubble.

For their part, proponents of Ottawa’s strategy claim it’s not surprising that the mortgage market hasn’t leveled off given that the government’s moves are aimed at achieving a gentle landing as opposed to slamming on the brakes, potentially leading to dire economic consequences.

The idea is that by gradually tightening up lending standards around CMHC insured mortgages, the “froth” will be removed from the market and equilibrium will return.

Problem is, Canadian real estate is anything but a normal market.

A crown corporation, the CMHC has already provided insurance on roughly $600-billion of the roughly $1.1-trillion of mortgages outstanding in this country. The purpose of that insurance is to allow wider access to the housing market.

Since the borrower pays for the insurance, the banks are able to lend the money at no additional cost compared to conventional uninsured mortgages. Indeed, because they’re ultimately backed by the taxpayer, CMHC insured mortgages are actually safer for lenders than conventional uninsured home loans, requiring less capital. They’re also much more easily packaged up into mortgage backed securities.

Despite all the moves it’s taking to limit the issuance of CMHC insurance, the government has so far done nothing to dampen the fundamental appeal of taxpayer guaranteed home loans for banks, who are one of the most important players in all this.

Just how significant the mortgage business is for the banks was made apparent in the near record earnings the big banks reported last year, as outsize revenue from consumer lending at their domestic operations offset declines in other businesses.

Once all the recent changes have come into effect banks will still be inclined to favour customers with insured mortgages — those folks who in a normally functioning market should have the toughtest time getting financing.

Peter Routledge, an analyst at National Bank Financial, puts it this way. Imagine two customers trying to borrow the same amount to buy a house, except one customer wants to make a 40% downpayment while the other can afford only 15% which means he has to take out insurance. All else being equal, the less credit-worthy borrower will be the more likely to get the loan, according to Mr. Routledge, because it’s more profitable to the lender.


Extrait de: Canada’s banking watchdog to oversee housing agency, Gordon Isfeld, Financial Post Staff,  Apr 26, 2012

OTTAWA — The federal government is putting Canada’s housing agency under tighter scrutiny amid concerns over a red-hot housing market and rising consumer debt.

Finance Minister Jim Flaherty announced Thursday that responsibility for Canada Mortgage and Housing Corp. will be handed over to the country’s banking regulator, the Office of the Superintendent of Financial Institutions.

The measure, contained in new legislation tabled Thursday, will “enhance the oversight framework for CMHC to ensure its commercial activities, particularly its mortgage insurance and securitization programs, play an important role in the housing market and the financial system,” Mr. Flaherty said.

“These proposed changes are part of the government’s continuous efforts to strengthen the housing finance system,” he told reporters. “They will contribute to the stability of the housing market and benefit all Canadians.”

Mr. Flaherty said OSFI would now be responsible for reviewing and monitoring CMHC’s commercial activities. Until now, the agency was overseen by Human Resources Minister Diane Finley.

“I’ve been concerned about the CMHC for some time in the sense that it’s become an important financial institution in Canada, and it was not subject to the same supervision by the Office of the Superintendent of Financial Institutions,” he said. “So I think this is an important step forward.”

The government has tightened mortgage-lending rules three times in the past four years as the housing market heated up, and Mr. Flaherty said Thursday he will again “take action as necessary.”

 “We watch the market closely, and I particularly watch the condo market in Vancouver, Toronto and to some extent in Montreal as well.”

CMHC’s function is to insure consumer mortgages and guarantee mortgage-backed securities issued by banks.

The Crown corporation currently has a $600-billion loan limit, which the government increased three years ago from $450-billion. The federal government guarantees the full value of mortgages insured by CMHC and 90% of loans insured by private firms.

The changes were alluded to in the government’s March 29 budget.

On Wednesday, Mr. Flaherty said “the issue that pushes them near their lending limit is the desire of some of the financial institutions to purchase portfolio insurance for their low ratio mortgages,” adding “that’s not the way most people usually think of CMHC.”

Canada’s hot housing market has long been a concern for the government and the Bank of Canada, which has kept its key interest rate at a near-record low of 1% since September 2010.

Queen’s University finance professor Louis Gagnon said he has also “been concerned about the CMHC for a long time. “

 “I believe that the federal government’s plan to bring CMHC under the direct supervision of the Office of the Superintendent of Financial Institutions is long overdue,” said Mr. Gagnon, who specializes in debt and risk management.

 “In fact, the previous oversight arrangement was ill-suited for this important task and I never did understand why the CMHC had been placed under the jurisdiction of the minister responsible for Human Resources and Skills Development. This was a recipe for a disaster.”

Canada’s hot housing market has long been a concern for the government and the Bank of Canada, which has kept its key interest rate at a near-record low of 1% since September 2010. Mortgage rates also hit new lows as commercial banks compete for consumers who are continuing to buy into the housing market even as prices rise.

On Tuesday, Bank of Canada governor Mark Carney said “mortgage rates are extremely attractive and that accounts for some of the move-up in [housing]valuation.”

But he warned consumers not to rely on lending costs “staying there forever.”

Mr. Carney said the average home price in Canada is about 4.75 times people’s income, while the historic average is closer to 3.5 times. Household debt to disposable income, meanwhile, is running at about 152.9%.

 Separately, OSFI is now also tightening mortgage underwriting criteria for banks.

The bill also provides for the protection of covered bond contracts and collateral in the event an issuer goes bankrupt, and it prohibits the issue of covered bonds except within the government’s framework.

It says CMHC can only guarantee covered bonds with the approval of the finance minister.

The legislation also contains proposed amendments to the Telecommunications Act to lift foreign investment restrictions on telecom companies that hold less than a 10% market share.