CMHC Answers Back

This week CMHC has taken a stand, reacting to weeks of buzz and criticism after the release of a report by CD Howe which recommended that government involvement in mortgage insurance be scaled back and that more private players be invited onto the field.

The argument is, that in light of the recent recession and lessons learned from the US housing crisis, Canadian taxpayers could make themselves unnecessary incumbents of this risk.

Adding to the pressure, the Obama administration advised last week that the US government should scale back involvement in backing mortgages as well, turning up the heat north of the Border.

In response, CMHC issued a letter to media outlets earlier this week, intended as a response to the warnings about the dangers of heavy handed government involvement in mortgage insurance, in which CMHC makes its case and answers critics. They warn of the dangers of adopting the US style mortgage insurance system and caution that there could be actually more cost to the taxpayer in this system.

Douglas Stewart, Vice President of Policy and Planning with CMHC, in his letter to Finn Poschmann, author of the CD Howe study, points out that the Canadian model withstood the windstorm of the recession: "Canada's current model provides access to housing for Canadians for all types of housing, regardless of where they live. The model is cost effective-providing some $12 billion to Canadian taxpayers over the last decade. Most importantly, the Canadian model withstood the test of the economic downturn, when housing markets in the US, United Kingdom and Ireland failed."

Similarly, Stewart points out that CMHC's conservative policies have assisted both in creating stability in the market and in avoiding disaster when the market was collapsing in the US.

"In addition, CMHC's prudent underwriting practices and market presence have contributed to the stability and resiliency of Canadian housing finance."

Stewart also suggests that they operate in the best interests of all Canadians, equally; "Unlike the private sector, CMHC has a mandate to serve all Canadians, while operating in a commercial environment. CMHC does not promote home ownership. Rather, as Canada's national housing agency, CMHC provides all qualified Canadians with access to all forms of housing- homeownership, rental, nursing and retirement homes, and housing in rural areas and smaller markets."

What the CD Howe report and others have done is spark conversation within the industry- clearly because all parties have something to say.

Anita DiPaolo-Booth, Strategic Marketing Leader with Genworth Financial Canada, told Propertywire.Ca "Genworth Financial Canada welcomes the debate advanced by the CD Howe Institute and others on how to make improvements to Canada's mortgage finance system. We have long been on record in support of the recommendation to create a level playing field where all mortgage insurance providers have the same level of government support and regulatory oversight. We believe the resulting enhancements to choice and competition would present a host of benefits for home buyers, taxpayers and mortgage lenders."