This is Bad. Shame on you Federal Government
Many of us probably did not even know that the federal government is not playing fair in the mortgage insurance industry. Keep in mind CMHC which is a federal crown corporation is clearly the market leader. Also remember that competition in tis industry has made the business stronger and brought much innovation and best of all lower prices for mortgage insurance.
The federal government however only fully insures Genworth or AIG to 90% while they back CMHC to 100%. this has been the way it is forever, but in these crazy times the banks have almost exclusively switched their allegience to CMHC.
You might say “who cares”. Well read the above paragraph again. If Genworth and/or AIG leave Canada this will no doubt hurt our industry. Not to mention the fact that right now CMHC is causing all kinds of problems because they are more often not accepting values of real estate.
Let’s hope Stephen corrects this problem tomorrow in the historic budget
January 29th, 2009 at 8:45 am
Many lenders are open in their stance that CMHC is currently the insurer of choice. I think this is a mistake when we are supposed to be in a open and competitive market. What are lender incentives to use CMHC? Is there something we are not told or is it simply it is more advantageous from the lender risk standpoint to use CMHC because they have this unfair advantage.
Either way it is a scary prospect when CMHC is the force driving the guidelines in lending and messing with the valuation of properties. Too much power in one aspect of real estate won’t help balance our market.