Sunday, April 15, 2012

Just shut down the CMHC

The clamour to clip the horns of the CMHC are getting louder.

The IMF, Bloomberg, Nomura, OFSI, even the Canadian Banks (the recipients of CMHC largesse) and the media have jumped aboard too, never mind those foolish bloggers who have been sounding the alarm for several years now.

I am sorry to have to link the National Post, which IMVHO is only one small step above Macleans but there is an article worth perusing, though it would have been better written...say two years ago than now. It talks about foreign speculative buying (which occurs alongside Canadian speculative buying) but also about the CMHC which seems to insure just about everything and anything.

Why exactly? And why do they insure rental or investment property? Isn't it obvious to even the most feeble brained, that if your mandate is to encourage Canadians to own their own home, by facilitating others to buy more for investment- you are taking homes out of the pool for sale and making it more expensive for first time

It used to be this bad:

They have tightened up the rules but it still exists.

From the CMHC site:

5. Does CMHC Mortgage Loan Insurance only apply to traditional single-family residential properties?

No, CMHC offers mortgage loan insurance products on various property types including duplexes, condominiums, owner-occupied properties, manufactured or mobile homes, properties requiring renovations and much more, including rental and nursing homes. Please check with your lender for more details.

I would have no problem for those building NEW rental stock to get insurance, but not for those just buying what's already built. It would be dumb beyond words.

The article says that a housing bust could hurt us a lot via the CMHC. Duh....We have been saying that in the bear blogs for several years now, ever since this Government doubled their capacity.


  1. Even insuring new rental stock is problematic when you have enough idiots who want to be Donald Trump. You might think it would be ok, but government subsidized credit inevitably screws things up. Banks lend against the subsidy (because lending = profit) and it creates all kinds of unintended effects.

    Eliminating socialized credit is a first step towards a properly functioning free market. Unfortunately, governments everywhere are addicted to market manipulation. They try not to intervene with direct spending, yet pulling these policy levers has much broader and potentially more damaging effects. It's ridiculous.

  2. I agree 100%.

    the only social benefit to insuring NEW rental housing was that it could it would increase the housing stock and help lower income families who could not afford to buy (that is all of us these days)

    However to insure resale rental property is just PLAIN STUPID. It means the property goes to an investor instead of an owner-occupier. Isn't that the opposite of what the CMHC should be doing?

    However better still shutter the danged thing and BTW lets remember who the Board of Directors are of this outfit. If as the IMF and OFSI are saying, risk is not controlled and oversight is needed, I may end up suing them in the future if I am left having to pay more taxes to cover their shortfall.

  3. Fish, where can I send you a private email?

  4. Hi Makaya- you can lay it out here. Anonymity is very important for me.

    I saw that someone was questioning the numbers on another blog. I check the sales for the last 30 days, but in my parameters I actually go over 30 days. 32 days to be exact to try and account for late sale entries (ie over estimate sales).

    Also I would expect the late entries to be a rolling issue, so if you miss some recent ones, you gain some later ones.

    Nevertheless the poster Z2HYR may have a point, and I will monitor the sales numbers and see the deviation.

  5. The reason why I need an email address is because I want to share something with you that I'm not allowed to share publicly. You can create a fake email account on gmail just for that one email if you're interested :)

  6. Ok Makaya

    Just for you. Freshly minted:

    1. Thanks Fish, I've just sent an email to you :)

  7. SFH West Van - HAM Central. 14 new. 5 changed. 3 sales.

    Probably make up for it in the next few days...sigh

  8. As you can see, everything is possible. CMHC is full of s*** and is just accelerating the speculations in the real estate market.
    Sentences like "Drawing on more than 65 years of experience, CMHC shares with you a wealth of knowledge, housing expertise, tools and guidance to help you stay informed and become trusted advisors to your clients."; just make me sick... As you stated, the CMHC is doing exactly the opposite of what they should be doing to protect low income families. Even the realtors are crying for more regulation (More Regulation in the Mortgage Market), since this kind of behaviour is the opposite to the needs of buyers or tenants.

    1. "CMHC is doing exactly the opposite of what they should be doing to protect low income families."

      Since CMHC's behavior and conduct are implicitly condoned, someone important out there must be telling you something.

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