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Love that Canada housing bubble..

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Interesting article over at the National Post on the ‘different here‘ argument.

If the Canadian housing market were to collapse, Canadian taxpayers would be hit hard. The federal government is fully liable for any losses incurred by the CMHC, which currently backs somewhere in the order of $600-billion worth of mortgages. It has been bailed-out by the government twice in the past.

The government needs to act quickly to remove the factors that are causing the market to expand so rapidly, as well as to disperse the risk across the financial system. The CMHC should be privatized, much like the Australians successfully did in 1997. Banks and insurance companies should be allowed to do what they do best — assess risk, without standards being forced upon them by government bureaucrats. Doing so would not only spread the risk throughout the financial system and protect taxpayers, it would also reduce the likelihood of Canada experiencing a U.S.-style housing crisis.

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SunBlaster
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why would they be remotly interested in privitizing? banks own our government and no explicit guarantees is bad for banking business. Plus what is another 600bill to existing 1.2tril amongs friends?

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6 years 6 months ago
jesse
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LOL too late! But nice flawed theory nonetheless.

Fascist Post says markets know best? Whuddasurprize!

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6 years 6 months ago
nxt
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"Hi, this is Jim. We're just wondering if you guys would be interested in taking over the CMHC.. We're looking for someone to take over the $600 billion in liabilities. Yes, that's right, we'd be removing all government backing and you'd just take responsibility for handing out mortgage insurance under the current agreement.

Hello? Are you still there? Hello?"

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6 years 6 months ago
patriotz
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@nxt:

Great one.

But note that the feds can't get rid of that $600bn liability no matter what. The Crown cannot assign its obligations, e.g. it cannot say to a CSB holder "Oh the government isn't going to guarantee this any more, you'll have to get your money back from XYZ Corp". Likewise for CMHC, it might be able to get some private corporation to take over the business, but it's stuck with the liabilities until they are wound down.

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6 years 6 months ago
patriotz
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BTW is anyone else getting this ad displayed in the lower left corner?

http://www.youtube.com/user/TailorMadeMortgages?v…

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6 years 6 months ago
Anonymous
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@patriotz: Nope, but I'm sure their attention to detail is great, the title of their video is "Kelowna Foreclosures How To But A Home That Is In Foreclosure Real Deals Kelowna" and they recorded it in an echoing empty house.

Any of you want to but a house in Kelowna?

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6 years 6 months ago
Anonymous
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bought a house in ottawa yet? it's affordable there!

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6 years 6 months ago
mattymatt123
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$10.80 PER HR AND YOU CAN OWN THIS HOME… LMFAO!!!!!!!!!!

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6 years 6 months ago
mattymatt123
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Ya! I'm gonna go out and buy a house on my McDonald income!!!

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6 years 6 months ago
Anonymouse
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"The CMHC should be privatized, much like the Australians successfully did in 1997."

.. and that prevented an Australian bubble from emerging?

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6 years 6 months ago
jesse
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@DEFAULT NAMEe: "and that prevented an Australian bubble from emerging?"

Nope. You can spread the risk but you can't eliminate it. I'll be watching Australia with keen eyes over the next 5 years; how its MI industry holds up will be interesting to watch.

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6 years 6 months ago
Anonymouse
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@jesse:

What are you thoughts on the link posted yesterday about the UK government planning to introduce taxpayer-backed mortgage guarantees? It seems that they think the Canadian model is the way forward.

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6 years 6 months ago
patriotz
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@DEFAULT NAMEe:

"it seems that they think the Canadian model is the way forward."

You got that right – just delay that day of reckoning as long as possible.

Remember that a number of local governments in the UK are now offering down payment loans. Now that's desperation.

IMHO the only thing that's going to keep the UK from going the way of Ireland is that it has its own currency that it can devalue.

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6 years 6 months ago
Anonymouse
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@patriotz:

"Remember that a number of local governments in the UK are now offering down payment loans. Now that’s desperation."

Mortgage companies have been offering >100% mortgages for a long time there. There were also government programs in place to loan "key workers" (teachers, police, etc) cash on favourable terms. It was only in 2008 that eligibility requirements tightened up, but now they're relaxing again. But it's certainly nothing new.

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6 years 6 months ago
Chris
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Privatization CMHC? Where do buyers come from?

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6 years 6 months ago
Chris
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Or you can order CMHC to buy insurance on its liability in open market. It will be fun for us to know how the market prices this $600B liability.

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6 years 6 months ago
Bally
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Interesting idea but the private mortgage insurance industry has not done a great job of assessing risk in other countries. All they've done is package their insurance to hide the risks and sell it on to other suckers. That made a few financial institutions a LOT of money for a few years. Until it didn't. And then the government bailed them out sticking the tax-payer with the bill anyway.

What might be a more interesting option is to look at how the CMHC could avoid paying out on loans where the banks didn't do their homework properly and lent money without a proper assessment of the borrowers ability to pay.

Then again the banks will probably just claim they are too big to fail & the government will bail them out leaving Mark Carney to eat these words (http://www.cbc.ca/news/canada/windsor/story/2011/11/04/mark-carney-financial-stability-board.html)

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6 years 6 months ago
jesse
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@DEFAULT NAMEe: I don't know of a private mortgage insurance scheme that has survived a housing correction of the magnitude that's in store for Canada and Australia. Australia's private model hasn't been thoroughly vetted, don't know much about the UK model. Housing market busts perpetuated by loose lending policies — supported by the government — cannot be solved with a private solution. It seems intuitively impossible.

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6 years 6 months ago
SoFaKinG_Good
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Oh common people. You poo-pooed my last post about a classic boiler-room operation but none of you are probably familiar with technical analysis.

It's a spinning top. All bets are on. Double or nothing. Everything on red. This casino is heating up.

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6 years 6 months ago
PennyStock
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"Auditor general finds 'disturbing' flaws in visa system"
http://www.cbc.ca/news/politics/story/2011/11/22/…

The audit identified a number of problems: it found that many of the criteria used by visa officers to identify high-risk applicants are outdated; CBSA analysts who provide security advice to visa officers have not received the necessary training; their work is rarely reviewed; and there was no evidence that mandatory checks were completed.

"This means that CIC and CBSA don't know if a visa was issued to someone who was in fact inadmissible," Wiersema said.

The interim auditor general was asked at his news conference whether the flaws in the system means there are people who were granted entry to Canada who should have been kept out.

"The department is not able to provide us with assurance that that's not happening," he responded.

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6 years 6 months ago
Yalie
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@jesse:

LOL too late! But nice flawed theory nonetheless.

Fascist Post says markets know best? Whuddasurprize!

I don't get it – are you in favor of government backed mortgage insureance (CMHC) or not? If you're not, what else are you suggesting other than the free market solution?

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6 years 6 months ago
chip
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@PennyStock:

What's really 'disturbing' about that audit of the visa section is that they found no changes were made after an audit ten years ago found the same gaping holes.

Well, I call it disturbing but maybe a bureaucrat would call it another day at the office.

Of course, from a govt department that gave us Operation Sidewinder nothing should surprise.

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6 years 6 months ago
Anonymouse
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There are currently 18 condos and 7 houses in Vancouver listed as being in foreclosure on ForeclosureGo. Will be interesting to revisit these figures in 6-12 months.

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6 years 6 months ago
paulb.
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New Listings 167

Price Changes 57

Sold Listings 102

http://www.laurenandpaul.ca

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6 years 6 months ago
Makaya
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@Yalie: let the banks do what they are supposed to: assess risk! No need for insurance.

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6 years 6 months ago