CMHC wants to conceal foreclosure information

The CMHC tends to have some pretty rosy forecasts for the future of Canadas housing market.

But if all is well, why are they now trying to get real estate agents to hide foreclosure status from potential buyers?

After recent stories about deceptive marketing practices, it’s heartening to hear that a group of Realtors in Quebec have raised issues of an ethical breech after the CMHC asked them to conceal foreclosure status on properties for sale.

The Quebec Federation of Real Estate Boards, which oversees the 12 real estate boards in the province, says it challenged CMHC about the change requiring them not to report on a detail sheet that properties for sale were part of a foreclosure, despite the fact that information is considered mandatory when loaded by brokers onto the selling system of local boards.

“Because the repossession field is currently a mandatory field in the brokerage system you have no choice by to indicate ‘no’, which goes against ethical rules stipulating that real estate brokers are obliged to publish information that is truthful and verified,” the group said in a statement to members.

The two sides resolved the issue by making it no longer mandatory to reflect the foreclosure status of a home, based on the seller’s instructions.

So why does the CMHC not want you to know about foreclosure status? Because then you might be tempted to bid on cold logic rather than emotion.

“Look at what is going on right now in financial institutions and everybody is ratcheting up their loan-loss provisions,” said Ben Rabidoux, a Canadian analyst for California-based Hanson Advisors, a market research firm whose clients are institutional investors. “Everybody expects loan losses to rise. I can’t imagine CMHC is in the dark on that. My suspicion is they want to limit any loss on that hits their books.”

By limiting the information on whether a property is part of foreclosure, the Crown corporation would potentially avoid a situation in which a buyer knows it has to sell. In the United States, foreclosed properties have sold at huge discounts.

Read the full article here.

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/dev/null
Member
/dev/null

A couple of recent westside price changes:
V980753
6399 CARNARVON ST
Nov 14/12 $849,000 (WTF?)
Nov 19/12 $3,490,000
Current Price $2,980,000 (-15%)
DOM: 105
2012 Assessment: $2,500,000

V974701
2986 21ST AVE W
Sep 26/12 $2,498,000
Dec 27/12 $2,298,000
Current Price $2,198,000 (-12%)
DOM: 154
2012 Assessment: $1,978,000

And a recent sale:
V992622
843 W 20TH AV
Feb 20/13 $1,998,900
Feb 21/13 $1,848,500
DOM: 1!
2012 Assessment: $1,840,000

The 2012 assessments seem to be the price ceiling now, versus the floor that they used to be.

HAM Solo
Guest
HAM Solo
Wow, that didn’t take long, but the CMHC response to the National Post article already released on Twitter. http://www.cmhc.ca/en/corp/nero/2013-02-27.cfm?WT.mc_id=TWT2013_53 Friends, I think this is actually a much bigger story than the Amanda Lee caper. You will see from the letter that the CMHC admits to intervening with the Quebec real estate board to ensure that foreclosures are no longer disclosed. This is nothing less than a cover-up of negative market news being orchestrated by an agency of the Federal Government. Who benefits? A small group of real estate insiders who can act on preferential information relevant to prices. Who loses? The general public, the specific buyers of foreclosed properties, and the market as a whole due to the continued obfuscation of important data. Heads should roll. In order of importance, the heads that should roll are: Sophie Joncas, interim Chair… Read more »
VultureBoy
Guest
VultureBoy

The CMHC board should all be fired. Transparency, honesty, reality. Is that too much to ask on what amounts to a lifetime of savings for a middle class Canadian ?!??

As I said in the last thread, we have seen false buyers. Now we have false sellers since they want to hide that it is a CMHC sale.

To do this, the board must be scared s417less.

Anonymous
Guest
Anonymous

@Short’em High:

CAD monthly is currently on 4-yr support, right when USD monthly is just under 2% from 10-yr resistance. Greetings. I am the other side of your short trade.

crashcow
Member

#4 was me.

Real Life Example
Guest
Real Life Example

Last year we were considering buying in Kits and had our eye on V982432 when it was listed for $868,000.

Today it is listed for $699,000. By my simple math we have saved about 20% by waiting. Does that make me want to buy now? Not really. Lets see how low this thing can go.

Anyone who denies that this market is in serious trouble is simply stuck in a loop.

Groundhog
Guest
Groundhog

@Real Life Example

Looks nice, but I have no desire to live in a townhouse. I wouldn’t buy that for more then 300K personally.

VultureBoy
Guest
VultureBoy

Just wrote to Jim Flaherty. Sick of the CMHC micky mouse board of director bu115h17.

DaMann
Member
DaMann

Groundhog

Not to mention that it’s basically a basement suite from what I can tell.

Crikey
Guest
Crikey

@HAM Solo:
“A small group of real estate insiders who can act on preferential information relevant to prices”

Exactly. Either *NOBODY* should be allowed to know about foreclosure status (which is downright impossible) or *EVERYBODY* must be clearly told about it.

Otherwise, you have a completely uneven market where a small group of insiders have information that the general public doesn’t have, which gives the insiders huge advantages for negotiations.

How is it the CMHC is getting away with this?

shriller
Guest
shriller

@Crikey,

But the insiders won’t be able to purchase at their price since their information will suggest to offer a price below what an outsider will offer. Thus, as long as there is some outsider willing to pay, the insider’s information is not actionable.
That said, the outsiders are clearly being hung out to dry. One could have concerns about this …. but CMHC is clearly acting to minimize the expected losses to the taxpayer. Kudos to them for realizing that this is part of their mandate. They certainly haven’t been considering the taxpayer before. I view this as a tacit admission that their books have been cooked.

Anonymous
Guest
Anonymous

-“or worse yet these nervous buyers during their subject period who were intimidated by ‘friends’ who told them “they were crazy to buy as homes would be far less next year”

-“this rebirth of the market has begun and is gaining momentum every day….the active leaders in the market are securing property at great value and will be the envy of those who waited

-“so this is my alert for buyers waiting to buy, dust off your shoes because we are entering a blockbuster 2013”

http://www.martyhomes.com/Blog.php/team-pospischil-real-estate-winter-newsletter-and-market-update

oh Marty, i sincerely hope your clients didn’t listen to you and did listen to their ‘friends’.

The real estate industry really has to change the rules regarding what their sales people are allowed to spew. It’s unfair that they are not held accountable.

phiscal.
Guest
phiscal.

But the insiders won’t be able to purchase at their price since their information will suggest to offer a price below what an outsider will offer. Thus, as long as there is some outsider willing to pay, the insider’s information is not actionable.

Your logic falls apart at ‘outsider willing to pay’. I’ve lived through a down market and believe me, it’s not that all offers are low, its that there aren’t very many people willing or able to pay. An insider would still know which properties are in foreclosure and not bother with the others.

900kCrackHouse
Guest
900kCrackHouse

I have found CMHC surprisingly defensive and yet responsive. The times I have written them they have come back with quite a long and detailed response. They quite strongly defend their position that “everything is fine”, there is no risk, and they are on top of things.

Time will tell!

Larry Lou
Guest
Larry Lou

Old Larry has found reality, he now states “Serious Price reductions” funny he still has the old crack shack mansion listed for a cool 8.5 million. Seriously that place might sell for 5 million tops, likely 4 million. Jeesh its been on the market for nearly 2 yrs. maybe he could hire Amanda to hype it up!

Vote Down The Facts
Guest
Vote Down The Facts

Whether or not MLS listings are flagged as foreclosures or not doesn’t stop them from becoming foreclosures in the first place. I wonder if the intent here was to stop sites like foreclousego.com from trawling for just those listings?

Bally
Guest

“Just wrote to Jim Flaherty. Sick of the CMHC micky mouse board of director bu115h17.”

It is Diane Finley who is responsible for the CHMC. She has a handy e-mail submission form on her contact page so I used that to request a change of board & no increase in the insurance limit. If you want to contact her you can get to her website through clicking my name…

shriller
Guest
shriller

@ phisical
Sure. That doesn’t make the argument fall apart. Basically you are saying that an insider could purchase a place that an outsider doesn’t know about. But as soon as the offer is in, the seller (or his or her realtor) will broadcast the bid to other possible buyers. There is no incentive for the seller to keep an offer private information. This is where your argument breaks down.

Short'em High
Guest
Short'em High

@crashcow Says: “…other side of short [CAD]…

Wait a few days… FYI, anybody doing this trade is scaling and fading the whipsaw to keep their risk level. Also, not sure what 4yr support you are talking about. Is that the “technical” method you couldn’t believe others weren’t using? CAD was lower last summer than it is now. This is a CAD trade, not a USD index trade.

When this trade is fully faded, there should be a good trade in Canadian mortgage and finance equities as Ben suggested. That’s the second leg of the 2 legged ass kicking.

Short'em High
Guest
Short'em High

[Sorry for the repost. I was hoping to get a reply from @VMD on the last thread, but perhaps @VMD missed my question?]

@VMD Says:
…Plus we have the ever-reliable paulB stats to do our own analysis…

Are these data accumulated somewhere on VCI?

Using each of the six standard spreadsheet functions STDDEV, AVERAGE, MIN, MAX, MEDIAN, and MODE on all “new listings” data points ever posted, what values do you get?

Those six objectively qualify the notion of a “big” listing day and a record listing day.

Obviously, many would like to know an objective answer to the question of what is a big listing day.

Thanks in advance for pointing out the cummulative data source or posting the results.

phiscal.
Guest
phiscal.

@shriller: who are the ‘other possible buyers’ in your scenario? How does the seller broadcast this information to them?

I’m saying the real issue in a down market with lots of foreclosures would be the lack of ‘other possible buyers’.

Skook
Member
Skook

Mike Fotiou @ Calgary Real Estate Review offers his take on that Financial Post story and about CHMC ownership and foreclosure.
Here’s the link:

http://calgaryrealestatereview.com/

Skook
Member
Skook

Just noticed that Mike has offered more info in the “Comment” section after the post – worth reading,too.

Vulture Fun
Guest
Vulture Fun
I found this in the comments section of Mick’s FP link: Remaxed-Out whazzup • 5 hours ago “I hardly feel the need to add anything to this or the CMHC story, Whazzup. As you know, my wife and I sold our house last spring, for three times what we bought it for in 1996. Having paid off our mortgage years ago, we are now renting in the same neighbourhood and have conservatively invested close to $1,000,000.00 in dividend paying stocks. While we do own another home, we felt we could not risk losing too much of our equity in real estate, so we diversified. We sleep much better at night. 2 questions for you: 1) Why is it so important for you to keep on trying to convince people that prices can only go up when they have corrected in… Read more »
Anonymous
Guest
Anonymous

Real Life Example Says: “Last year we were considering buying in Kits and had our eye on V982432 when it was listed for $868,000. Today it is listed for $699,000.”

Yikes you were going to buy a basement suite for $868,000? If you want to live below grade just rent one for $900 per month.

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