CMHC, humor, hype, mortgage, Open Topic, opinion, predictions

What will the CMHC announce?

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118 Comments

Who wants to play ‘guess the future’?

Apparently the CMHC is holding a conference call at 10 am EST on Feb 27th.

Some rumours are saying privatization, though it looks like most everyone agrees that would extreeeeemely unlikely at this point for a few reasons:

–Privatization would require the finance department
–No one in their right mind would take on the debt

But that doesn’t mean you can’t guess at what is going to be revealed tomorrow!

So what do you think the CMHC will announce? Privatization? Tougher underwriting standards? Branching out into commemorative figurines? A new special expert task force comprised of Brad Lamb, Bob Rennie and Angelo Mozilo?

What’s your best guess at what the CMHC will announce tomorrow?

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George

Why are comments #114 and #115 downvoted into oblivion? Right now 114 has 3 upvotes and 29 downvotes and 115 has 4 upvotes and 25 downvotes. Those commenters didn’t say anything offensive or rude. All they are doing is expressing dislike for CIBC’s practice of enabling people from China to circumvent China’s capital controls.

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No Noise

@ Rainmaker – a very logical and entirely possible underlying reason this dirty money transfer goes on

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rainmaker

Wow hey @95, my original post (post #32) was also downvoted to oblivion, looks like a lot of readers are trying to hide the fact that, as @95 said, “…banks are coming up with ways to circumvent China’s capital controls. It may not meet the technical definition of money laundering, as Patriotz pointed out, but I agree with what someone else wrote that that is really just nitpicking (or arguing about semantics). The banks are helping people violate the law in China.” @ 81 says “…It’s unbelievable that the government of Canada knowingly allows major Canadian financial institutions to assist Chinese foreign investors to break China’s $ transfer laws. And as well no checks on the whether the $ was ill-gotten? What other countries is Canada doing this to? You would think diplomatic relations would suffer at least. Once again… Read more »

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space889

@Mortgageslave – hate to break it to you but you are the idiot. Being fine is simply a cost of doing business and if the profits are higher than the fine, banks will still do it. Just see JPMorgan for the prime example. Looks at the case of CIBC discussed here where it is helping people in China work around the China’s $50K limit. Also where it fired an employee so they can keep her clients by making her unemployable elsewhere. Btw, this came straight from the mouth of the person who makes his living placing Chinese students in Canada. As well Canada require the student to have $50K in their Cdn bank account to proof they have enough cash to live here for 2 years before visa is given. Given this kids spending habits, $50K/year might not even be… Read more »

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UBC in crisis mode

New ads from all realtors:

Buy! Buy! Buy! before May 1, 2014 when CHMC new rules come in.
This will create a hot housing market in next two months.

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patriotz

“Effective May 1st, CMHC Purchase (owner occupied 1 – 4 unit) mortgage insurance premiums will increase by approximately 15%, on average, for all loan-to-value ranges.”

And as @1 predicted, they are not doing anything that will have real impact.

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patriotz

@98: “CMHC to increase mortgage insurance premiums:”

Told ya so. 🙂

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Son of Ponzi

#104
I still believe that this monster will crash under its own weight
Or, maybe it will be death from a thousand paper cuts.

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Son of Ponzi

# 106
Everyone is a little edgy.
—————–
Of course, everyone is, especially the Realtors.
They know this thing will blow up soon.

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Son of Ponzi

I question the low listings recently reported by the Real Estate Board.
I monitor the SFH RE activity in the following areas in Richmond.
Westwind, Steveston Village and Steveston South.
In the last 3 weeks, not a single new listing has been posted for these areas.
Pretty strange, because these are generally very active RE areas.

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Many Franks

@david: All CMHC said is that it was going to make an announcement. It’s everyone else — this blog included — that went wild with speculation. (See acres of twitchy realtors on Twitter before the announcement.) It seems everyone’s a little edgy.

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Many Franks

Let’s do some dubious math, mixing national and local numbers. Garth recently reported that the average downpayment across Canada is 7%; that puts the CMHC premium into the 90% LTV bracket, which is going from 2.00% to 2.40%.

CREA’s average Vancouver home price in January is $805k. A 0.04% premium increase is $3200, and as pointed out above, the insurance is typically amortized. So this is an additional papercut.

Note that CREA is also announcing that it will be announcing premium reviews yearly in Q1 of each year. This may set the stage for further ratcheting (on a slow, yearly basis).

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VMD

@25
Turns out to be low-impact CMHC announcement.
Does have direct (but mild) impact to general public, hence summoned media? And/or a publicity stunt for CMHC to seem “proactively” protecting tax payers?

Attention now moves back to OSFI’s B21 guidelines expected to open to public comment in March 2014, where 30 year mortgages may be scrutinized.

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david

You gotta give them credit (pardon the pun)…..they came up with an idea that makes no difference whatsoever — not to buyers, not to the industry insiders, and not to the government politicians —- but which does give them the appearance of at least being awake and proactive…..which will be a handy defense when the eventual post-mortem and ash-sifting occurs. Golf clap.

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Ray

haha, I love how they admit right on the website that noone in their right mind would pay these premiums straight up — that the average Canadian just folds them into their mortgage and amortizes over 25 years. What’s 3.15% of your mortgage when you spread it over 25 years? Something like 6.3%? lol

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bullwhip29

@ 99

absolutely riveting stuff, huh? now back to our originally scheduled programming…

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Softy

Here is the key statement:

For the average Canadian homebuyer requiring CMHC insured financing, the higher premium will result in an increase of approximately $5 to their monthly mortgage payment. This is not expected to have a material impact on the housing market.

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Softy

OTTAWA, February 28, 2014 — Following the annual review of its insurance products and capital requirements, CMHC will increase its mortgage loan insurance premiums for homeowner and 1 – 4 unit rental properties effective May 1, 2014. The increase applies to mortgage loan insurance premiums for owner occupied, self-employed and 1-to-4 unit rental properties, including low-ratio refinance premiums. This does not apply to mortgages currently insured by CMHC. CMHC’s capital management framework is consistent with international practices and Canadian guidelines for mortgage insurers. Increased capital targets are consistent with Canadian and international industry trends and makes the financial system more stable and resilient. “The higher premiums reflect CMHC’s higher capital targets” said Steven Mennill, CMHC’s Vice-President, Insurance Operations. “CMHC’s capital holdings reduce Canadian taxpayers’ exposure to the housing market and contribute to the long term stability of the financial system.”… Read more »

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Softy

CMHC to increase mortgage insurance premiums:

https://www.cmhc-schl.gc.ca/en/corp/nero/nere/2014/2014-02-28-1100.cfm

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No Noise

Because politically it looks terrible, especially if this is dirty foreign money. China is trying to stop the flow of corrupt $ out, Canada is assisting the process.

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fixie guy

@81 No Noise Says: “It’s unbelievable that the government of Canada knowingly allows major Canadian financial institutions ….”

The CMHC benefits financial institutions by backing their loan risks with taxpayer dollars. Why would policies granting additional advantages be a shock?

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George

Why is Bo Xilai’s comment #38 downvoted into oblivion? It IS troubling that banks are coming up with ways to circumvent China’s capital controls. It may not meet the technical definition of money laundering, as Patriotz pointed out, but I agree with what someone else wrote that that is really just nitpicking (or arguing about semantics). The banks are helping people violate the law in China. Canadian banks have no obligation to follow the laws in other countries (funny how that doesn’t stop them from conforming to FACTA, which is US policy). But to actually devise strategies intent on circumventing laws in another country seems to cross the line. Maybe I could be convinced that this would be a good thing if it serves some public interest or moralistic good (like helping someone escape anti-gay laws in Russia, for example).… Read more »

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patriotz

@92: “Whats disturbing is that these 2 extra visas are not counted in statscan population figures.”

Because you’re not part of the population of a country if you’re just visiting. But the numbers of such people are available – you know them don’t you.

You might also note that anyone spending over 183 days a year in Canada, regardless of visa status, is legally a resident of Canada for income tax purposes and must report and pay taxes on worldwide income.

Over to you, “tough on crime” Federal government.

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