Tag Archives: loan-loss

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.