Toronto Home Sales Rise Yet Again

I found this article about foreclosures. It seems to be just as relevant as the one Cal posted

http://www.theonion.com/content/news/thousands_of_abandoned_foreclosed

In case someone wants the facts the website of the CMHC is

http://www.cmhc-schl.gc.ca

The truth is that CMHC is fundamentally different from Fannie and Freddie.

CMHC is and insurance company they do not own any mortgages themselves. They are a part of the Government and they follow guidelines. Currently to get a mortgage you need a credit score of 680 a 5% down payment or more and your payment must equal no more than 30% of your income. You must have been at your current employ for more than a year. Revenues made by CMHC go to our government. It there was a collapse and CMHC needed money from the government that would be fair because when times were good our government collected the money

Fannie and Freddie were originally owned by the US government but was sold and was a private company. Under the mandate of the us government they performed the same duties as our CMHC and they also issued and owned mortgages. As a for profit company their duty to stabilize the mortgage industry fell by the wayside in their quest to maximize shareholder profits which is the only legal mandate for a publicly traded company.

And there is nothing wrong with mortgage backed securities if the underlying mortgages are sound. Which ours are because our banks have never issued predatory lending products like ARM's, balloon payment mortgages, NINJA (No Income No Job or Assets) mortgages and many more products.

Just because someone writes an article does not make it factual. These people are fear mongering. I am concerned about the prices of houses in Toronto and Vancover and think that it is unsustainable but I don't need to make things up and publish them.

Cal you won't get any argument from me about the state of Real Estate and how hard it is right now to find good investments in the GTA. It will be absolutely horrible when the whole mess does a nose dive.

But CMHC is a good thing well capitalized and doing a good job over all. They are nothing like Fannie and Freddie. CMHC's job is to protect the stability and liquidity of the canadian mortgage market and they are doing ok.

Financial Post did a story about the CMHC.

If CMHC were a private operation, regulators and politicians would be all over the place in search of dubious business practices. Exorbitant fees and operating margins, monopoly cross- subsidies, anti-competitive behaviour and financial reporting that make it difficult to know exactly what's going on within the $100-billion-asset operation.

What we do know is that CMHC is a cash cow built around the mortgage insurance business. From top to bottom, the CMHC mortgage insurance operation is a great expensive rip-off of Canadian homeowners.

We start with its legislated support structure as the supplier of a government-mandated service. Under the Bank Act, every mortgage from a bank or other federally regulated institution with a down payment of less than 25% must carry mortgage insurance. Whether Canadians need such insurance, they must get it and pay for it.

It's the law, and the law last year cost Canadians $1.2-billion in premiums paid to CMHC. The net claims against CMHC for mortgage default totaled $117-million, for a premium-claim ratio of 10 to 1. Total revenue from insurance, including interest on investment, topped $1.6-billion, while operating expenses and claims totaled $256-million. Total net profit before tax payments to the federal government: $1.4-billion. It pays no provincial taxes. Not bad for a business that generates $1.2-billion in premium revenue. Nothing else CMHC does makes any real money; the operation is all subsidies, cross-subsidies, and appropriations from Parliament.

CMHC gets about 70% of this nationally mandated mortgage insurance business. Thanks to the opening of the market to some competition in 1995, Genworth Financial Canada, a subsidiary of GE, holds the other 30% and presumably makes the same profit margins. The government plans to increase competition, although it hardly rates as a market. On top of mandating the insurance, Ottawa also provides a government guarantee to companies providing mortgage insurance. One good sign is that competition recently helped promote a small price cut in premiums.

Read more: http://www.financialpost.com/script...-4e44-8929-32276e4e3ee1&k=43673#ixzz0V0qBoFQX