The Conservatives policies of making themselves look good without properly studying and evaluating their proposals and bullying ahead are catching up to them.
Lets be honest, it is not their fault after all the Conservative Party is made up of Reformers with absolutely no history of running anything other than to the outhouse. So why should we expect anything better?
First of all they lowered the down payment requirement on housing purchases to 5% which made affordability easier.... a good thing for home sales, contractors and banks ..... a bad thing for CMHC who insured these high risk loans.
Then when the economy crashed in 2008 and both Flaherty and Harper were insisting that Canada would not be affected by the down turn they quietly had CMHC buy up the banking industries high risk loans.
Again Flaherty and harper miscalculated the economy and didn't change the down payment requirement. Surprise, surprise housing sales continued to escalate and put an even greater burden on CMHC and their insured loans.
Canada Mortgage & Housing Corp approaches Fannie Mae default risk
By Andrew Mayeda and Greg Quinn
The Canadian housing agency’s vulnerability to mortgage defaults has soared ninefold in 20 years, approaching levels reached by Fannie Mae and Freddie Mac in the U.S. at the height of the housing boom. Canada Mortgage & Housing Corp. says its finances are secure unless the country plunges into deep recession for several years.
Government-owned CMHC insured $541 billion in mortgages as of Sept. 30, an amount equal to 31% of Canada’s annual gross domestic output, as home prices climb and construction expands. In 2006, when U.S. home prices peaked, the combined exposure of the government-backed agencies to potential defaults was slightly more than a third the size of the economy, according to Bloomberg calculations based on U.S. Federal Reserve data. Fannie and Freddie were bailed out in 2008.
“If a significant number of homeowners default, CMHC would have a lot of claims they would have to pay out,” said John Andrew, real-estate professor at Queen’s University in Kingston, Ontario. Homes would “sell at greatly discounted prices as supply exceeds demand,” he said, adding “the risk of this is significant.”
http://business.financialpost.com/2012/03/09/ghost-of-fannie-mae-haunts-canadas-housing-agency/
The Canadian housing agency’s vulnerability to mortgage defaults has soared ninefold in 20 years, approaching levels reached by Fannie Mae and Freddie Mac in the U.S. at the height of the housing boom. Canada Mortgage & Housing Corp. says its finances are secure unless the country plunges into deep recession for several years.
Government-owned CMHC insured $541 billion in mortgages as of Sept. 30, an amount equal to 31% of Canada’s annual gross domestic output, as home prices climb and construction expands. In 2006, when U.S. home prices peaked, the combined exposure of the government-backed agencies to potential defaults was slightly more than a third the size of the economy, according to Bloomberg calculations based on U.S. Federal Reserve data. Fannie and Freddie were bailed out in 2008.
“If a significant number of homeowners default, CMHC would have a lot of claims they would have to pay out,” said John Andrew, real-estate professor at Queen’s University in Kingston, Ontario. Homes would “sell at greatly discounted prices as supply exceeds demand,” he said, adding “the risk of this is significant.”
http://business.financialpost.com/2012/03/09/ghost-of-fannie-mae-haunts-canadas-housing-agency/
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