Banks in Canada have, lately, been very strict about qualifying and approving potential home buyers for Mortgage.
On 29 of August, "The Globe and Mail" published an article saying that "Canada Mortgage and Housing Corp. saw profits at its mortgage insurance business fall sharply in the second quarter largely due to a jump in losses from claims.
The rise in claims losses suggests that an increasing number of borrowers whose mortgages were insured by CMHC have been unable to make their payments and have lost their homes. Mortgage insurance pays the bank back when a borrower defaults.
Amid growing concern about taxpayers’ exposure to mortgage defaults, Ottawa has been taking steps to curb CMHC’s growth and has placed the housing agency under the watch of the country’s banking and insurance regulator.
The amount of insurance that CMHC has in force crept up to $576-billion at the end of June, closing in on the $600-billion limit that Ottawa is now enforcing on the Crown corporation. To keep the amount in check, CMHC has dramatically cut the amount of portfolio insurance that it is offering to banks.
And it said that its future sales of mortgage insurance will continue to be offset as each year Canadians pay off about $60-billion of mortgages that it has already insured.
CMHC said that it has been spending more money on so-called “work-outs,” in which the mortgage insurer and banks work with struggling borrowers to find a solution – such as deferred payments – to keep them in their home".
To read more go to:
Jump in Claims pinches CMHC's Insurance Business
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