More reforms needed at CMHC
The 2012 federal budget announced steps to protect taxpayers from exposure to risks in the residential mortgage market: enhancing the governance and oversight framework for CMHC, and introducing a legislative framework for covered bonds.
In March, the federal budget began to focus on supervision of the Canadian Mortgage and Housing Corporation (CMHC), which controls approximately 75% of the default mortgage insurance market. The International Monetary Fund released a statement in 2011 that indicated the need to assess strengthening the CMHC's risk management.
Today, it has been reported that the Office of the Superintendent of Financial Institutions (OSFI) may be entrusted with this supervision. In addition, there are discussions regarding dividing the insurance responsibilities of the CMHC from their other mandates, which is believed to have the potential to achieve better governance.
The federal government has maintained the CMHC's 600 billion dollar limit, which was increased three years ago. This will allow other insurers to pick up any slack. Genworth Financial, for example, has indicated they have the capacity to do so.
To learn more, read the full article from the Financial Post here.