Blog Post

2014 CMHC Annual Report

Katherine Martin • May 08, 2015

Yesterday morning CMHC released it’s 2014 Annual Report… and they weren’t messing around. This is a comprehensive 130 page document that if you started to read right now, you might finish in time for the release of the 2015 report next year.

Now, just in case you have an appetite for government correspondence like this, I have included the report in it’s entirety below along with the official press release.

Bon appetit!

CMHC 2014 Annual Report

CMHC Releases Its 2014 Annual Report

OTTAWA, May 7, 2015 — Canada Mortgage and Housing Corporation (CMHC) today released its 2014 Annual Report.

“I’m very proud of what we accomplished in 2014,” said Evan Siddall, President and Chief Executive Officer. “Beginning with a new mission, to help Canadians meet their housing needs, we took steps in all our areas of business to ensure our operations are aligned with CMHC’s refocused approach, and to be a high-performing organization to provide the most value to Canadians.”

In keeping with the Corporation’s focus on housing needs and in support of the Government’s efforts to reduce taxpayer exposure to the housing sector, CMHC made important changes to its mortgage loan insurance and securitization business. This included premium and fee adjustments, changes to policies for low-ratio insurance, and the discontinuation of some products, including mortgage loan insurance for second homes and for the construction of multi-unit condominiums.

In 2014, CMHC’s total net income of $2.6 billion was provided for primarily by mortgage loan insurance and securitization activities. Total insurance-in-force, which represents the aggregate exposure of the mortgage loan insurance activity, stood at $543 billion as at December 31, 2014, down $14 billion from the beginning of the year. Over the past decade, CMHC has provided $21 billion toward improving the government’s fiscal position; $18 billion of this contribution was provided through the mortgage loan insurance activity.

CMHC’s strong underwriting practices and sound mortgage loan insurance portfolio are reflected in the 2014 results. Average credit scores at origination were 731 for transactional homeowner and 760 for portfolio, and the average borrower equity in CMHC’s insurance portfolio has remained stable at 46%. Other key figures show mortgage loan insurance claims paid during the year decreased by 4% from 2013 while the arrears rate remained relatively unchanged at 0.35%.

CMHC follows risk management practices as set out by the Office of the Superintendent of Financial Institutions.

In 2014, CMHC provided $117.6 billion in guarantees through its securitization programs. These guarantees help both small and large lenders access funds for residential mortgage lending, supporting competition in the mortgage market and contributing to the stability of the financial system. In 2014, CMHC also announced increases to its guarantee fees. This is an important step toward further reducing taxpayer exposure to the housing sector and encouraging the development of private market funding options.

The federal government, through CMHC, also provided investments of more than $2 billion for housing in 2014, including funding to support households living in existing social housing on and off reserve, and approximately $302 million in new commitments of affordable housing.

Throughout the year, CMHC worked with provinces and territories to extend bilateral Investment in Affordable Housing agreements to 2019, which included additional funding for Nunavut. From April 2011 to the end of December 2014, 217,772 households are no longer in housing need as a result of this funding.

CMHC provides objective housing research and advice to Canadian governments, consumers and the housing industry. In 2014, it continued to improve the availability of information on the housing market through reports such as CMHC’s Insurance Business Supplement and tools like the Housing Market Information Portal and the House Price Analysis and Assessment Framework.

CMHC’s 2014 Annual Report is available online at www.cmhc.ca/annualreport or by calling 1-800-668-2642.

CMHC helps Canadians meet their housing needs. As Canada’s authority on housing, we contribute to the stability of the housing market and financial system, provide support for Canadians in housing need, and offer objective housing research and advice to Canadian governments, consumers and the housing industry. Prudent risk management, strong corporate governance and transparency are cornerstones of our operations.

Follow CMHC on Twitter @CMHC_ca

Media inquiries:

Charles Sauriol
CMHC Media Relations
613-748-2799
csauriol@cmhc-schl.gc.ca

Annual Report Highlights — CMHC in 2014

Financial Highlights
Total Assets ($M)	248,490
Total Liabilities ($M)	230,308
Total Equity ($M)	18,182
Net Income ($M)	2,625

Assisted Housing
Amount provided by the federal government through CMHC for housing programs ($M)	2,010

Mortgage Loan Insurance
Number of units insured		308,820
Insurance-in-force ($B)		543
Average equity in CMHC’s insured transactional homeowner and portfolio (per cent)		46
Average credit score at origination for CMHC’s transactional homeowner loans insured in 2014		745
Average outstanding loan amount ($)		139,221

Securitization
Total guarantees-in-force ($B)		422
Annual securities guaranteed ($M)		117,643

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Katherine Martin

Origin Mortgages

Phone: 1-604-454-0843
Email: kmartin@planmymortgage.ca
Fax: 1-604-454-0842

Understanding a Spousal Buyout Mortgage

By Katherine Martin • 08 May, 2024

If you’re going through or considering a divorce or separation, you might not be aware that there are mortgage products designed to allow you to refinance your property and buy out your ex-spouse. If you’re like most people, your property is your most significant asset and is where most of your equity is tied up. If this is the case, it’s possible to structure a new mortgage that allows you to purchase the property from your ex-spouse for up to 95% of the property’s value. Alternatively, if your ex-spouse wants to keep the property, they can buy you out using the same program. It’s called the spousal buyout program. Here are some of the common questions people have about the program. Is a finalized separation agreement required? Yes. To qualify, you’ll need to provide the lender with a copy of the signed separation agreement, which clearly outlines asset allocation. Can the net proceeds be used for home renovations or pay off loans? No. The net proceeds can only buy out the other owner’s share of equity and/or pay off joint debt as explicitly agreed upon in the finalized separation agreement. What is the maximum amount that you can access through the program? The maximum equity you can withdraw is the amount agreed upon in the separation agreement to buy out the other owner’s share of the property and/or retire joint debts (if any), not exceeding 95% loan to value. What is the maximum permitted loan to value? The maximum loan to value is the lesser of 95% or the remaining mortgage + the equity required to buy out other owner and/or pay off joint debt (which, in some cases, can total < 95% LTV. The property must be the primary owner-occupied residence. Do all parties have to be on title? Yes. All parties to the transaction have to be current registered owners on title. Your solicitor will be required to confirm this with a title search. Do the parties have to be a married or common-law couple? No. Not only will the spousal buyout program support married and common-law couples who are divorcing or separating, but it’s also designed for friends or siblings who need an exit from a mortgage. The lender can consider this on an exception basis with insurer approval. In this case, as there won’t be a separation agreement, a standard clause will need to be included in the purchase contract to outline the buyout. Is a full appraisal required? Yes. When considering this type of mortgage, a physical appraisal of the property is required as part of the necessary documents to finalize the transaction. While this is a good start to answering some of the questions you might have about getting a mortgage to help you through a marital breakdown, it’s certainly not comprehensive. When you work with an independent mortgage professional, not only do you get a choice between lenders and considerably more mortgage options, but you get the unbiased mortgage advice to ensure you understand all your options and get the right mortgage for you. Please connect anytime; it would be a pleasure to discuss your needs directly and provide you with options to help you secure the best mortgage financing available. Also, please be assured that all communication will be held in the strictest of confidence.

Why Downpayment Source Matters

By Katherine Martin • 01 May, 2024

If you’re looking to purchase a property, although you might not think it matters too much, the source of your downpayment means a great deal to the lender. Let’s discuss the lender requirements, what your downpayment tells the lender about your financial situation, a how downpayment helps establish the mortgage loan to value. Anti-money laundering Lenders care about your downpayment source because, legally, they have to. To prevent money laundering, lenders have to document the source of the downpayment on every home purchase. Acceptable forms of downpayment are money from your resources, borrowed funds through an insured program called the FlexDown, or money you receive as a gift from an immediate family member. To prove the funds are from your resources and not laundered money from the proceeds of crime, you’ll be required to provide bank statements showing the money has been in your account for at least 90 days or that you’ve accumulated the funds through payroll deposits or other acceptable means. Now, if you’re borrowing all or part of your downpayment, you’ll need to include the costs of carrying the payments on the borrowed downpayment in your debt service ratios. If you’re the recipient of a gift from a direct family member, you’ll need to provide a signed gift letter indicating that the funds are a true gift and have no schedule for repayment. From there, you’ll need to show the money deposit into your account. Financial suitability Lenders care about the source of the downpayment because it is an indicator that you are financially able to purchase the property. Showing the lender that your downpayment is coming from your resources is the best. This demonstrates that you have positive cash flow and that you’re able to save money and manage your finances in a way that indicates you’ll most likely make your mortgage payments on time. If your downpayment is borrowed or from a gift, there’s a chance that they’ll want to scrutinize the rest of your application more closely. The bigger your downpayment, the better, well, as far as the lender is concerned. The way they see it, there is a direct correlation between how much money you have as equity to the likelihood you will or won’t default on their mortgage. Essentially, the more equity you have, the less likely you will walk away from the mortgage, which lessens their risk. Downpayment establishes the loan to value (LTV) Thirdly, your downpayment establishes the loan to value ratio. The loan to value ratio or LTV is the percentage of the property’s value compared to the mortgage amount. In Canada, a lender cannot lend more than 95% of a property’s value. So, if you’re buying a home for $400k, the lender can lend $380k, and you’re responsible for coming up with 5%, $ 20k in this situation. But you might be asking yourself, how does the source of the downpayment impact LTV? Great question, and to answer this, we have to look at how to establish property value. Simply put, something is worth what someone is willing to pay for it and what someone is willing to sell it for. Of course, within reason, having no external factors coming into play. When dealing with real estate, an appraisal of the property will include comparisons of what other people have agreed to pay for similar properties in the past. You’ll often hear of situations where buyers and sellers try to inflate the sale price to help finalize the transaction artificially. Any scenario where the buyer isn’t coming up with all of the money for the downpayment, independent of the seller, impacts the LTV. All details of a real estate transaction purchase and sale have to be disclosed to the lender. If there’s any money transferring behind the scenes, this impacts the LTV, and the lender won’t proceed with financing. Non-disclosure to the lender is mortgage fraud. So there you have it; hopefully, this provides context to why lenders ask for documents to prove the source of your downpayment. If you’d like to talk about mortgage financing, please connect anytime; it would be a pleasure to work with you.