Why do we need CMHC?

If you are getting a mortgage and putting less than 20% down on that home purchase you were required to get mortgage insurance. This insurance is provided through two companies, one being CMHC.

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If you are getting a mortgage and putting less than 20% down on that home purchase you were required to get mortgage insurance. This insurance is provided through two companies, one being CMHC.

Who is CMHC?

Canada Mortgage and Housing Corporation (CMHC) is Canada’s national housing agency. Established as a government-owned corporation in 1946 to address Canada’s post-war housing shortage, the agency has grown into a major national institution. CMHC is Canada’s premier provider of mortgage loan insurance, mortgage-backed securities, housing policy and programs, and housing research.

On January 1, 1946, the Central Mortgage and Housing Corporation was created (changed to “Canada” Mortgage and Housing Corporation in 1979) to house returning war veterans and to lead the nation’s housing programs.

CMHC’s basic functions were to administer the National Housing Act and the Home Improvement Loans Guarantee Act, and provide discounting facilities for loan and mortgage companies. The capital of the Corporation was set at $25 million (a substantial amount for the times), and a reserve fund of $5 million authorized to be accumulated from profits. This requirement and capital structure are still in effect today.

National Housing Act

The purpose of the Act is to promote the construction of new houses, the repair and modernization of existing houses, and the improvement of housing and living conditions.

Canada Mortgage and Housing Corporation Act

The purpose of the Act is to incorporate the Canada Mortgage and Housing Corporation, Canada’s national housing agency, and provides the objects and powers of the Corporation

Should we be concerned about the sustainability of CMHC?

Lately there has been increasing numbers of announcements of CMHC spending. Some are grants some are loan guarantees to different sources other than home owners. All those premiums paid by home owners being used to build affordable housing is great, but at what cost? Are we at risk that CMHC will not have money to save the banks from a collapse of American proportions?

• Click here to see Patrick’s complete blog ‘Why do we need CMHC’

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