Asian Shares to Be Pressured, Chipmakers in Focus: Markets Wrap
Asian stocks were mixed at the open after US shares extended their losing streak to the longest since January.
Jun 1, 2017
Mortgage fraud isn’t limited to Home Capital — but not widespread: CMHC CEO
By Greg Bonnell
The head of the country’s housing agency says mortgage fraud in Canada is clearly not contained to Home Capital Group -- and policymakers are working to “get ahead” of the problem.
In an interview with BNN, Canada Mortgage and Housing Corporation CEO Evan Siddall said there’s a clear incentive for mortgage fraud to grow across the country.
“Are there only 45 brokers in Canada conducting fraud? No, there’s more. But our numbers suggest it’s really quite small,” he said.
“There’s an incentive, however, for it to grow and we’re doing work now with our colleagues in Ottawa to try to get ahead of that.”
The crisis at Home Capital stems back to 45 brokers the alternative lender cut ties with in 2015 for misstating income on loan applications. To date, only two brokers have been publicly identified as being sanctioned by the provincial regulator, the Financial Services Commission of Ontario.
When asked if sanctions against two brokers went far enough, Siddall said that is a question better left for the provincial regulators.
The Home Capital crisis unfolded against a backdrop of soaring home prices that have Canadians piling on record levels of debt.
Household indebtedness is the “thing that worries me the most,” said Siddall.
“It just reduces the degrees of freedom that we have in light of an event offshore or some turnover in unemployment in Canada,” he said. “Households are more indebted and therefore more levered to housing shocks and interest rates.”
That scenario is a key concern for the International Monetary Fund, which warned in report Wednesday that a “sharp correction in the (Canadian) housing market could impair bank balance sheets” and “trigger negative feedback loops in the economy.”
Those concerns were magnified by Canada’s first-quarter GDP report. While the economy showed impressive growth of 3.7 per cent, consumer spending and real estate were key drivers.
Siddall, for his part, doesn’t see Canada’s housing boom – some consider it an economy addicted to real estate – ending badly.
“Housing is seven per cent of GDP, we’re not a housing-driven market,” said Siddall, who did acknowledge there are “multiplier effects” from real estate into the broader economy.
“We’ve actually got a pretty healthy economy, the numbers are coming out reasonably strong. We’ve just got to make sure we make it easier to invest in the real part of the economy.”
