OTTAWA, April 25 Canada's federal housing agency
will stop offering two types of mortgage insurance next month,
it announced on Friday in the latest move to curb its
ballooning, taxpayer-backed mortgage insurance business and
contribute to housing market stability.
Canada Mortgage and Housing Corporation (CMHC) will
discontinue its current mortgage loan insurance for borrowers
who purchase a second owner-occupied home and for self-employed
workers who cannot provide independent validation of their
Both products will no longer be available as of May 30.
"As a result of changes to CMHC's mandate to contribute to
the stability of the housing market, benefiting all Canadians,
while effectively managing and reducing taxpayers' exposure to
risk, CMHC is undertaking a review of its mortgage loan
insurance business," the agency said in a statement.
"This is the first set of changes resulting from this
review," it said.
CMHC plays a similar role to Fannie Mae and Freddie Mac in
the United States and controls about three-quarters of the
mortgage insurance market in Canada. Home buyers with a down
payment of less than 20 percent are obliged to carry default
But the government has recently become alarmed at the
exponential growth of that insurance business, which it
guarantees, and has taken several measures to increase oversight
of the agency and make more room for private insurers.
CMHC will now only provide homeowner mortgage loan insurance
to one property per borrower at a time. It will also require
self-employed home buyers to provide proof of income from a
third party, which the agency says is now readily available.
The two mortgage products represented less than 3 percent of
CMHC's total insurance volumes in units.
"Given the limited use of these products, their
discontinuation is not expected to have a material impact on the
(Reporting by Louise Egan; Editing by Bernard Orr)