Reining in the mortgage king

The finance ministry’s legal oversight of the CMHC was long overdue

In March, Maclean’s warned that the Canada Mortgage and Housing Corporation, the quasi-governmental insurer that underwrites $500 billion of residential mortgages, answers to no one—not Canada’s top financial regulator or even the minister of finance. That all quietly changed last month when Ottawa passed a law that puts the CMHC strictly under the watchful gaze of both the finance minister and the Office of the Superintendent of Financial Institutions (OSFI).

With the new law, CMHC must hand over “prescribed books, records and information” and make those records available to the public. The legislation also allows the minister to set capital requirements and impose fees to compensate the government for the risks it assumes by backstopping mortgages.

CMHC has always said the money it sets aside to cover insurance losses exceeds that required by OSFI. But Finn Poschmann, a C.D. Howe researcher, told the House of Commons finance committee the new law is overdue. “There are a number of informal arrangements through which our oversight agencies are able to have a look at what it is that the CMHC does and the risks to which taxpayers are exposed,” he said. “However, it is an informal arrangement. It’s good to have this in legislation.”

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