Evidence of meeting #208 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was payment.
A video is available from Parliament.
5:40 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
The repayment terms, including the payment amounts, have not been announced. That will be coming in the terms and conditions.
5:40 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
That's a little strange, because Evan Siddall, who runs CMHC, has said publicly that the repayment to the government will go up if the value of the property increases. Why is it that he believes that those terms are determined, when Finance officials do not?
5:40 p.m.
Senior Vice President, Policy, Research and Public Affairs, Canada Mortgage and Housing Corporation
I think what Cynthia was saying is that they haven't been finalized. Your example was a straight, proportionate amount. We haven't decided how it will actually work.
5:40 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
But there are really only two ways it can work. One is to treat it as an interest-free loan, whereby the principal is fixed and paid back nominally at the time of the home sale, or it's an actual share in the house and that share's value rises as the house appreciates. It has to be one of those two.
5:40 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
In many shared equity mortgage models that exist in Canada and other jurisdictions, you have an element of appreciation and depreciation sharing. That's something we're looking at. The exact mechanism or the exact repayment amounts are not yet decided.
5:40 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
It's rather a big deal. This is not a small detail. We're really determining whether the government is going to own part of a person's house or whether it's just an interest-free loan. We're supposed to launch this thing in September. We're already into May, and we don't know that? How is that possible?
5:45 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
Finance and CMHC officials are working to provide advice to the minister, and we expect those terms and conditions to be available in the coming weeks.
5:45 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Okay.
If the house depreciates in value, will the taxpayer take a loss at time of sale?
5:45 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
Similar to the comment on appreciation, many shared equity mortgage models internationally and in Canada include some elements of depreciation sharing to balance the risks with the appreciation sharing. But once again, the exact repayment mechanism or terms are yet to be announced.
5:45 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Has any other jurisdiction tried this kind of scheme before?
5:45 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
Yes. There are examples in the United Kingdom, as well as within Canada.
5:45 p.m.
Conservative
5:45 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
I think there's a mix. Yes, some of them are still being offered. Some of them are not. I can't at this moment speak to the particulars of each of those as to why some may or may not be, but we can get back to you.
5:45 p.m.
Senior Vice President, Policy, Research and Public Affairs, Canada Mortgage and Housing Corporation
Also, in Canada, there are some that are not government run but non-profit run, as Cynthia mentioned, and that are still up and running.
5:45 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
On the one run by the British government, is the British government still offering this?
5:45 p.m.
Senior Vice President, Policy, Research and Public Affairs, Canada Mortgage and Housing Corporation
I'd have to check. We can get back to you.
5:45 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
I understand that the British Columbian government started a similar initiative. Is that the one in Canada that you were referring to, Ms. Leach?
5:45 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
As Michel said, there are several in Canada, some by the not-for-profit sector. I believe the prior B.C. government did have a program.
5:45 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
I believe not.
5:45 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
I want to understand how this is being financed. Will any of the funds come from CMHC's reserve capital?
5:45 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
This program will be separate from CMHC's commercial mortgage insurance and securitization businesses. It will be funded via loans from the Crown borrowing program.
5:45 p.m.
Conservative
5:45 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
Basically, yes.
5:45 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Does money provided to CMHC through this program impact the budgetary balance of the Government of Canada?