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.
5:45 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
To the extent that the program affects the net income of CMHC, it would be consolidated in the public accounts and affect the budgetary balance. I think there are some assumptions you have to assume there in order to answer the question.
I don't know, Michel, if that's something we can get back to the member on or....
5:45 p.m.
Senior Vice President, Policy, Research and Public Affairs, Canada Mortgage and Housing Corporation
Again, it's depending on what the take-up is. There is a cost, obviously, from the government side, from actually lending money to CMHC, but to the extent that we're paying it back.... There's a cost to administrating the program, obviously, and then the variable will be the decisions the government makes—the Minister of Finance—in terms of how we share our gains and losses.
5:45 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Page 304 of annex 2 in budget 2019 allocates only $121 million to CMHC over the four years to administer the first-time homebuyers incentive program, yet the budget document states that this will be a $1.25-billion program. Can you explain the distinction?
5:45 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
Yes. Those are the estimated costs over the first five years of the program. They include interest costs for the loans that CMHC will receive from the Crown borrowing program to provide funding under the program, as well as CMHC operational costs and small credit risk provisions. What is not included are assumptions around appreciation or depreciation in the assets.
5:45 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Okay.
Also, then, was a loan risk assessment conducted for this initiative before it was announced?
5:45 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
There are a lot of factors that have not yet been announced as part of the terms and conditions that will be important to that risk assessment, so—
5:45 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
We are working on that internally with CMHC.
5:50 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
I'm not sure.
5:50 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Can you commit to the committee that it will be released to us when it is?
5:50 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
I cannot.
5:50 p.m.
Conservative
5:50 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
It's not within our power.
5:50 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
That's unfortunate. I appreciate that is not within your power, and that it is not your decision, unfortunately, that the government has decided to put significant quantities of Canadian tax dollars at risk without being prepared to reveal those risks to Canadian taxpayers.
The next question is, will the shared equity mortgages provided under the scheme be securitized under the NHA MBS program?
5:50 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
That is not the intention, no.
5:50 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
If a bank issues one of these mortgages, decides it wants to securitize it and goes to CMHC for securitization, would such securitization be prohibited given that the homebuyers incentive is already part of the scheme?
5:50 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
The insured mortgage would be what would be issued by the bank or other financial institution. That element is currently able to be securitized under CMHC securitization programs provided it meets appropriate parameters. That would continue to be the case. The shared equity mortgage component, the incentive, would be held by CMHC, and that would not be securitized.
5:50 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Okay.
Has the government or the department ever considered allowing shared equity mortgages to be provided by private lenders?
5:50 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
Yes. The department looked at a range of options for shared equity mortgages and the program response to the housing affordability needs.
As well, there's another initiative announced in the budget to lower the incentive, which is the shared equity mortgage provider fund. CMHC will provide $100 million in loans to existing shared equity mortgage providers or prospective shared equity mortgage providers in the non-government space—the not-for-profit or private sectors—to try to encourage increased activity or participation in that space.
5:50 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
How many mortgages are issued by not-for-profits and private sector lenders right now?
5:50 p.m.
Director, Housing Finance, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
I do not have that number on me.
Would you know, Michel?
5:50 p.m.
Senior Vice President, Policy, Research and Public Affairs, Canada Mortgage and Housing Corporation
Are we talking about just shared equity mortgages?
5:50 p.m.
Senior Vice President, Policy, Research and Public Affairs, Canada Mortgage and Housing Corporation
I don't have the numbers of all of them, but I know that Options for Homes in Toronto, which primarily does business in the Toronto area, has issued I think something like 2,700 over its history. I can't remember how long they've been in business, but—