That's correct.
Evidence of meeting #144 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was health.
A video is available from Parliament.
Evidence of meeting #144 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was health.
A video is available from Parliament.
11:50 a.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
You're asking for a legislative change.
To provide clarity to the committee for our consideration, can you go over which act it is and exactly what change you want?
11:50 a.m.
Chief Executive Officer, OneClose
Yes.
PRMHIA is the act that governs mortgage insurance.
The change required is an addition to the “eligible mortgage loan” definition. Currently, it states that the mortgage insurer requires a registered first or second charge. What we're asking for is the inclusion of title insurance as an alternative to a registered first or second.
We have a legal opinion confirming our compliance otherwise. It goes on to state that the prevailing commercial market practice in the country uses title insurance as an alternative to the first or second. It's just not referenced in the legislation. Their recommendation was to update the legislation, regardless of our operation.
11:50 a.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
I think you said there are 60,000 condo units coming online this year, as I recall.
11:50 a.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
What percentage of those would fall into this kind of interim category, where people are moving in and not able to free up their bank capital to go back into the market?
11:50 a.m.
Chief Executive Officer, OneClose
All of them, because they are all in Ontario, where the interim occupancy period currently exists.
11:50 a.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Therefore, every single one of the 60,000 units are going to have situations where banks that want to advance their mortgages are prohibited from advancing their mortgages just because the legislation does not allow for title insurance to supplant a registered mortgage charge, correct?
11:55 a.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Thank you. Those are my questions.
11:55 a.m.
Liberal
11:55 a.m.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
Thanks very much.
Thanks, Mr. Murphy, for coming in to speak with us today.
I want to build on some of the questions that have been asked by other members. In a nutshell, a purchaser who's buying a condominium can't take ownership in Ontario until, basically, full completion of a condo building. As a result, they can't get a mortgage until they take title, which doesn't happen until a later point in time. They move into the unit; they pay a “rent”—I use that word in quotations—but they're not paying a mortgage and they're not paying down the principal. They're paying a rent, which costs them more.
Therefore, the purchaser is paying more than they would otherwise, if they had actually owned the unit and had taken title, and the developer is not able...because they haven't been paid by the purchaser for the condo unit. Their money is tied up. Their capital is tied up in that development and not being deployed to build more housing, so it's not allowing more housing to be built during that period. Is that a quick summary of the problem?
11:55 a.m.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
You're proposing a change that would allow title to be transferred quickly, if not immediately, to the purchaser and allow them to get that mortgage. That lowers the costs for the purchaser, for the Canadian who's buying the condo unit, the housing, and it allows the developer to take that money and to then start building other housing, which allows us to increase housing supply and therefore reduce the cost of housing for Canadians. Is that correct?
11:55 a.m.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
I'll be quick here with a few questions.
You mentioned that Alberta already does this—is that what you said?
11:55 a.m.
Chief Executive Officer, OneClose
Yes, they do it for all of their closings, not just condominiums.
11:55 a.m.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
How do they do that if they haven't had the legislative change that you're proposing?
11:55 a.m.
Chief Executive Officer, OneClose
The prevailing market practice has accepted it. There's a lag between when monies are advanced in Alberta and when registration actually occurs, since they have a Torrens registry system. What originally was three to four weeks has morphed into about a four-month delay period, so all of the lenders, all of the mortgage insurers in Alberta, use what's called gap insurance or gap coverage, which is title insurance to bond over that period and protect everyone.
11:55 a.m.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
If this amendment that you're proposing happened, how quickly could you operationalize this to impact purchasers in the market?
11:55 a.m.
Chief Executive Officer, OneClose
We could be in market within 30 days. We've done all of our platform build. We have our partnerships with lenders and with mortgage insurers. The workflow is completed. The narrative steps, the legal documentation, the opinion work...everything is done.
11:55 a.m.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
Fantastic. What would the impact of this be, do you think, for the housing market for purchasers over the next two to three years?
11:55 a.m.
Chief Executive Officer, OneClose
On in-flight inventory, for purchasers who have bought units under construction that are occupying in the next four years, the saving is north of $6.5 billion. The savings to the developers for those same units would be another $5 billion or $6 billion. The accelerated liberation of private sector liquidity to be redeployed towards new housing is approximately $30 billion a year, which would add 30,000 to 40,000 units, give or take.
