Canada Mortgage and Housing Corporation

Canada Mortgage and Housing Corporation (CMHC) is a Crown corporation owned by the Government of Canada.

CMHC is responsible for the housing industry in Canada. Its main duty is currently to ensure low cost mortgage loans are available to Canadians by providing insurance to lenders in case of defaults and homebuyer assistance. The borrower can pay lower interest costs when the loan is insured but the borrower has to pay the insurance premiums so it is uncertain as to whether the CMHC is helping the borrower reduce financing costs.

Since 1954 one in three Canadian home buyers have made use of CMHC's programs. The CMHC also has a large research wing that analyses the housing situation in Canada and housing design and technologies.

The Minister of Labour and Housing is responsible for the maintenance of the agency.

History

Near the end of World War II, the Canadian government began to worry about the demobilization of thousands of soldiers in Europe, and their re-entrance to Canadian society. With so many people coming back to Canada, a number of problems would arise, one being that there may not be enough housing existing to accommodate the soldiers and their desire to have families.

The agency was created in 1946 in response to housing demands after the return of World War II veterans and societal changes after the war included a policy that every family in Canada have their own home. Its role was to aid in the management and finance of housing projects in Canadian cities. It took over the assets of the Wartime Housing Ltd., that had built thousands of houses during the war. Upon creation, the Corporation was named the Central Mortgage and Housing Corporation.

In 1954, the federal government changed the National Housing Act. The amendment removed the federal government from the direct finance of housing projects, instead leaving mortgage financing to the banks. The banks began to issue mortgage loans. If the individual receiving the loan went bankrupt then the bank who gave the loan would not lose money, but instead would be reimbursed by the government. Now individual families in a multitude of salary ranges could afford to buy homes.

In 1979, the Corporation's name was changed from the Central Mortgage and Housing Corporation to Canada Mortgage and Housing Corporation.

Importance in Canadian public sector

The CMHC is the second largest crown corporation after Canada Post in terms of revenue with some $4.6 billion in 2004. It is the largest crown corporation in terms of assets with some $26 billion in holdings. The CMHC influenced the development of Canadian housing projects (see below). Furthermore, the federal Government of Canada often uses the CMHC as a financial agent.

Influence over housing projects

The CMHC provides assistance and guidance to the private sector in the building, design and planning of houses. Thus provincial governments have aligned their housing standards and planning practices along those of the CMHC. The CMHC also makes financial loans to cities at low- and middle-interest rates for the development of housing projects. Thus, both the cities and provinces in Canada rely on the CMHC for the continuation of housing development in the areas under their jurisdiction. This alignment has had a number of influences on Canadian housing in general:
* Development of the policy of every Canadian family having a home.
* Development of a national building code
* With the insurance of mortgages and 90%/10% downpayment standard the suburbanization of Canadian cities was possible
* Building experimental houses for new and improved building techniques and technology
* Often acts as a developer, but this function is diminishing.
* Influences the socio-economic differentiation in cities by approving low-cost housing projects only when placed where they desire. For example, the Calgary municipal government wanted to develop the NE portion of the city as a high-cost housing market due to the view of the Rocky Mountains. However, the CMHC, in loaning money to Calgary, decided that the development should instead be focused around low-cost housing projects.

Large Projects

Among its early projects was the Regent Park project in Toronto.

External links

* [http://www.cmhc-schl.gc.ca/en/index.html Canada Mortgage and Housing Corporation Official website]
* [http://www.ontariotenants.ca/research/rents-vacancy.phtml Report questioning the accuracy and biases of CMHC studies]
* [http://www.firstfoundation.ca/blog/mortgage-articles/ Canadian Mortgage Industry Blog]