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One Stress That CMHC Didn’t (Publicly) Test

Our national housing agency wants to put your mind at ease, sort of.

CMHC published its annual stress test this week. Its report claimed CMHC would remain solvent barring a catastrophic scenario entailing:

  • a 48% home price crash,
  • 25% unemployment, and
  • no government intervention (full details here).

The report made headlines across the media, as unlikely as some of its doomsday scenarios are.

What’s far more likely, however, is a scenario that CMHC didn’t talk about: market share losses.

CMHC’s market share has skid since July, after it chose to tighten lending criteria while competitors Sagen and Canada Guaranty maintained the status quo.

Thereafter, CEO Evan Siddall wrote what some deemed to be a guilt-trip letter to lenders. Its accusatory tone warned that by sending business to competitors lenders were contributing to CMHC “approaching a level of minimum market share that [it requires] to be able to protect the mortgage market in times of crisis.” Apparently CMHC’s management didn’t expect lenders to reward the insurers that supported their customers.

From the admittedly non-representative sample of lenders we spoke with soon after, their sentiment was that Siddall’s letter alienated much of the mortgage industry — likely encouraging more support of CMHC’s competitors, not less.

Since then, there’s been hints that CMHC’s market share has dropped even further, perhaps below its 40% minimum target. The problem is, no one but insiders really know. It refuses to publish the data, despite being a government agency and despite the risk that (it says) its market share losses present. If that concerns you as someone who indirectly owns this crown corporation—i.e., as a taxpayer—you’re not alone.

“Our financial stability mandate is an important focus of the Corporation,” said spokesperson Len Catling. “To be able to act upon our financial stability mandate, CMHC aims to maintain enough presence to be able to: a) step in to enable financial stability and b) absorb market share if private insurers exit market.”

As if withholding market share data weren’t worry enough, CMHC has also refused to confirm if it stress-tested its resilience against a plunging market share scenario. Catling said the crown corporation “would only speak to the scenarios and results [it] presented publicly…”

That’s concerning, because CMHC’s 5-year plan (pg. 52) anticipates a market share “decline.” And the company clearly has the ability to estimate its own market share. It makes one wonder why it would not be forthcoming with the numbers.

“Competitive reasons” would seem a flimsy excuse for concealing its market position. Its public competitor, Sagen, routinely estimates its market share for analysts. Yet, despite CMHC’s public ownership, much broader housing market mandate and obligation to uphold financial stability, it doesn’t hold itself to that same standard. And that’s notwithstanding its CEO’s very public pledges of transparency.

As a consumer-focused mortgage news site, interest in this story stems mainly from the potential repercussions to borrowers, homeowners and taxpayers. Those repercussions could manifest themselves if CMHC loses too much business and can’t fulfill its mandate, and/or (heaven forbid) seeks a big cash infusion from Ottawa. The health of CMHC matters and Canadians deserve more visibility of its vital signs.

Editorial/opinion content solely reflects the views of the author.

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  • Ditch it says:

    The government should have sold CMHC’s commercial operations years ago. I’ll miss those dividends.

  • Marvin Lehr says:

    Government bureaucracy is impossible to get through if it’s automatically rewarded.
    Why would you go out of your way if there is no bonus or if it is automatic.

  • J. says:

    Maybe CMHC doesn’t want people to worry about how close to the edge its market share really is?

  • Refi-Guy says:

    I can’t believe Siddall is still around.

    He should do the honourable thing and pull a Payette.

    He is constantly grinding down the moral at CMHC with his horrible “management” style, poor decision making and over inflated sense of ability.

    Who ever takes over is going to have their work cut out for them to rebuild the organization from the ground up.

    If you are interested in the job I suggest that the first thing you cut is the row (results oriented work) and give back everyone a decent sized cubical/office.

  • Siddall has already given his resignation, so he can do whatever he likes now without consequence.

  • DJ says:

    Does anyone hold CMHC accountable for this sort of thing?

  • The Spy says:

    Hi DJ, Unless people make a noise about stuff like this, it gets buried. If you feel so inspired, a quick note to your MP (contact info here: might result in them raising the issue with Finance officials. Would also recommend CC-ing the Finance Minister:

  • NA says:

    Great work as always @Ratespy. As I mentioned on twitter, I’m curious to hear your views on why CMHC needs to have a “minimum market share” at all? Isn’t the government well entrenched in the default insurance game with it’s guarantee of 90% of CG and Sagen’s books?

    • The Spy says:

      Hi NA, Coincidentally, I’m having a call on this tomorrow so let me reply back then.

    • The Spy says:

      Hi NA,

      CMHC says it “aims to maintain enough presence to be able to: a) step in to enable financial stability and b) absorb market share if private insurers exit market.”

      As an example cited by CMHC, it “introduced products such as IMPP during the pandemic lockdown which helped provide lenders additional liquidity.”

      My thoughts are these:

      1) It doesn’t make sense to me how CMHC could no longer step in to support financial stability simply because its market share has dropped. CMHC is government backed. If there’s a crisis, the government could still channel all necessary resources through CMHC to stabilize the system regardless of market share.

      2) Private insurers aren’t going anywhere and if they did, OSFI (their regulator) would know about it. OSFI would notify CMHC far in advance so that CMHC could ramp up to take over those businesses. CMHC is fully prepared to do this from my discussions with its risk folks, even if its market share skids from ~40% today to under 30%. Keep in mind that over 90% of insured deals are automatically adjudicated by computer (Emili). That significantly improves scalability and further defeats the minimum market share claim.

      Based on the information shared by CMHC, conversations with leaders in the industry and simple common sense, Siddall’s financial stability justification for maintaining market share seems weak at best. I suspect CMHC is doing all it can to buttress market share for other reasons, not the least of which include optics and management performance assessments.

  • Gary Siegle says:

    Really interested in hearing what you learned in the call about CMHC’s reinsurance of CG & Sagen

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