Canada Mortgage and Housing Corporation

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					Welcome to Canada Mortgage
and Housing Corporation’s (CMHC)
Annual Public Meeting
Tuesday August 23, 2011
Victoria, British Columbia
          CMHC
Why   Home to Canadians
                                    CMHC
Why                         Home to Canadians
What   Promoting housing quality, affordability and choice for all Canadians
                                            CMHC
Why                                  Home to Canadians
What           Promoting housing quality, affordability and choice for all Canadians

                 80%
Who     Canadians whose housing
       needs are met by the market
                                            CMHC
Why                                  Home to Canadians
What           Promoting housing quality, affordability and choice for all Canadians

                 80%                                                      20%
Who     Canadians whose housing                           Canadians in need (housing needs not
       needs are met by the market                           adequately met by the market)
Accountability and governance

CMHC:
 Is governed by an independent Board of Directors.
 Reports to Parliament through the Minister of Human
  Resources and Skills Development.
 Is subject to a range of accountability processes and
  requirements.
Responsible risk management

 Enterprise Risk Management Framework enables
  CMHC to identify and analyze risks and implement
  mitigation strategies.
 Corporate risk appetite statement supports consistent
  decision-making across the Corporation.
 Rigorous and comprehensive stress testing shows
  that CMHC is well positioned to handle extremely
  adverse economic conditions.
Pace of economic recovery
Emphasis on financial regulation and
reform
Canada’s changing demographics
Rapid evolution of technology
Growing concern for the environment
                                            CMHC
Why                                  Home to Canadians
What           Promoting housing quality, affordability and choice for all Canadians

                 80%                                                      20%
Who     Canadians whose housing                           Canadians in need (housing needs not
       needs are met by the market                           adequately met by the market)
                                            CMHC
Why                                  Home to Canadians
What           Promoting housing quality, affordability and choice for all Canadians

                 80%                                                      20%
Who     Canadians whose housing                           Canadians in need (housing needs not
       needs are met by the market                           adequately met by the market)

                                                  Affordability
                                                    Pre-1994
                                                  Social Housing
                                                    Programs
 H                                                 Affordable
                                                 Housing Initiative
 O                                                  Affordable
 W                                                Housing Centre
                                            CMHC
Why                                  Home to Canadians
What           Promoting housing quality, affordability and choice for all Canadians

                 80%                                                      20%
Who     Canadians whose housing                           Canadians in need (housing needs not
       needs are met by the market                           adequately met by the market)

                                                  Affordability        Renovatio
                                                    Pre-1994              n
                                                  Social Housing          Housing
                                                    Programs            Repair and
 H                                                 Affordable          Improvement
                                                                         Programs
                                                 Housing Initiative
 O                                                  Affordable
 W                                                Housing Centre
                                            CMHC
Why                                  Home to Canadians
What           Promoting housing quality, affordability and choice for all Canadians

                 80%                                                      20%
Who     Canadians whose housing                           Canadians in need (housing needs not
       needs are met by the market                           adequately met by the market)

                                                  Affordability        Renovatio        Distinct
                                                    Pre-1994              n             Housing
                                                  Social Housing          Housing        Needs
                                                    Programs            Repair and      On Reserve
 H                                                 Affordable          Improvement
                                                                         Programs        Domestic
                                                 Housing Initiative                      Violence
 O                                                  Affordable                           Seniors’
 W                                                Housing Centre                       Independent
                                                                                          Living
Economic Action Plan investments

 Canada’s Economic Action Plan (CEAP) provided a
  one-time investment of some $2 billion over two
  years
  to build new and repair existing social housing.
 Over 14,000 social housing and First Nations housing
  projects completed or underway.
 CEAP also provided $2 billion in low-cost loans to
  municipalities to fund housing-related infrastructure.
 More than 270 loans approved under Municipal
  Infrastructure Lending Program.
 Housing program expenditures return to normal
 levels




* Reference levels for years prior to 2011/12 include affordable housing investments for the Affordable Housing Initiative and Renovation Programs.
                                                  CMHC
Why                                        Home to Canadians
What                 Promoting housing quality, affordability and choice for all Canadians

                          80%                                                   20%
Who           Canadians whose housing                           Canadians in need (housing needs not
             needs are met by the market                           adequately met by the market)

       Mortgage Loan                                    Affordability        Renovatio        Distinct
         Insurance                                        Pre-1994              n             Housing
         Homeowner                                      Social Housing          Housing        Needs
                                                          Programs            Repair and      On Reserve
            Rental
 H        Nursing and
                                                         Affordable          Improvement
                                                                               Programs        Domestic
                                                       Housing Initiative                      Violence
 O     retirement homes
                                                          Affordable                           Seniors’
 W                                                      Housing Centre                       Independent
                                                                                                Living
Serving Canadians everywhere
      CMHC has a mandate to provide qualified Canadians with access to all
       forms of housing – homeownership, rental, and housing in rural areas
       and smaller markets.
      CMHC is the only mortgage loan insurer for large multi-unit properties
       (including rental housing, nursing and retirement homes), and the
       primary insurer for housing in rural areas and smaller markets. These
       markets represented 44% of its high ratio business in 2010.



                   Distribution of approved units for multi-unit properties and high ratio
                                       homeowner properties in 2010

100%
 90%
 80%
 70%
 60%
 50%
 40%
 30%
 20%
 10%
  0%
          Canada            Atlantic             Quebec                Ontario            Prairies and   British Columbia
                                                                                           Territories
                      Homeowner properties in rural areas and smaller communities
                      Multi-unit properties of > 4 units (includes nursing and retirements homes)
                      Homeowner properties in urban areas
CMHC mortgage loan insurance (Units)
            Mortgage Loan Insurance (units)
1,200,000

1,000,000

 800,000

 600,000

 400,000

 200,000

       0
             2008   2009   2010P   2010   2011P
Returns to the Government of Canada
 CMHC’s mortgage loan insurance business operates
  at
  no cost to Canadian taxpayers.
 As of the end of 2010, CMHC has contributed over
  $14 billion (most of which is attributed to mortgage
  loan insurance) to reducing the Government's annual
  deficit through both the income tax it pays and its net
      CMHC's contributions last decade.
  income over the to reducing the($M)
                              deficits
                                       Government of Canada's annual

 3,000

 2,500

 2,000

 1,500                                                                                   Net Income
                                                                                         Income Taxes
 1,000

  500

    0
         2001   2002   2003   2004   2005   2006   2007   2008   2009 2010P 2010 2011P
                                                  CMHC
Why                                        Home to Canadians
What                 Promoting housing quality, affordability and choice for all Canadians

                          80%                                                   20%
Who           Canadians whose housing                           Canadians in need (housing needs not
             needs are met by the market                           adequately met by the market)

       Mortgage Loan                                    Affordability        Renovatio        Distinct
         Insurance                                        Pre-1994              n             Housing
         Homeowner                                      Social Housing          Housing        Needs
                                                          Programs            Repair and      On Reserve
            Rental
 H        Nursing and
                                                         Affordable          Improvement
                                                                               Programs        Domestic
                                                       Housing Initiative                      Violence
 O     retirement homes
                                                          Affordable                           Seniors’
 W                                                      Housing Centre                       Independent
                                                                                                Living
Prudently managing mortgage insurance
risks
Credit Scores of Insured Borrowers
 Department of Finance parameters for government-guaranteed
  mortgage loans set a 600 minimum credit score for borrowers.
 The average credit score for high ratio homeowner loans
  approved
  by CMHC in 2010 was 731.
              Distribution of approved high ratio homeowner loans
                              by credit score in 2010
                   No Score                                         =0<600
                     0%                                              0%

                                                            ≥ 600 < 660
                                                                9%



                                                                             ≥ 660 < 700
                                                                                 17%




      ≥ 700
      74%
Prudently managing mortgage insurance
risks
Homeowner Equity of Insured Borrowers
 The majority of CMHC-insured mortgages have relatively low
  loan-to-value ratios, with the average homeowner having about
  44% equity in their home.

        Distribution of homeowner Insurance-in-force by loan-to-value (LTV) ratio
                           (based on updated property value)


                    >90.01%
                                        >95.01%, 2%
                   ≤ 95%, 7%




     >80.01%
    ≤90%, 21%




                                                                           ≤80%, 70%
Prudently managing mortgage insurance
risks
Arrears Rate
 CMHC’s mortgage arrears rate is in line with the industry
  trend of 0.44%.

                             Arrears Rates (%)
        0.5


        0.4


        0.3


        0.2


        0.1


         0
                2008                  2009         2010
                       CMHC Overall          CBA
   Prudently managing mortgage insurance
   risks
                   2010 Distribution of Insurance-in-Force by Province/Territory

                                         Manitoba      Atlantic
                          Saskatchewan    2.1%          5.3%      Territories
                   Quebec     2.0%                                  0.3%
                   15.7%




   Alberta                                                                         Ontario
   15.3%                                                                           43.1%




             British Columbia
                   16.3%



Geographically diversified reducing overall exposure to economic cycles
Prudently managing mortgage insurance
risks
Capital Reserves
 CMHC currently maintains twice the minimum capital required
  by the Office of the Superintendent of Financial Institutions
  (OSFI).


 250
 200                                   CMHC Insurance Available Capital (%
                                       MCT)
 150                                   OSFI's Minimum Capital Test (100% MCT)
%
 100
                                       CMHC's Internal Capital Target (150%
  50                                   MCT)

                                       CMHC's Capital Holding Target (200%
   0                                   MCT)
                                                  CMHC
Why                                        Home to Canadians
What                 Promoting housing quality, affordability and choice for all Canadians

                          80%                                                   20%
Who           Canadians whose housing                           Canadians in need (housing needs not
             needs are met by the market                           adequately met by the market)

       Mortgage Loan            Securitization          Affordability        Renovatio        Distinct
         Insurance              Programs that             Pre-1994              n             Housing
         Homeowner             provide lenders          Social Housing          Housing        Needs
                             access to mortgage           Programs            Repair and      On Reserve
            Rental
 H        Nursing and
                                    funds                Affordable          Improvement
                                                                               Programs        Domestic
                                                       Housing Initiative                      Violence
 O     retirement homes
                                                          Affordable                           Seniors’
 W                                                      Housing Centre                       Independent
                                                                                                Living
                                                    CMHC
Why                                        Home to Canadians
What                 Promoting housing quality, affordability and choice for all Canadians

                          80%                                                   20%
Who           Canadians whose housing                            Canadians in need (housing needs not
             needs are met by the market                            adequately met by the market)

       Mortgage Loan            Securitization          Affordability        Renovatio         Distinct
         Insurance                Programs that            Pre-1994             n              Housing
         Homeowner               provide lenders         Social Housing         Housing         Needs
                               access to mortgage          Programs           Repair and       On Reserve
            Rental
 H        Nursing and
                                      funds              Affordable          Improvement
                                                                               Programs         Domestic
                                                       Housing Initiative                       Violence
 O     retirement homes
                                                          Affordable                            Seniors’
 W                                                      Housing Centre                        Independent
                                                                                                 Living
                          Research and Information Transfer – Policy and Building Science
                                                 Market Analysis
                                              International Activities
                                                    CMHC
Why                                        Home to Canadians
What                 Promoting housing quality, affordability and choice for all Canadians

                          80%                                                   20%
Who           Canadians whose housing                            Canadians in need (housing needs not
             needs are met by the market                            adequately met by the market)

       Mortgage Loan            Securitization           Affordability       Renovatio            Distinct
         Insurance                Programs that            Pre-1994             n                 Housing
         Homeowner               provide lenders         Social Housing         Housing            Needs
                               access to mortgage          Programs           Repair and          On Reserve
            Rental
 H        Nursing and
                                      funds              Affordable          Improvement
                                                                               Programs            Domestic
                                                       Housing Initiative                          Violence
 O     retirement homes
                                                           Affordable                               Seniors’
 W                                                       Housing Centre                           Independent
                                                                                                     Living
                          Research and Information Transfer – Policy and Building Science
                                                 Market Analysis
                                              International Activities


                     HRSDC         AANDC         DFAIT           NRCan         NRC           IC
                                                       CMHC
Why                                            Home to Canadians
What                     Promoting housing quality, affordability and choice for all Canadians

                           80%                                                          20%
Who              Canadians whose housing                              Canadians in need (housing needs not
                needs are met by the market                              adequately met by the market)

       Mortgage Loan               Securitization             Affordability        Renovatio             Distinct
         Insurance                   Programs that              Pre-1994              n                  Housing
          Homeowner                 provide lenders           Social Housing          Housing             Needs
                                  access to mortgage            Programs            Repair and           On Reserve
             Rental
 H        Nursing and
                                         funds                 Affordable          Improvement
                                                                                     Programs             Domestic
                                                             Housing Initiative                           Violence
 O     retirement homes
                                                                Affordable                                 Seniors’
 W                                                            Housing Centre                             Independent
                                                                                                            Living
                            Research and Information Transfer – Policy and Building Science
                                                      Market Analysis
                                                   International Activities


                         HRSDC         AANDC          DFAIT           NRCan             NRC         IC

        Provincial ,                                                                             Private sector lenders,
       territorial and                                                  First Nations              mortgage brokers,
         municipal               NGO and non-profit groups                                        builders, developers
       governments                                                                                   and investors

				
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