The Canadian federal budget delivered on March 21,
2013 had a couple of very significant highlights (or perhaps more
appropriately characterized as lowlights) for the Canadian
structured finance industry.
Restrictions on Use of Government-Backed Mortgage
Insurance
Buried on page 141 of the Conservative budget (did they
honestly think no one would notice?), under the heading
"Reinforcing the Housing Financing Framework", is a very
short one-page summary of new measures intended to "increase
market discipline in residential mortgage lending and reduce
taxpayer exposure to the housing sector".
While the heading promises all good things, "market
discipline" is a two-edged sword, particularly in the Canadian
housing market where homeowners, home builders, banks and other
financial institutions have long become accustomed to living off of
CMHC's generous mortgage insurance program. What the
Conservative budget proposes is nothing short of the most dramatic
overhaul
