Housing

Ten things to know about CMHC’s Insured Mortgage Purchase Program

Published by Anonymous (not verified) on Tue, 07/04/2020 - 5:42am in

In March 2020, the Trudeau government launched a new version of the Insured Mortgage Purchase Program (IMPP). According to CMHC’s website: “Under this program, the government will purchase up to $50 billion of insured mortgage pools through CMHC.”

Here are 10 things to know:

1. Canada Mortgage and Housing Corporation (CMHC) is a federally-owned crown corporation. Many of us know CMHC as the federal agency that works with provincial and territorial governments to assist some low and moderate income households with rental housing. Likewise, some of us know CMHC as the lead federal agency on Canada’s National Housing Strategy (geared mostly to renters).

2. CMHC has been acting as a publicly-owned insurance company for residential mortgages since 1954. Indeed, in addition to assisting some renter households, CMHC also offers to insure mortgages with high loan-to-value ratios.[1] In other words, it tells the banks and other financial institutions: “If you are willing to provide a mortgage to this prospective homeowner, we’ll make sure you don’t incur any losses if they ever end up in default.”

3. The Superintendent of Financial Institutions (OSFI) regulates the banks to make sure they don’t engage in overly risky activity. Banks (and other financial institutions) sometimes like to get aggressive in their lending, so OSFI says they can’t make mortgage loans with less than a 20% down payment unless the mortgage is insured. CMHC provides such mortgage insurance, and premiums are paid by qualifying homeowners.

4. Most of Canada’s formal financial institutions are currently eligible to have their mortgages insured by CMHC.[2] Indeed, CMHC’s insurance program is not available to all lenders, but it does apply to all major mortgage issuers.[3] Mortgages that do not have CMHC insurance include mortgages with larger down payments and mortgages issued by some of Canada’s newer mortgage lenders.

5. Without CMHC’s insurance program (or equivalent) prospective homeowners would typically need at least a 20% down payment in order to purchase a home.[4] That would make it more challenging for many Canadians to buy a home for the first time. So without this insurance program in place, rental vacancy rates in Canada would likely be even lower than they are today (and this would be bad news for renters and prospective renters).

6. If an approved lender (namely, a bank, trust company, or credit union) makes a mortgage loan, CMHC will issue an insurance policy on that mortgage. The down payment can be anywhere from 5% to 20% of the value of the home. And if there’s a default, CMHC pays the bank. With this insurance program, a mortgage with a high loan-to-value ratio all of a sudden becomes a very good investment for the bank—that is, what once looked like a high-risk loan is now a low-risk loan. CMHC insurance therefore makes mortgage lending attractive for banks.

7. Homeowners then have to pay the premiums. For a loan-to-value ratio up to 80%, the premium is 2.4%. For a loan-to-value ratio between 80.1% and 90%, the premium is 3.1%. And for a loan-to-value ratio of between 90.1% and 95%, the premium is 4%. That’s the premium paid by qualifying homeowners, as a lump sum, when they take out the mortgage. Premiums go to CMHC’s publicly-owned insurance program. CMHC takes the premiums and invests them in stocks and bonds. When the time comes to cover claims on insurance, they can use the pool they built up to pay the claims.

8. With our looming recession, some homeowners will likely default on their mortgages. Knowing this, banks and other lenders have been looking at the state of all their loans (in fact, they must do so according to federal regulations).[5] And they need to be setting aside reserves against those possible defaults. Some banks are starting to think about calling in (i.e., cancelling) their loans and/or not issuing new loans. To avert such a crisis—known as a liquidity crisis—the Government of Canada is essentially injecting money into the financial system so that banks and other lenders don’t have to call in loans and stop issuing new loans (which would make matters worse for Canada’s economy). The Government of Canada is giving CMHC money to buy existing mortgages (all of which are insured by CMHC, and are therefore safe for the government to buy). When banks sell these mortgages to CMHC, banks get cash in return, which they can use to then make new loans (including new mortgage loans).

9. With the recently-announced IMPP, CMHC is offering to bulk purchase insured loans. CMHC effectively becomes a bulk purchaser of insured loans, bundled as mortgage-backed securities. CMHC has offered to buy back as many as financial institutions want to sell to them, up to the $50 billion threshold. Homeowners will see no difference in the day-to-day. Once each mortgage term ends (they’re typically five-year term mortgages) homeowners will have to renew their mortgages with lenders.

10. A buy-back on this scale has only taken place once before. As is noted elsewhere: “Between fall 2008 and the end of 2010, CMHC purchased $69billion of mortgages” via a previous iteration of this same program, in the immediate aftermath of the 2008-09 world financial crisis.

In sum. With the IMPP,the Government of Canada has likely helped prevent a financial crisis, which would have made our looming recession even worse. (For a concise overview of Canada’s housing finance system, see Chapter 4 of the Canadian Housing Observer 2014.)

I wish to thank the following individuals for assistance with this blog post: George Fallis, Susan Falvo, Marc Lee, David Macdonald, Marc-André Pigeon, David Pringle, Saul Schwartz, John Smithin, Tsur Somerville and two anonymous sources. Any errors are mine.

[1] A few caveats are in order here. First, CMHC also insures mortgages in rural areas that have low loan-to-value ratios (otherwise, the lender might refuse to issue a mortgage). Second, there are two other insurers of residential mortgages in Canada, in addition to CMHC. They are Genworth and AIG.

[2] And also by Genworth and AIG.

[3] Any lender or mortgage broker can apply to be an NHA-Approved Lender, and must then comply with CMHC underwriting standards—and if they don’t, they risk losing the approved lender status.

[4] Alternatively, they might provide another guarantee for the lender.

[5] OSFI sets requirements for reserves, based on risk-weighting criteria.

Ten things to know about CMHC’s Insured Mortgage Purchase Program

Published by Anonymous (not verified) on Tue, 07/04/2020 - 5:42am in

In March 2020, the Trudeau government launched a new version of the Insured Mortgage Purchase Program (IMPP). According to CMHC’s website: “Under this program, the government will purchase up to $50 billion of insured mortgage pools through CMHC.”

Here are 10 things to know:

1. Canada Mortgage and Housing Corporation (CMHC) is a federally-owned crown corporation. Many of us know CMHC as the federal agency that works with provincial and territorial governments to assist some low and moderate income households with rental housing. Likewise, some of us know CMHC as the lead federal agency on Canada’s National Housing Strategy (geared mostly to renters).

2. CMHC has been acting as a publicly-owned insurance company for residential mortgages since 1954. Indeed, in addition to assisting some renter households, CMHC also offers to insure mortgages with high loan-to-value ratios.[1] In other words, it tells the banks and other financial institutions: “If you are willing to provide a mortgage to this prospective homeowner, we’ll make sure you don’t incur any losses if they ever end up in default.”

3. The Superintendent of Financial Institutions (OSFI) regulates the banks to make sure they don’t engage in overly risky activity. Banks (and other financial institutions) sometimes like to get aggressive in their lending, so OSFI says they can’t make mortgage loans with less than a 20% down payment unless the mortgage is insured. CMHC provides such mortgage insurance, and premiums are paid by qualifying homeowners.

4. Most of Canada’s formal financial institutions are currently eligible to have their mortgages insured by CMHC.[2] Indeed, CMHC’s insurance program is not available to all lenders, but it does apply to all major mortgage issuers.[3] Mortgages that do not have CMHC insurance include mortgages with larger down payments and mortgages issued by some of Canada’s newer mortgage lenders.

5. Without CMHC’s insurance program (or equivalent) prospective homeowners would typically need at least a 20% down payment in order to purchase a home.[4] That would make it more challenging for many Canadians to buy a home for the first time. So without this insurance program in place, rental vacancy rates in Canada would likely be even lower than they are today (and this would be bad news for renters and prospective renters).

6. If an approved lender (namely, a bank, trust company, or credit union) makes a mortgage loan, CMHC will issue an insurance policy on that mortgage. The down payment can be anywhere from 5% to 20% of the value of the home. And if there’s a default, CMHC pays the bank. With this insurance program, a mortgage with a high loan-to-value ratio all of a sudden becomes a very good investment for the bank—that is, what once looked like a high-risk loan is now a low-risk loan. CMHC insurance therefore makes mortgage lending attractive for banks.

7. Homeowners then have to pay the premiums. For a loan-to-value ratio up to 80%, the premium is 2.4%. For a loan-to-value ratio between 80.1% and 90%, the premium is 3.1%. And for a loan-to-value ratio of between 90.1% and 95%, the premium is 4%. That’s the premium paid by qualifying homeowners, as a lump sum, when they take out the mortgage. Premiums go to CMHC’s publicly-owned insurance program. CMHC takes the premiums and invests them in stocks and bonds. When the time comes to cover claims on insurance, they can use the pool they built up to pay the claims.

8. With our looming recession, some homeowners will likely default on their mortgages. Knowing this, banks and other lenders have been looking at the state of all their loans (in fact, they must do so according to federal regulations).[5] And they need to be setting aside reserves against those possible defaults. Some banks are starting to think about calling in (i.e., cancelling) their loans and/or not issuing new loans. To avert such a crisis—known as a liquidity crisis—the Government of Canada is essentially injecting money into the financial system so that banks and other lenders don’t have to call in loans and stop issuing new loans (which would make matters worse for Canada’s economy). The Government of Canada is giving CMHC money to buy existing mortgages (all of which are insured by CMHC, and are therefore safe for the government to buy). When banks sell these mortgages to CMHC, banks get cash in return, which they can use to then make new loans (including new mortgage loans).

9. With the recently-announced IMPP, CMHC is offering to bulk purchase insured loans. CMHC effectively becomes a bulk purchaser of insured loans, bundled as mortgage-backed securities. CMHC has offered to buy back as many as financial institutions want to sell to them, up to the $50 billion threshold. Homeowners will see no difference in the day-to-day. Once each mortgage term ends (they’re typically five-year term mortgages) homeowners will have to renew their mortgages with lenders.

10. A buy-back on this scale has only taken place once before. As is noted elsewhere: “Between fall 2008 and the end of 2010, CMHC purchased $69billion of mortgages” via a previous iteration of this same program, in the immediate aftermath of the 2008-09 world financial crisis.

In sum. With the IMPP, the Government of Canada has likely helped prevent a financial crisis, which would have made our looming recession even worse. (For a concise overview of Canada’s housing finance system, see Chapter 4 of the Canadian Housing Observer 2014.)

I wish to thank the following individuals for assistance with this blog post: George Fallis, Susan Falvo, Marc Lee, David Macdonald, Marc-André Pigeon, David Pringle, Saul Schwartz, John Smithin, Tsur Somerville and two anonymous sources. Any errors are mine.

[1] A few caveats are in order here. First, CMHC also insures mortgages in rural areas that have low loan-to-value ratios (otherwise, the lender might refuse to issue a mortgage). Second, there are two other insurers of residential mortgages in Canada, in addition to CMHC. They are Genworth and AIG.

[2] And also by Genworth and AIG.

[3] Any lender or mortgage broker can apply to be an NHA-Approved Lender, and must then comply with CMHC underwriting standards—and if they don’t, they risk losing the approved lender status.

[4] Alternatively, they might provide another guarantee for the lender.

[5] OSFI sets requirements for reserves, based on risk-weighting criteria.

Why Hospitals Are Building Housing

Published by Anonymous (not verified) on Tue, 24/03/2020 - 5:40am in

As U.S. coronavirus infections rolled past 30,000 this weekend, approximately one in four Americans is under some kind of order not to leave home. But as Ruth Ann Norton knows, which home they’re confined to makes a world of difference.

“Housing is such an integral part of health in this country,” says Norton, president and CEO of the Green & Healthy Homes Initiative, a non-profit that advocates for healthier housing measures like lead removal and clean air. For example, families that have lead removed are “less likely to have respiratory exacerbations,” which Norton says will likely have an impact in this pandemic, since coronavirus is a respiratory illness. “We did not think about or know about or anticipate the coronavirus, but what we know is that when people are better equipped, they’re less likely to be poisoned by lead, and be safer from injury.”

From eviction moratoriums to hastily reconfigured homeless shelters, the coronavirus is making one thing abundantly clear: the connection between health and housing runs deep. A Robert Woods Johnson Foundation report “found that low-income people with difficulty paying rent, mortgage or utility bills were less likely to have a usual source of medical care… [and] children in areas with higher rates of unaffordable housing tended to have worse health.” 

These links have become so apparent that some hospital systems have started spending their money not just on health care facilities and staff, but on housing for the communities they serve. These interventions have taken on new urgency amid the worst public health crisis in a century as people’s homes have become, quite literally, bulwarks against a dangerous disease. 

The neighborhood is a patient

Dr. Kelly Kelleher is vice president for community health at Nationwide Children’s Hospital, a pediatric teaching hospital with a staff of nearly 12,000 in Columbus, Ohio. In 2009, the hospital launched the Healthy Neighborhoods Healthy Families (HNHF) program to partner with residents of the city’s south side in making their neighborhood a healthier place to live. It began as a collaborative effort between the hospital, the mayor’s office, the faith-based Community Development for All People and the United Way. Effectively, the goal was to look at the neighborhood as a patient. 

“Children are largely affected by the residence they live in, especially early in their life,” says Kelleher.

On the south side of Columbus, says Kelleher, 30 percent of homes were vacant when the program was launched — the highest share in the city, which explains why residents, when asked about their biggest health concerns, ranked safe housing at the top of the list. 

With the hospital providing the financing, the HNHF coalition established a four-prong approach to using housing to improve health outcomes. The first prong is home repair for people at risk, like fixing widows and lighting. The second prong can include a full gut rehab to provide stable housing, the third is a low-income housing tax credit, and the fourth is creation and maintenance of single-family rentals for low-income workers.

“That combination of programs, with the goal of creating a mixed-income, stable community, bringing together diversity, provides the healthiest neighborhood possible,” says Kelleher. 

Over the past 10 years, Kelleher says, the hospital has invested $10 million and leveraged about $80 million more, acting as a guarantor in deals that it thinks will benefit the neighborhood. In April, HNHF will publish the initiative’s health outcomes in the journal Pediatrics. Though Kelleher couldn’t provide that data before it’s published, a report in Pediatrics from September 2018 found that the investments “have dramatically transformed the housing stock in the area and reduced blight” and “altered the vacancy rate… from greater than 25 percent to below the community average of six percent.”

The majority of HNHF housing has been built in the last five years, and in that time, Kelleher says that both the neighborhood environment and health have improved. There has been more market-rate investment, a reduction in crime and an increase in jobs and high school graduation rates. And, to the hospital’s point, the number of emergency room visits by children has gone down, as has the rate of child in-patient hospital stays. 

There’s still a lot of runway left, however. “We’re still 50,000 houses short for the community,” says Kelleher, noting the explosive growth Columbus anticipates in the coming years.

Other cities have followed suit. Boston Medical Center made a $6.5 million “community improvement” investment in 2017 as part of its larger plan to expand. BMC is investing in various projects, including funds for affordable, equitable housing as well as funding for community health workers to work directly in Boston’s housing developments, says Dr. Megan Sandel, one of the leaders of BMC’s housing initiative. 

According to Sandel, just 10 to 20 percent of health is determined by the type of health care received. The social determinants of health, such as where you live and your environment, are likely to have a much greater impact. 

BMC’s investments don’t go to site-specific housing directly — instead, they support organizations that work on housing and homelessness, including Boston Housing Authority. “Early evidence shows, by helping medically complex patients who were homeless, we’re seeing improvement in both their mental and physical health,” says Sandel.

The project is still quite new, and data has not been published yet, but the early evidence is positive. Sandel is looking forward to more conclusive results in years to come.

A race against recession

“We believe that [HNHF] will buffer that neighborhood” from the economic fallout caused by the coronavirus — “as long as we can maintain it,” Kelleher says of Columbus’s south side. “What I’m not clear about is what will happen to the system overall. If children are hospitalized at a much greater rate, it could overwhelm our system and we’ll have a negative year, financially, with insurance companies paying a lot more.” 

If that happens, Kelleher worries that the hospital will be compelled to refocus its diminished resources away from housing and back onto sick care.

“The health effects of the economy are far more profound on kids and their families than maybe even the virus,” he says. “If we don’t figure this out, we’re going to spend the next 20 years making up lost ground, on a whole generation of children. Do we retreat? Or think about these programs intentionally and address where they are most needed?”

It’s ironic that the coronavirus threatens to derail an initiative specifically aimed at improving the spaces where people are currently quarantined to avoid that very pandemic. Still, if the funding can outlast the current crisis, the idea may continue to catch on. Boston Children’s Hospital is following BMC’s lead, and has set aside $5 million for housing. In a report, WBUR noted that Massachusetts “spends about 40 percent of its money on health care, and one percent on housing. If health care leaders start speaking out about the need for more and better housing… that could help change the ratio in the long term.” 

The post Why Hospitals Are Building Housing appeared first on Reasons to be Cheerful.

Affordable housing, homelessness and the upcoming federal budget

Published by Anonymous (not verified) on Fri, 20/03/2020 - 10:14am in

I’ve written a ‘top 10’ overview of things to know about affordable housing and homelessness, as they relate to Canada’s upcoming federal budget. The overview is based on the affordable housing and homelessness chapter in the just-released Alternative Federal Budget.

A link to the ‘top 10’ overview is here.

Affordable housing, homelessness and the upcoming federal budget

Published by Anonymous (not verified) on Fri, 20/03/2020 - 10:14am in

I’ve written a ‘top 10’ overview of things to know about affordable housing and homelessness, as they relate to Canada’s upcoming federal budget. The overview is based on the affordable housing and homelessness chapter in the just-released Alternative Federal Budget.

A link to the ‘top 10’ overview is here.

the 2020-21 Alberta budget

Published by Anonymous (not verified) on Tue, 10/03/2020 - 3:21am in

I’ve written a ‘top 10’ overview of the 2020-21 Alberta budget, tabled on February 27.

The link to the overview is here.

the 2020-21 Alberta budget

Published by Anonymous (not verified) on Tue, 10/03/2020 - 3:21am in

I’ve written a ‘top 10’ overview of the 2020-21 Alberta budget, tabled on February 27.

The link to the overview is here.

Cost savings associated with Housing First

Published by Anonymous (not verified) on Fri, 06/03/2020 - 7:32am in

I’ve written a summary of a recent study I co-authored on savings to the health and justice sectors associated with Housing First (i.e., the immediate provision of subsidized housing, along with social work support, to persons experiencing long-term homelessness).

The study, based on a large sample size from Calgary, finds that every $1 spent on Housing First is associated with more than $2 of savings to the public system (i.e., the health and justice sectors).

The summary can be found here, and it includes a link to the actual study.

Cost savings associated with Housing First

Published by Anonymous (not verified) on Fri, 06/03/2020 - 7:32am in

I’ve written a summary of a recent study I co-authored on savings to the health and justice sectors associated with Housing First (i.e., the immediate provision of subsidized housing, along with social work support, to persons experiencing long-term homelessness).

The study, based on a large sample size from Calgary, finds that every $1 spent on Housing First is associated with more than $2 of savings to the public system (i.e., the health and justice sectors).

The summary can be found here, and it includes a link to the actual study.

The DIY Wheelchair Ramp

Published by Anonymous (not verified) on Thu, 05/03/2020 - 4:31am in

Welcome back to The Fixer, our weekly briefing of solutions reported elsewhere. This week: the BYO, DIY wheelchair ramp transforming Canadian cities. Plus, New Yorkers facing eviction get a legal lifeline, and a mobile preschool rambles through Appalachia. 

Inclined to help

Some ideas are so simple you wonder how it took so long to implement them. Here’s one: the Toronto-based StopGap Foundation provides easily transportable ramps that instantly transform steps into a rollable incline, so that when someone needs one it can be whipped out and put into place within seconds.

Businesses can ask StopGap for a custom ramp to fit their steps. Each one is lightweight, coated with a non-slip additive and even has rope handles for easy portability. The slope is designed to be the perfect steepness for wheelchairs and strollers. StopGap will even include a window sign so businesses can let patrons know they’ve got a ramp ready to deploy should anyone need it.

stopgapCredit: StopGap Foundation

The foundation was started by Luke Anderson, who uses a wheelchair ever since a mountain biking accident left him with a spinal cord injury in 2002. Since he started StopGap in 2011, he and his team have distributed over 2,000 ramps in 60 communities across Canada. One of the latest to get the StopGap treatment is the Other Paw bakery in Jasper, Alberta. “Awareness is spreading,” Anderson told the Jasper Local. “A ramp lands in Jasper and it draws attention. It gets people talking. And hopefully there’s a domino effect.”

Read more at the Jasper Local

A good defense

A new law in New York City that offers low-income tenants facing eviction free legal counsel is having a big impact, a new analysis shows. In 2017, the city made the services available in 20 low-income zip codes, and in the past two years evictions in those areas fell by 29 percent. 

evictionResidents of a Brooklyn neighborhood protesting eviction of an elderly neighbor. Credit: Michael Premo / Flickr

Some 58,000 tenants took advantage of the program, according to the report by the city’s Office of Civil Justice, and 85 percent of them managed to stay in their homes despite efforts to evict them. Now, the City Council is looking at expanding who is eligible to participate — and the program is expected to go citywide by 2022. “This is an area where the metrics clearly show success,” said the Commissioner of Social Services. “The shelter system is like the emergency room. This is preventative medicine, and it’s clearly working.”

Read more at The City

Get on the bus

For some families living in rural Kentucky, preschools are over an hour away. But the many miles are only one part of what makes them feel distant. For some parents in this part of the country, the very idea of preschool feels foreign. As one mom told the Hechinger Report, “Why should a four year old go to school?” These factors contribute to the state’s low preschool enrollment rate of 29 percent.

One effort is working to raise those numbers. Partners in Education, an initiative of Kentucky’s Berea College, runs the Rosie and Sunny Buses, two colorfully painted buses that contain entire preschools right inside. The buses drive to the homes of children who aren’t enrolled in preschool, bringing the experience right to their door. Each bus has two adults on board: a teacher for the kids and a “family navigator” for the parents. 

It’s the navigator that makes the effort truly unusual. This person works with the parents to figure out the family’s needs — better nutrition, home repairs, debt relief — and help set them on a path to getting those issues solved. By offering support to both kids and parents in a single four-wheeled package, the buses have changed some parents’ attitudes toward preschool. After several visits by the Rosie Bus, one mom enrolled her daughter at a traditional preschool. To date, the buses have provided schooling and navigating services to over 100 families. 

Read more at the Hechinger Report

The post The DIY Wheelchair Ramp appeared first on Reasons to be Cheerful.

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