本文发表在 rolia.net 枫下论坛U.S. mortgage mess creeps north
TARA PERKINS AND LORI McLEOD
From Thursday's Globe and Mail
The effects of the U.S. subprime crisis are showing up on the fringe of the Canadian mortgage business, even though mainstream lending and the housing market are on solid ground.
Lenders catering to riskier borrowers, most of whom took advantage of new financing techniques and a wave of liquidity to enter the market in the past few years, are struggling to fund their operations.
The result is a slow retrenchment in a sector that held about 5 per cent of the Canadian mortgage market before the credit crunch spread from the United States in August.
Some offices have been closed, employees have been let go, and fewer so-called alternative products are being offered to borrowers who do not qualify for regular loans.
Toronto-based Xceed Mortgage Corp. yesterday suspended its line of uninsured mortgage products, effective immediately.
Mississauga-based lender MoneyConnect Inc., meanwhile, told brokers last week that it's liquidating a portfolio of mortgages.
Lenders in this sector that rely on securitization can't access financing to take on new mortgages, noted Jim Murphy, president of the Canadian Association of Accredited Mortgage Professionals.
That's creating new opportunities for the big banks and others who are moving in to fill the void.
Last week, MoneyConnect posted a notice on its website informing mortgage brokers of a "warehouse clearance sale."
The company, launched early last year, was created to originate and buy "non-conforming" home mortgage products on behalf of institutional investors and securitization providers - companies that package loans to sell them as bonds.
But "our warehouse is full and due to ongoing turmoil in the capital markets, traditional investors simply aren't buying mortgages," it said on its website. As a result, it decided to "slash penalties and liquidate our warehouse portfolio."
The company urged mortgage brokers to take its customers' mortgages and shop them around to new lenders. It offered to waive the prepayment penalty charge for some customers who were then able to pay off their mortgages.
MoneyConnect warned in December that it would not approve more loans until further notice while it pursued new sources of funds. "Although the quality of mortgage credit in Canada continues to remain extremely strong and has not been a contributing factor to this global dilemma, a crisis of confidence exists with investors, which is preventing Canadian originators from accessing capital-markets-based funding," it said.
Its chief executive officer, Maurice Forget, could not be reached yesterday. The privately held company is partly owned by its executives, a global investment bank, and Quanto Financial Corp., whose principal shareholders are Deutsche Bank (Canada), National Bank of Canada and Montreal-based private equity firm Redfern Equity Capital Partners.
Shortly before the subprime crisis hit, MoneyConnect had been hoping to ride the "non-conforming" mortgage market, catering to customers who found it difficult to get bank financing. The company expected an annual industry growth rate of 50 per cent.
Instead, the market has teetered of late. HSBC Financial Corp. Ltd. shut down its mortgage services operation here, closing dozens of locations and cutting about 300 jobs as it exited the subprime mortgage business in North America. GMAC Residential Funding of Canada cut about 70 employees. And Accredited Home Lenders, which could not be reached for comment, appears to have chopped its Canadian work force and stopped accepting new loan applications at its Toronto and Vancouver offices because it could not securitize the loans in Canada.
Alex Haditaghi, chief executive officer of MortgageBrokers.com, said the departure of these lenders is a reflection of the collapse of mortgage securities, and not a sign of trouble in a robust Canadian mortgage market.
One industry source said that "the big players, such as the major banks, are loving it because they're getting all the business back again."
The decrease of uninsured mortgages has caused an increase in business for alternative lender Home Capital Group Inc., whose mortgages are insured by Canada Deposit Insurance Corp. and cover no more than 80 per cent of a home's value, CEO Gerald Soloway said.
The entry of higher-risk mortgage providers into the conservative Canadian market was an anomaly, and he's happy to see things returning to the way they were.
"I personally think ... this is a good thing for the economy long term, because we've seen the devastating effect it's had on the United States with mass foreclosures, mass evictions, great disruption. They thought they were doing a great gift for people letting them into a house with no money down. But I think in reality the disruption to society as a whole far outweighs that benefit."更多精彩文章及讨论，请光临枫下论坛 rolia.net