Canada's national housing agency is being questioned on whether they're selling properties that were foreclosed, reported The Financial Post.
The anxious Quebec Federation of Real Estate Boards found that Canada Mortgage and Housing Corp., CMHC, didn't disclose to consumers that their estates were part of a foreclosure. The agency was required to report those properties in question when a broker is involved with the selling process.
"Because the repossession field is currently a mandatory field in the brokerage system you have no choice by to indicate 'no', which goes against ethical rules stipulating that real estate brokers are obliged to publish information that is truthful and verified," the real estate boards said in a statement to The Post.
It finally became resolved when both sides agreed not to not make it mandatory to reveal the foreclosure status of homes. But this brings up an ethical issue, whether homebuyers could have asked for lower rates and bids on the homes if it was in distress.
CMHC, which is 100 percent federally funded, controls nearly 75 percent of the country's insurance market. In addition, Canada's Bank Act says that if someone wants to buy a home for less than 20 percent down is required to have mortgage default insurance.
CMHC could be doing business as usual to avoid a housing prices drop and get a better price. Currently, the country doesn't seem to be on the road to huge foreclosures, in fact the number of foreclosures are going down.
"Look at what is going on right now in financial institutions and everybody is ratcheting up their loan-loss provisions," said Ben Rabidoux, a Canadian analyst for Hanson Advisors, in an interview with The Post. "Everybody expects loan losses to rise. I can't imagine CMHC is in the dark on that. My suspicion is they want to limit any loss on that hits their books."
