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When Will CMHC Back Away from the Liberal's Title Insurance Plan

It has been more that a month since the federal election and, even though I visit the CMHC web site regularly I can find no press release about whether the Conservatives have dropped the Liberal’s 2005 plan to provide title insurance coverage to owners on all CMHC insured loans.

In early 2005, Joe Fontana, the then Minister of Labour and Housing, was faced with an embarrassingly high CMHC profit level and a report to CMHC by a professor from the University of New Brunswick, Norman Siebrasse, that said that title insurance was a superior product to a solicitor’s opinion, particularly in the case of fraud. So, on April 22 of 2005 he issued an announcement that CMHC would be enhancing its mortgage loan insurance benefits to better protect Canadians’ investment in their homes by keeping them secure from title related risks. Basically CMHC was going to offer title insurance to homeowners for any transactions where CMHC was insuring the related loan. He promised that this enhancement would be available to consumers by the fall of 2005.

That announcement produced a huge number of complaints, particularly from lawyers in Western Canada. The CMHC announcement was delayed and, in December, Brian Tabor, the President of the Canadian Bar Association, sent a strong letter to CMHC objecting to the proposal. That letter clearly a “protect lawyers’ turf” missive and is, in my view inaccurate in some ways. For example, he states that the incidence of mortgage fraud is relatively low across Canada and that is not what lenders, title insurers or lawyers I speak to are saying. Mortgage fraud has been a massive problem the last few years.

However, with a change in government and a strong uproar from lawyers in the Conservative party’s western base, I speculated, when I spoke at the CBAO’s Annual Institute the day after the federal election, that the CMHC position was likely to be reversed. It will be interesting to see how quickly an announcement is made by Diane Finley, the Minister of Human Resources and Social Development from Ontario, one way or another.

Bruce McKenna

March 3, 2006 in Title Insurance | Permalink

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