Julie Dickson, the head of OSFI (Office of the Superintendent of Financial Institutions) will not be back when her term expires in July 2014. She’s decided to not to stick around after making more lending rule changes in 2012, than I have ever seen, during my entire 23 year career working in financial services. OSFI is a regulatory body that provides regulation and supervision to 152 Banks, Trust companies and other Lenders. In short, they are auditors. Here’s a link to the major changes made just last year including putting CMHC under OSFI control.. more on that later..
Some say her claim to fame is that she was in charge during the worst banking and mortgage crises in history. And that Canada came out of this global financial collapse way better than any other country. It’s true, we did come out of this very well compared with the rest of the world… But what does Ms. Dickson and OSFI have to do with it? For me, this had more to do with luck, govt intervention and Canadians being our normal conservative selves. We were a little slower to adapt to U.S. style lending policies… Ask any financial expert and they will tell you we were just a few years behind the U.S. with regards to their wild mortgage lending guidelines…
Did you know that our Federal govt approved and promoted $0 money down mortgages, with interest only payments?? and not just for owner occupied properties but for rental properties, too? Think about that… $0 money down with interest only payments on a rental property!!! Wow! Or how about the 35 and 40 year mortgage amortizations? 95% loan to value refinances? We also had 107% mortgage financing in Canada… (not supported by govt of Cda but it was here)… Remember, all these programs started to get introduced in 2006.. just 2 years before the October 2008 U.S. sub-prime mortgage crisis.
And now Ms. Dickson and Mr. Flaherty (federal minister of finance) have turned back the clock to 1993 with a knee jerk like reaction with their Bill B-20… This Bill affects anyone that borrows money.. yes.. ALL of US… Many of the newer lending rules are just like they were 20 years ago… Only it isn’t 1993 anymore… and times have changed.. Our needs have changed… We don’t have 8.00% and 9.00% mortgage rates… We need a govt for 2013, not 1993.
Ms. Dickson isn’t sticking around for the credit fallout that will come from the excessive changes she brought in last year… We have record low interest rates but the govt doesn’t want you to access them… These rule changes have begun…the full effects won’t be felt for another year or two as mortgages come up for renewal or when you want to refinance, or buy an investment property or just borrow to invest. This is when most Canadians will realize how much things have changed..
And to make matters worse, our federal govt decided to put CMHC (Canada Mortgage and Housing Corporation) under the control of OSFI. Let’s remember that CMHC is a national housing agency that was created to make owning a home more affordable. But now it’s under the control of an auditor??… So how is that supposed to work? That’s like taking the sales staff and asking them to report to accounting department… We’re not gonna see much sales results….It just doesn’t work…. hence a change at the helm for CMHC.. more on that change in a future report…
Your best interest is my only interest.
As always, I welcome your comments, calls and questions.
Steve Garganis 416 224 0114 firstname.lastname@example.org