Canada Mortgage and Housing Corp. chief executive officer Karen Kinsley confirmed in the Crown corporation’s annual report that she is stepping down, meaning a replacement will soon be announced by the government.
The executive change will mark a new era for the mortgage insurer, which is one of the largest financial institutions in the country and plays a key role in the housing market.
Ms. Kinsley has been at the helm for a decade. Finance Minister Jim Flaherty has taken steps of late to rein in CMHC, including placing it under the oversight of the country’s financial regulator. Last week the government announced that Robert Kelly, a former Bank of New York Mellon CEO and long-time executive at Toronto-Dominion Bank, has been named CMHC’s new chairman.
“CMHC has been my home away from home for 25 years,” Ms. Kinsley, who worked her way up the ranks at the Crown corporation, wrote in the annual report, released Monday.
The new leader will be stepping in at a time when Ottawa has been trying to stem the growth of CMHC in order to keep the housing market, and taxpayers’ exposure to it, in check (the government backstops mortgage insurance). The amount of mortgage insurance that CMHC can have in force has been capped at $600-billion; in its annual report it said that it had roughly $566-billion in force at the end of 2012, virtually unchanged from the beginning of the year. The amount decreases as consumers make mortgage payments and CMHC estimates that roughly $60-billion to $65-billion of payments are made towards mortgages that it insures each year.
The Crown corporation insured $66-billion in loans last year for 386,222 units of housing, well below its plan of $94.5-billion for 550,335 units, largely as a result of its efforts to curb the sale of bulk insurance in order to stay within its $600-billion limit. Banks buy bulk insurance to cover portfolios of mortgages that aren’t required to be insured.
Insurance is mandatory for mortgages where the consumer has a down payment of less than 20 per cent, so-called high ratio mortgages. The market for such mortgages has shrunk since Mr. Flaherty tightened the mortgage insurance rules last July (including cutting the maximum length of an insured mortgage to 25 years from 30), another reason why CMHC’s insurance last year was much lower than expected.
Profit came in at $1.716-billion for 2012, and the Crown corporation is forecasting profit of $1.524-billion in 2013. It expects its assets to fall from $292.04-billion at the end of December to $267.85-billion at the end of this year.