* CMHC chief says needs to remain vigilant
* Says problem not pervasive within industry
* CMHC seeking more data on private lenders
(Adds comments on Home Capital, less regulated lenders)
By Matt Scuffham
TORONTO, June 1 The head of Canada's housing
agency, whose responsibilities include maintaining the stability
of the country's housing market, said on Thursday there was no
evidence of widespread fraud in Canada's mortgage industry.
Home Capital, one of Canada's biggest mortgage lenders, has
scaled back on lending to focus on repairing its balance sheet
following rapid deposit withdrawals after a management shake-up
and accusations brought by a regional regulator that it had
misled investors about its mortgage business. The company has
said the accusations are without merit.
"There is not evidence that fraud is a widespread problem
within the industry but we know it happens. It's very hard to
find and incentives exist for frauding the system so we need to
be vigilant," Evan Siddall, chief executive of Canada Mortgage
and Housing Corp (CMHC) told reporters.
"We don't think this is a pervasive problem in Canada. It is
a discreet issue," he added.
CMHC is responsible for insuring the bulk of Canadian
mortgages issued by banks and other big lenders.
Steve Mennill, senior vice president, insurance at CMHC said
it had seen "no unusual level of defaults associated with Home
Siddall said the CMHC is working with the Canadian Bankers
Association to get more data on how much lending is being done
by lenders not regulated by Canada's main financial regulator.
Reuters reported on Wednesday that Home Capital's problems
were pushing more borrowers toward less regulated mortgage
providers, raising the risks for them and the wider property
In an earlier speech to business leaders in Toronto, Siddall
said that Canadians will continue to struggle to afford new
homes unless more is done to address supply issues as economic
growth and new immigrants ramp up demand for homes.
"Canada's housing affordability challenge will only get
worse without more and faster supply. Urbanization is a global
trend and Canada's embrace of immigrants will add to the future
need for housing, particularly in our cities," he said.
Canadian authorities have taken a number of measures to try
to cool rampant housing markets, particularly in the cities of
Vancouver and Toronto, which has seen a 33 percent price rise in
the past year. The increases have raised concerns many Canadians
have been priced out of the market.
Canada's Liberal government has said it plans to invest
C$11.2 billion ($8.3 billion) in new housing over the next 11
($1 = 1.3483 Canadian dollars)
(Reporting by Matt Scuffham; Editing by Chizu Nomiyama and Lisa