banks1

The banks are another major player in this building scandal fiasco. Banks write mortgages for homes and depend on the assessed value of those homes for future cash flows and as security backing the mortgages provided. If the structures are overvalued because they have major structural defects, the banks find themselves with over-valued mortgages and under-valued securities backing those mortgages.

It is the position of the Canada Mortgage and Housing Corporation that it is the responsibility of banks, prior to issuing mortgages to make sure the assets behind those mortgages meet minimum building code requirements. Clearly, the banks depend all parties doing their job properly - the designer, the truss design engineer, the plan reviewer, the chief building officer (CBO) and/or municipality that issues the building permit, the building inspector, the builder, the truss manufacturer and on and on and on.

Furthermore, the Canada Mortgage and Housing Corporation (CMHC) has also stated that not only is this true for new homes, it is also true for existing homes (i.e., where the warranty may have already expired). Note that in all correspondence we received from the Canada Mortgage and Housing Corporation (CMHC), the one thing we were NOT told is "no issue"... what we were told is "not OUR issue..."! The Canada Mortgage and Housing Corporation (CMHC) provides insurance for mortgages issued by banks and also "bundles" those mortgages and sells "mortgage backed securities" on the financial exchanges which are "backed" by those now "over-valued" mortgages where the structures behind those mortgages have major structural defects such as those in our case!

Needless to say, in my opinion, the banks, like the insurers, have a major nightmare on their hands as these public safety issues become public!