Yukon Housing Corporation considered selling its mortgage portfolio to ease last year’s cash squeeze, but President Ron MacMillan insists the plan never got beyond the drawing board.
He also insists it was an honest misunderstanding when he left reporters with the impression last April that no such plan existed.
At the time, MacMillan denied the corporation had prepared a report to consider selling the portfolio, which is worth more than $44 million. The corporation’s finance committee had, in fact, produced an internal report that proposed exactly that.
“I guess what I was thinking the question was, had we gone to Outside consultants, had we commissioned reports in the Outside world, which we hadn’t done,” MacMillan says now. “We’d done a bunch of things internally. But we hadn’t gone out and gotten a consultant to get advice.”
The Crown corporation’s board recommended last August that government pursue a less drastic option than a complete sale of the mortgage portfolio: encourage mortgage clients to move their business over to a bank. This would be done by offering incentives, such as a waiving of the fee usually imposed on customers who transfer their mortgage to another institution.
But “there’s been no final decision on that,” said MacMillan.
“Nothing’s happened. There’s been no action. Nothing.”
The Liberal opposition has alleged since April that the government planned to sell off the mortgage portfolio. Jim Kenyon, the minister responsible for the corporation, and Premier Dennis Fentie have both denied that any such plans existed.
The Liberals are now touting documents released last week through an access to information request as proof otherwise. But none of the documents show that cabinet discussed, let alone approved, the proposal to sell-off the mortgage portfolio.
The closest connection is a tenuous one: portions of the document are blacked-out on the grounds that they would reveal recommendations to cabinet.
Nonetheless, the Liberals’ Gary McRobb seized on the documents as proof that the government “did in fact consider selling the portfolio” in an open letter addressed to Kenyon.
“We didn’t believe your denials at the time and how could we on the heels of the premier’s secret negotiations to sell-off our energy future to a private company from Alberta?”
Kenyon did not respond to an interview request.
When the housing corporation’s board debated the merits of selling its portfolio of more than 230 mortgages last August, they recognized that such a move could provoke a public backlash.
“The public may perceive this option as the privatization or selling of a (Yukon government) asset at a reduced cost,” the minutes state.
“It may also be difficult to publicly communicate that this initiative has no similarity to the asset-backed paper issue that has burdened the government.”
There were other drawbacks. Banks would want the mortgages to be guaranteed. This would either mean mortgage clients would have to buy insurance, at considerable cost, or the housing corporation would have to backstop the mortgages itself.
And selling the portfolio would mean the corporation would no longer collect $1.8 million annually in interest payments.
That helps explain why the board would lean towards the softer option of persuading clients to move their business to a bank to help ease the corporation’s cash-flow woes. What remains unclear is why the corporation never received the green light from cabinet to move on the proposal.
But the timing may explain a lot. Last August, the territorial government was rocked by the ATCO energy privatization scandal. Fears of setting off another controversy involving the sale of Crown corporation assets may have dampened any enthusiasms to meddle with the mortgage portfolio.
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