Yukon Housing Corporation’s directors considered selling off the Crown corporation’s mortgage portfolio, according to documents obtained by the Liberals through an access to information request.
But just what actions were taken by the board and the Yukon government over the ensuing 10 months remains a mystery, in part because portions of the released documents were redacted.
The selloff of more than 230 mortgages, worth more than $44 million, was considered to alleviate the corporation’s cash-flow woes.
The corporation’s president Ron Macmillan denied in a past interview the corporation had any plans to sell the portfolio. He could not be reached for comment before today’s deadline.
Jim Kenyon, the minister responsible for the housing corporation, has also repeatedly denied the government considered selling the mortgage portfolio.
“No steps have been taken, because there are no plans to do that,” he told the legislature April 12. “It is absolutely untrue.”
Perhaps it’s true cabinet never considered selling the mortgage portfolio to a bank. But the housing corporation’s board certainly did on August 6, 2009.
Board members, faced with a cash shortfall for the fiscal year, asked their finance committee to look for solutions, with one being the selloff of its mortgage portfolio to a bank.
The board recognized 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.”
And the option had other limitations. 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.
Two alternatives were considered to an outright selloff of the mortgage portfolio.
One involved the corporation offering incentives to clients who transferred mortgages to banks. It was suggested the corporation could waive its three-month interest penalty, and that the corporation would pay part of the legal costs involved with the mortgage transfer.
Another option was to “securitize” the mortgage portfolio to allow the corporation to convert its mortgage holdings into cash. But, the minutes note, this would require a “fundamental shift” in the Crown corporation’s existing target group: clients who have been refused by a bank.
Whatever recommendations were made to cabinet by the board that day remains a mystery. They were redacted on the grounds they would reveal recommendations to cabinet.
But after the vote, board members instructed staff to “meet with banks to see if they would offer some incentives to clients.” This suggests the board decided to offer inducements to clients to move their mortgages to banks, and to not sell off the portfolio.
The minutes from the following meeting also support this. On August 6, Marc Perreault, director of program delivery, confirmed banks were interested in offering inducements to potential clients.
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