GE Money Canada, a subsidiary of General Electric, has decided to stop its Canadian alternative mortgage business this week, as part of a corporate strategic shift away from consumer finance, which was reported in the Financial Post. They will no longer accept new applications but will continue to honour their current commitments. This decision was effective as of July 31st, 2008.
Items of note include:
- Entered the market in 2005
- The value of the GE Money’s Canadian mortgage business was less than $1-billion
- GE has also been stepping back from the consumer finance business in the United States, and last year shut down its WMC Mortgage subprime lending business.
- Canada’s biggest banks collectively hold about two-thirds of the all domestic residential mortgages outstanding
- At the end of 2007, about $822-billion in total mortgages was outstanding
This decision follows a recent trend with other Canadian alternative lenders deciding to leave the industry. As a result, there are less and less options for mortgage shoppers with lower credit scores.
CAAMP also commented that in addition to alternative lenders withdrawing from the market, many conventional lenders have also withdrawn their alternative products, further eroding the available options.
Another company which decided to close up shop was PMI Mortgage Insurance Company Canada (PMI Canada), a subsidiary of PMI Mortgage Insurance Co., which announced its withdrawal from Canada and the closure of its Canadian office.
They announced yesterday:
“PMI has conducted a strategic review of its overall organization and has
determined that the closure of PMI Canada is a necessary step in the
fulfillment of its five-point plan to allow PMI to focus on the company’s core
business and maintenance of financial strength,” stated Janet Martin,
President and CEO, PMI Canada.
“This was a difficult decision driven by market conditions and PMI
continues to have a positive view of mortgage insurance opportunities in the
Canadian mortgage market,” said Steve Smith, Chairman and CEO of PMI. “We
appreciate the welcome we received from market participants and the
cooperation extended by the Government of Canada.”
We’ll keep an eye out for who will be next.