GROW-OPS 'SUBSIDIZED'

CMHC Paid Up To $80M In Insurance Claims: MP

OTTAWA -- Canada's Crown mortgage corporation is "subsidizing"
marijuana grow-ops with millions of dollars each year, some MPs say.

Tory MP Patrick Brown said the Canada Mortgage and Housing Corp. paid
out $50-$80 million in insurance claims related to criminal activity
last year -- including pot-growing operations disguised as family
homes. He says policies must be adopted so insurance payouts covering
criminals don't drive up premiums for honest home-buyers.

Next month Brown will press the Commons human resources committee to
investigate CMHC policy to determine if greater "due diligence" is
required of the banks.

Phil Smith, CMHC's national manager of insurance services, said the
Crown corporation has seen an increase in payments related to criminal
activity, but "not a huge" rise. Other than the total 2005 claims
payout of $120 million, he would not disclose any figures.

BORROWERS CHECKED

Loans are insured only after the lender has scrutinized employment
records and financial information, Smith said. But CMHC's agreement
requires it to pay for all loan defaults unless a bank employee is
involved in fraud.

"Let's be up front about this. People don't go to a lending
institution and say I want a property to use as a grow-op. So it's
fraud -- and fraudsters are good at what they do," he said.

Smith said CMHC also has a duty to Canadians to ensure the
contaminated property is repaired and cleaned up to ensure the health
and safety of future dwellers.

Liberal MP Jim Karygiannis said Canadians will be "outraged" to learn
a Crown corporation is underwriting grow operators. He called for a
new mechanism uder which CMHC could refuse to pay if it's deemed the
lender did not do enough to screen out a grow operator.