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Re: The Canadian Government is Now The Biggest Sub-Prime Lender In The World
boy had to resurrect my Itulip account so I could respond to this bit of serious misinformation.
CMHC is not a mortgage holding company, it is a Mortgage Insurance company. Everyone that gets a mortgage that is not 20/80 has to buy mortgage insurance from CMHC before the bank will take it. Depending on initial equity the fee can be as much as 3%. That's about what it was for me in 2008 when I got my 0% mortgage (to ride the coming low interest gravy train :cool: ).
I'm not sure about what he says for all the securitization stuff but these mortgages are still not subprime. To get a CMHC backed mortgage you still have to have a good credit rating (qualify for a regular 20/80 mortgage if you had the 20). Subprime mortgages were starting up in Canada during the boom years, but they are an infinitesimal portion of the total mortgage pool. These mortgages were also only for those people who didn't qualify from a CMHC mortgage (and only really available in bubble areas).
What Harper has done for the bank bail out (in 2008) is to buy the CMHC mortgages from the banks. This was actually not a bad idea considering the government was already on the hook for these mortgages when they failed anyways. Now at least the government has a possibility to gain from the mortgages when/if they are being paid back. Before the bail out the government only stood to lose money when a person defaulted, and the bank stood to gain when the homeowner payed.
At the end of the day, CMHC is making more secure loans now than previously because it requires the 5% (as it use to, before the bubble years). The change to allow 35 year mortgages is concerning, but people have to pay a higher premium for that. Other than that, CMHC is pretty much doing what it always did, insure houses with less than 20% equity.
However the danger here is if CMHC starts letting mortgage qualifications slip. With the Government holding the mortgages, and quality sliding, CMHC could very well become a Canadian Freddie. But for now, its not.
http://www.cmhc-schl.gc.ca/en/co/moloin/moloin_005.cfm
btw you can only get a CMHC mortgage on a primary residence. CMHC does not insure second properties.
boy had to resurrect my Itulip account so I could respond to this bit of serious misinformation.
CMHC is not a mortgage holding company, it is a Mortgage Insurance company. Everyone that gets a mortgage that is not 20/80 has to buy mortgage insurance from CMHC before the bank will take it. Depending on initial equity the fee can be as much as 3%. That's about what it was for me in 2008 when I got my 0% mortgage (to ride the coming low interest gravy train :cool: ).
I'm not sure about what he says for all the securitization stuff but these mortgages are still not subprime. To get a CMHC backed mortgage you still have to have a good credit rating (qualify for a regular 20/80 mortgage if you had the 20). Subprime mortgages were starting up in Canada during the boom years, but they are an infinitesimal portion of the total mortgage pool. These mortgages were also only for those people who didn't qualify from a CMHC mortgage (and only really available in bubble areas).
What Harper has done for the bank bail out (in 2008) is to buy the CMHC mortgages from the banks. This was actually not a bad idea considering the government was already on the hook for these mortgages when they failed anyways. Now at least the government has a possibility to gain from the mortgages when/if they are being paid back. Before the bail out the government only stood to lose money when a person defaulted, and the bank stood to gain when the homeowner payed.
At the end of the day, CMHC is making more secure loans now than previously because it requires the 5% (as it use to, before the bubble years). The change to allow 35 year mortgages is concerning, but people have to pay a higher premium for that. Other than that, CMHC is pretty much doing what it always did, insure houses with less than 20% equity.
However the danger here is if CMHC starts letting mortgage qualifications slip. With the Government holding the mortgages, and quality sliding, CMHC could very well become a Canadian Freddie. But for now, its not.
http://www.cmhc-schl.gc.ca/en/co/moloin/moloin_005.cfm
btw you can only get a CMHC mortgage on a primary residence. CMHC does not insure second properties.
....gold.
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