Most people think of CMHC when they go to buy a home. CMHC Mortgage Insurance is the insurance that you pay (it is added to your mortgage) in order to guarantee the lender that in the event of default, the lender will get what is owed to it.
CMHC is a Federal Crown Corporation.
Generally speaking, no lender requires CMHC. In fact, most lenders, including banks, trust companies, and credit unions, don't even use the services of CHMC if the borrower has 25% or more down-payment. This is viewed to be the "crossing-over point" for the borrower; the borrower is viewed to be financially stable enough and the equity is viewed to be enough that even in the event of payment default, the lender will be able to sell the property and recuperate the amount left owing.
But if you know anything about financial institutions, and how competitive they are for the consumer interest dollar, they really aren't that concerned about the need for CHMC. In fact, if CMHC were to disappear, I don't think many financial institutions would feel the effects at all.
After all, it is the CONSUMER who pays the premium (to guarantee that the lender would be compensated in the event of mortgage payment default). How ridiculous is that?
Respectfully,
D'Arcy E. Barker, B.Sc., REBC
CHARTERED FINANCIAL PLANNER
REGISTERED EMPLOYEE BENEFITS CONSULTANT
