There is no commercial “security” peril to insure against. Even if the Bank were
to advance some third party’s existing funds, the real estate security is mutually
assessed at a given amount, meaning that the maximum exposure to loss is about
minus 10% at the outset and then rapidly declines with every payment
made. It would be like you or me insuring a fictitious structure on a vacant lot for
$800,000 against fire. The first crime is complete when you take out the
insurance policy and not when you make or don’t make a falsified claim against
it.
A legitimate insurance undertaking (i.e., business) will generally pay out about
70% of premiums collected, in claims. CMHC pays out less than 5%. Prima facie
CMHC is not an insurance undertaking.

The thing being insured is the commercial profitability of a credit contract, which
is interest by definition. The federal government knows this, and is regardless
reasonably expected to know this. The nominal premium is expressly excluded
as an insurance charge under ss. 347(2) of the Criminal Code by the very act of
adding/compounding it to the nominal credit advanced:

“insurance charge” means the cost of insuring the risk [i.e., and not the income]
assumed by the person who advances or is to advance credit under an agreement,
where the face amount of the insurance does not exceed the credit advanced;

You cannot add the insurance Premium on top of the principle it is a violation of the criminal code of canada

Because the payments start right away and are overwhelmingly interest, the
thing being insured-in-fact is the business profitability of the credit, even if it were
The Banks own equity being invested instead of yours.
What is needed is a criminal investigation of the entire CMHC operation to determine how they deal with the fact that it is a purported “insurance company” that allegedly receives billions in alleged premiums while virtually never paying out on any claims.
Just thought you should know…not everybody is stupid

Watch out- an election is coming! Harper is sure to use some bogus excuse to go to the polls before the looming meltdown. Moreover the euphoria created by the bubble may give him the majority he so craves.

http://blog.canadianbusiness.com/cmhc-out-of-control/

I think I highlighted that one in my 20 Cents from February 2010 post.

I don’t have quotes for this, but it is a familiar story I believe I read in the news.

The system needs appropriate checks and balances in order to function; what we’ve had in North America has had no controls in place. Following what Obama is recommending in terms of regulation introduction on Wall Street is another interesting story to follow related to this topic.

http://www.financialpost.com/Story.html?id=2543597

Would the Canadian government consider this?

Thanks for stopping by Kelso.

* Do not spend more than 33% of your net income on total housing costs.
* Don’t buy just to flip or speculate unless you really know what you are doing.
* Don’t buy if you plan on selling within a few years.

Why #1? This provides buffer room in case interest rates go up. In fact, it’s good to calculate the 33% on a 5% or 6% mortgage rate.

As for the other two points, in the end, you need somewhere to live. If you buy a home for the longer term, then you will ride the ups and downs of the market. Over the long run it should be comparable to renting or better.

I don’t know about a popping bubble, but higher rates are going to make it tough for overstretched families…
.-= Kevin´s last blog ..Have a Lump Sum? Should You Pay Off the Mortgage Faster or Invest It Instead? =-.