Comments on: CMHC: Fannie Mae Canadian Style?

By: CIC

CIC — Tue, 22 Feb 2011 04:35:52 +0000

CMHC Insurance (example)
The nominal mortgage insurance premium is a fraud within a fraud. The premium is a disguised interest charge illegally capitalized in advance (contrary to s. 347(1)(a) and (b) of the Criminal Code), and the charge for Provincial Sales Tax (PST) constitutes multiple prima facie frauds by the Crown.

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

By: A Dozen Good Reasons to Move to Canada | Balance Junkie

A Dozen Good Reasons to Move to Canada | Balance Junkie — Thu, 01 Jul 2010 09:47:53 +0000

[...] and sound(er) fiscal policies. I’ve also raised a couple of concerns over our housing market (CMHC: Fannie Mae Canadian Style?) and the growing levels of household debt many of us are servicing (Canada: Golden Child or Tag [...]

By: Canada: Golden Child or Tag Along Sibling? | Balance Junkie

Canada: Golden Child or Tag Along Sibling? | Balance Junkie — Thu, 03 Jun 2010 09:51:49 +0000

[...] of quite a pop. Whether the bust will be as severe as the one in the U.S. remains to be seen. (See CMHC: Fannie Mae Canadian Style? for more on [...]

By: Personal Investment & Financial Planning Articles

Personal Investment & Financial Planning Articles — Fri, 21 May 2010 23:51:15 +0000

[...] Cents presents CMHC: Fannie Mae Canadian Style? | Balance Junkie posted at Balance Junkie, saying, “This article looks at whether government backing of [...]

By: 2 Cents

2 Cents — Wed, 12 May 2010 21:16:29 +0000

It looks like another meltdown has been temporarily averted. Let’s see what happens before the next one! Thanks for your comments!

By: jen

jen — Wed, 12 May 2010 18:24:42 +0000

…and don’t forget the role of the Harper government in exacerbating our collective indebtedness. Harper took 70 billion off the banks books to facilitate continued mortgage lending in 2008. He provided tax write offs for new owners and offered to insure 40 year sub prime loans right when those same policies were clearly throwing the US down the tubes. His stimulus plan, when the recession hit, was not towards infrastructure but on inflating the housing bubble even more due to a series of initiatives in his economic action plan.

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.

By: Financial Spilled Milk: Macbeth Meets Ponzi | Balance Junkie

Financial Spilled Milk: Macbeth Meets Ponzi | Balance Junkie — Tue, 11 May 2010 09:48:49 +0000

[...] failures fail. To use the forest fire analogy that I’ve used before in my discussion of the CMHC and Fannie Mae, we’re still holding up the dead wood and choking out new, healthy growth. If we continue to [...]

By: 2 Cents

2 Cents — Sat, 01 May 2010 17:54:50 +0000

Thanks very much Paul. I think you’re right. This topic needs more attention. To be fair, I know that a few columnists at the Financial Post have written about this and Larry MacDonald had a good article on the CMHC back in February:

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

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

By: Paul

Paul — Sat, 01 May 2010 16:31:11 +0000

Excellent post, and I love the forest fire metaphor. This is hands-down the biggest single risk to Canada as a nation at this point in time. For the most part the mainstream media is negligent in discussing this critical topic. Bravo!

By: James

James — Fri, 30 Apr 2010 15:31:07 +0000

I believe that the mortgage insurance competition that was driving the 0-5% downpayment desire were companies (AIG, I think?) out of the states that quickly pulled their operations out of Canada once they started having trouble down south.

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.