Mortgage insurance plays a big role in the Canadian mortgage market. Federally-regulated deposit-taking institutions, including all the chartered banks, can only hold “high ratio” loans (i.e., those with loan-to-value (LTV) ratios greater than 80 percent since April 20, 2007, up from 75 percent) if they are insured against default. Hence about 45 percent of all chartered bank-held mortgages are insured. Also, all of the mortgages that back NHA MBSs must be insured. The dominant mortgage insurer is government-guaranteed CMHC, accounting for about 70 percent of all outstanding insurance. Two private insurers, American International Group and Genworth Financial, account for almost all of the rest. Since 1988, the federal government has been providing a 90 percent guarantee to private insurers.
A VERY rough calculation
45% of mortgages are insured
75% are insured by cmhc
$1 trillion total mortgage debt
$338 billion cmhc insured mortgages
by definition all are less than %30 down
estimate 15% current equity (totally pulled out of the air) for this pool
assume 40% drop in prices
cmhc will have to cover gap of
(plus approximately 50k per house processed)
To an American, that sounds like a drop in the bucket.
Canada: 1.6 trillion gdp
so the CMHC bailout would be ~5% of gdp