Quote:
Originally Posted by Weitz
Is CHMC fully funded by the feds? I don't know its inner workings.
|
They collect premiums and go through regular audits and stress tests. Same with the private insurers, Genworth and Canada Guaranty. Someone at Canada Guaranty once told me they basically need to have enough cash on hand to pay out the insurance on x% of mortgages they hold which was a ridiculously high number if I remember correct and the information was correct. Like if that many people defaulted on their mortgages we probably wouldn't be casually chatting here about mortgages and, instead, would be fighting in aisle 6 of the grocery store over the last can of beans.
Basically, they hold premiums and are mandated to keep so much cash on hand they can pay out a very challenging period of defaults. If things were to get even worse than that then the government would be stuck with the remaining bill.