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Old 03-29-2011, 12:31 PM   #1778
Cowboy89
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Quote:
Originally Posted by chemgear View Post
Good article on Macleans about the CMHC:

http://www2.macleans.ca/2011/03/23/a-mortgage-monster/

The CMHC: Canada’s mortgage monster
This is the issue that will pop the bubble. The retort from CMHC in the article that Canada did not and do not have subprime rates is false. The definition of a sub prime loan is one where the borrower made payments at teaser rates before they were jacked 3-5 years later. We do not have subprime rates in intentional strcutures, but people who barely qualified for a 0 down 40 amort, or a 5 down 35 amort, at record low rates of the past couple of years are effectively subprime borrowers as they are now paying much lower rates than they will have to refi for in 3-5 years time while not really paying down much principal because they're down payments were so low or non-existant. These are people who should not own their homes, and their high risk for default when rates inevitably normalize has been offloaded to CMHC in much the same fashion as Fannie mae and Freddy Mac in the US 5 years ago.
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