I do agree to a certain extent; however keep in mind that this was brought in so that people didn't have to have a 20% down payment. Without CMHC, banks would likely not want to look at mortgages without that much down.
So the benefit you are getting is being able to buy a house with only 5% down.
If the coverage protected you in the way you are thinking, the cost would have to be considerably more; as it would be used far more frequently.
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