Mortgage Insurance Deductibles

A better way of dealing with excessive mortgage lending to high-risk borrowers is to combine a change in the pricing regime for mortgage insurance with continued refinement of the regulation of the mortgage insurance system. [...] The current system also limits the risk of the introduction of a deductible on lenders for insured contagion of a housing crisis to the broader financial mortgage losses, which would reduce the coverage sector by containing most of the losses within the. [...] A particular concern here is that to maintain the effectiveness of the mortgage further refinements of regulatory guidelines ensure insurance system as a macroprudential tool that that mortgage insurers have access to the reliable insulates the Canadian financial system from the information on borrowers that is needed to price large losses that follow a housing crash. [...] We first compare the proposed by a Department of Finance consultation impact of the low- and high-loss examples from the paper (Canada 2016), the objective of which is to consultation document, which envisions a 20 percent reduce moral hazard that leads to the issuing of (low) and 50 percent (high) loss upon default on a an increasing number of mortgages to borrowers $300,000 mortgage. [...] The reason is that lenders a severe housing crash take place, a portion of the can roll the expected extra cost of the deductible losses would flow back to financial institutions into the mortgage amount, which leads to minor whose financial position would already have been increases in the monthly payment so long as the weakened by the crisis.