Subprime North

Two years ago, Canada opened the door to American subprime lenders, leading to a game of one-upmanship with Canada's federal mortgage insurer, CMHC.

1 minute read

December 16, 2008, 8:00 AM PST

By Michael Dudley


"In the first half of this year, as the subprime mortgage crisis was exploding in the United States, a contagion of U.S.-style lending practices quietly crossed the border and infected Canada's previously prudent mortgage regime.

New mortgage borrowers signed up for an estimated $56-billion of risky 40-year mortgages, more than half of the total new mortgages approved by banks, trust companies and other lenders during that time, according to banking and insurance sources. Those sources estimated that 10 per cent of the mortgages, worth about $10-billion, were taken out with no money down.

The mushrooming of a Canadian version of subprime mortgages has gone largely unnoticed. The Conservative government finally banned the practice last summer.

How did the staid world of mortgage insurance become the cradle of so much financial risk in the Canadian housing sector? It started almost by accident."

Saturday, December 13, 2008 in The Globe and Mail

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