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  5. CM: hi there - just a follow question on your recent answer to the question on CM and the note you included on uninsured mortgages. [Canadian Imperial Bank Of Commerce]
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Q: hi there - just a follow question on your recent answer to the question on CM and the note you included on uninsured mortgages. Correct me if i am wrong, but uninsured mortgages are those where the borrower puts down more than 20% of the value of the home and therefore does not require insurance. How is this more risky than insured mortgages where the lender is putting less than 20% down. This seems a bit backward in terms of interpretation. For example, i have an uninsured mortgage and own 95% of the value of the home. How is this more risk to the bank?

Asked by kelly on June 29, 2021
5i Research Answer:

It is a question of credit quality and exposure. Yes, a large downpayment reduces the risk to a bank. But, if insured mortgages fail there is simply one claim to a government entity (CMHC). If non-insured mortgages fail a bank has to collect from individuals (or seize and sell houses). A single, government guaranteed entity vs hundreds or perhaps thousands of individual claims is the main difference here.