Who are CMHC & Genworth? Mortgage Insurers

http://LeahCoss.ca
Hi everyone, how are you? It's Leah Coss with the Mortgage Center. And I wanted to go over what is the difference between the two mortgage insurers. Now there are three. There's CMHC which is what people normally use as the go to word. There's also Genworth as well as AIG. AIG is only used by one lender at the moment. They might make a comeback, but they also might just fall off the board all together. So I'm only going to discuss CMHC and Genworth.
Now the primary difference is that CMHC is government run or government overseen, but Genworth is private so that gives them a lot more flexibility.
Now how do they differ? Well when it comes to mortgage insurance, if you're unaware of what this actually does, it doesn't protect you, it protects the banks. So when you get a mortgage and you're putting such a small amount of equity down, they're going to make it so you have to pay these CMHC or Genworth premiums.
What these premiums do is if you loose your default and you get foreclosed upon, any losses that you have on this transaction to the bank or any losses that the bank has, they get back from the mortgage insurance. So it's a good safety net for them.
With these, CMHC will give back 100% of the losses, Genworth will do 90%. So every lender uses CMHC, not every lender uses Genworth.
Why is it important that we have both out there? Many reasons. But the one that will affect you the most is for example, unauthorized basement suites. If you find a home that has a basement suite and it's unauthorized or illegal, then CMHC won't touch it. The government, they can't have that on their hands because it's not legal or its illegal, it has it right in the name, so because of that you have to go to a lender that uses Genworth. All right? So it's great for that reason.
When it comes to rental income and how they use it, it's always nice to go with a Genworth lender, once again. They're going to let you use a 100% add back in the equation as opposed to only 50% add back from CMHC. Obviously just hearing those numbers 50% or 100% shows you just how much more beneficial it could be to use a lender that uses Genworth.
Now is that always the case where Genworth is better? Absolutely not. CMHC is great for the majority of transactions, CMHC is great with. But having Genworth there, it keeps CMHC in check, creates that level of competition which you never want someone to have a monopoly in.
But it also allows you to do things that the banks don't or so that the government they mandate and they put a lot of restrictions on CMHC. Having Genworth there it allows them to, I don't want to say pick up the crumbs, but it really is picking up those deals that wouldn't otherwise get done, but make absolute sense when it comes to seeing it on paper for a lender.
So that's the main difference. Those are the ways that they'll treat your files not letting affect you the most. For the most part, you won't even know which insurer you're with until the deal is all set and done. It doesn't really matter to you but in case you're curious, that's what mortgage insurance is there for and that's how they treat different files.
So if you have any questions about that or anything else of course you're welcome to always give me a call. Leah Coss with the Mortgage Center. Hopefully I'll be talking to you soon.
http://LeahCoss.ca

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