Abstract
The Canadian mortgage insurance system is unique: the government of Canada has a significant explicit exposure to mortgage finance. Forty-three percent of mortgages (including all loan-to-value mortgages over 80 percent) are covered by guarantees backed by the government, leaving Canadian taxpayers highly vulnerable to this sector of the economy. The Canadian system also includes an unlevel playing field for mortgage insurance because it favours the dominant, government-owned mortgage insurer at the expense of private insurers. This study recommends that the Canadian government reduce taxpayer vulnerability, including withdrawing government guarantees from all mortgage insurers-public and private-and privatizing the Canada Mortgage and Housing Corporation's mortgage insurance business.
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