Can anyone walk me through the process of underwriting insured first mortgages? To me, it seems like there is such little risk there would not be much need for any analysis. I am specifically referencing CHMC insured first mortgages in Canada.
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Not sure about this CHMC insurance you are talking about, but 'insurance' is usually limited or has some loss-sharing (that is my understanding of PMI in the US). If you mean the loan is puttable to the insurer like a gov't agency, then risk may be mitigated. But, I'm pretty sure the originator takes risks from 'underwriting errors' in many instances, so if you goof the documentation and the insurer can claim you f'd the origination, they can probably get out of paying.
This was a big area of battle in the US post '08, whole firms popped up to forensically examine defaulted mortgage files to find evidence of errors to force repurchase by the originating firm.
So, I really doubt you are off the hook of underwriting. But looking at the terms and limits of the insurance would be the first stop in figuring this out.
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