Lesson 7 · General · For sellers
Doesn't CMHC insurance protect the seller?
The short answer
No. CMHC mortgage insurance covers the lender if the borrower defaults on their mortgage payments. It pays nothing to a seller whose buyer fails to close, so carrying costs, re-listing and legal fees fall on the seller. Home closing insurance is the product that covers the seller when a buyer delays or defaults.
Key facts
- CMHC insurance covers
- The lender, if the borrower defaults on the mortgage
- Pays the seller
- Nothing, if the buyer fails to close
- Home closing insurance on a delay
- Carrying costs advanced
- On a default
- Shortfall, legal fees, cost of selling a second time
- When you pay
- Not until the deal is firm
Transcript
Read the full transcript
Doesn't CMHC insurance protect the seller?
No, it protects the lender.
A lot of sellers assume that if the buyer's mortgage is insured, the deal is protected.
It's not.
CMHC mortgage insurance covers the lender if the borrower defaults on their mortgage payments.
It pays nothing to a seller whose buyer fails to close.
So if your buyer's financing falls through a week before closing day, the carrying costs, the re-listing, and the legal fees are all on you.
Home Closing Insurance is the product that covers the seller.
If the buyer delays, your carrying costs are advanced.
If the buyer defaults, it covers the shortfall, legal fees, and the cost of selling a second time.
And you don't pay until the deal is firm.
Get a free quote in minutes, at securemyoffer.com/quote.
Summary only. Coverage, eligibility and conditions are governed by the policy and surety documents. Questions about coverage? Talk to a licensed broker at 1-833-766-2329.