I am not vey knowledgeable about how the risk of CMHC insured mortgages is shared. However, if the lender is 100% absolved of any loss in the event of a default, that is a problem.

The US RE meltdown was largely due to fraudulent lending practices precisely because the firms approving the mortgages were not the ones a risk.

I am a supporter of the CMHC concept but it seems logical to make sure that the lender will always be required to share in a least a portion of the risk.

The apparent interest rate variance in favor of smaller down payments defies logic. If the lender was always assuming some risk, that variance would probably not exist.