[dradernh]

Originally Posted by Alfisti

The fact your lender can just...sell your loan to someone else is absolutely insane.

I don't know. The mortgage fixed at 2.625% for 30 years that we took out at the end of 2020 and was bought by Fannie Mae doesn't seem especially insane to us.

I'm only a bit familiar with the differences between the Canadian system of regulating mortgages and the way we do it down here in the States. I suspect there would be a political earthquake if we didn't have access to 30-year fixed mortgages with no prepayment penalties –AND– we had to refinance every 5 years. I'm assuming the latter is still the convention in Canada. IIRC, the differences in the rights of borrowers and lenders are quite a bit different, too. An an in-depth analysis of the strengths and weaknesses of each system would be interesting to see.

I worked at a very conservative financial management firm in the late 80s, and it always had a small amount of CMOs in each client's portfolio. Choosing tranches of high-quality notes was the job of professionals. It wasn't rocket science, and the CMOs they chose yielded decent income. Lower quality CMOs were available to firms willing to take on greater risk in the hopes of realizing potentially higher returns for their clients.