text: Re:  (1)  CMHC was certainly pushed to keep lending going. Why do you think they expanded, for example, portfolio insurance?  Why did we go to the extreme of 35 and 40 years, for a while??  Why does the max. amount insured remain far above what would be necessary for first-time buyers only??  Or, related to the latter, why do we provide any insurance when high income people buy ONE house, let alone more?? All this, rather than letting the market find its level alone.
  (2)  That was the US theory too, but in practice, and after many lawsuits, the government basically chickened out on fully enforcing this - and when you are going to bail out all depositors/bank creditors anyway... -  taxpayers pay either way!!
  (3)  When your house is worth $600k, post-crash, and your mortgage is $920k, it will be very rational to walk away.  The fact that you have to go through bankruptcy to do it, in a recourse jurisdiction, will not stop people - the gain is too big (walk and buy back in).