Shaky Foundations: How Ottawa's Computers Get Canadian Home Prices Wrong

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HOUSE PRICES CANADA 2012
CMHC’s automated underwriting program – called Emili – had been stamping its approval on millions of mortgages as safe. But in Emili-approved cases where the banks were forced to foreclose, the homes turned out to be worth much less than believed. (AP photo) | AP

When Dennis Gilmore gathered financial analysts and investors on a conference call last summer, the head of California-based First American Financial Corp. had some troubling news. It was what he referred to bluntly as "the situation" up in Canada.

The Los Angeles-area insurance company was losing tens of millions of dollars due to hidden problems in the Canadian housing market, and there were no assurances that the bleeding was going to stop.

Read the whole story at The Globe and Mail