Mathematically, three out of four homes in the United States are worth just what the mortgage is paid on them. In November of 2011, an estimated one out of every four hundred and ninety two homes went into the foreclosure procedure. Analyzers cannot ascertain where the U.S. will bottom out in real estate for the fourth straight year.
This isn’t the situation, yet, in Canada. Little attention is paid to Canada’s mortgage finance system by the U.S.. Historically, none of the banks in Canada neglected when the Great Depression hit, and this trend continues during what the United States Of America refers to as the Great Recession. According to published reports, there are fewer than one percent of mortgages in Canada that are delinquent.
How did Canada come out on top with real estate?
A vice president from the Canadian Bankers Association in Ottawa answered this question by simply stating they give loans to individuals able to pay them back. It sounds simple, according to one of the CEOs, but it is the way the company works.
Comparatively speaking, real estate agents in Canada are not quite as busy considering the differences in people. There is an estimated 34.3 million residents living in Canada, and the inhabitants of the USA is more than 307 million. Canada ranks ninth in the planet ‘s market, and also the USA ranks number one.
The World Economic Forum ranked Canadian banks best in the entire world in the last several years. Yet, it’s noted they’re a small group of lenders. There are 71 which have national regulators, when compared with the U.S. lenders having more than 8,000. The Federal Deposit Insurance Corporation provides insurance to U.S. lenders.
Considering how conservative Canada is, though, there is a lot to learn out of their regulatory process. The standards required are more elaborate, as well as the set-asides in preparation for economic downturns or other losses are larger.
There are also no big writeoffs on taxes for Canadian homebuyers. All they receive is a capital gains tax exemption. The very fact that there are not any mortgage interest tax write-offs allows Canadian homeowners to fast pay down their mortgages. There is also no such business model similar to Freddie Mac or Fannie Mae in Canada.
Another difference between Canada as well as the USA in regards to mortgages is, if a Canadian loses their house, they are still required to finish paying off the mortgage debt. This really is called a non-recourse loan, plus it prevents Canadian homeowners from walking away from their real estate loan debt. This page has a lot of information covering Eddie Yan. Real estate agents disclose all of this information to potential homebuyers before the process starts. These Canadian lessons prove useful to the United States.
Mortgage-interest tax write-offs issued in the U.S. likely will not come up in the coming year when Congress begins debate on reducing the deficit. It is been advocated that the USA scale back drastically on mortgage-interest tax write-offs in order to lower debt and create more revenue used to reduce deficits.
The National Commission on Fiscal Responsibility and Reform made this recommendation, but it wasn’t set on the table. Yet, there are a great number of defenders of the real estate mortgage deduction saying it helps drive homeownership in the USA.