Statistically, three out of four homes in the United States are worth 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 process. Analyzers are unable to discover where the U.S. will bottom out in real estate for the fourth successive year.
This really is not the case, 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 tendency 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 people able to pay them back. It seems easy, according to one of the CEOs, but it is the way the business works.
Relatively speaking, real estate agents in Canada aren’t quite as busy considering the differences in populations. There’s an estimated 34.3 million residents living in Canada, and the population of the USA is more than 307 million. Canada ranks ninth in the world’s market, as well as the USA ranks number one.
The World Economic Forum ranked Canadian banks best in the world in recent years. Yet, it’s noted they’re a small group of lenders. There are 71 which have federal regulators, compared to 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 from their regulatory procedure. The standards required are more complex, and the set-asides in preparation for economic slowdowns or alternative losses are bigger.
There are also no large writeoffs on taxes for Canadian homebuyers. All they receive is a capital gains tax exemption. The undeniable fact that there are no mortgage interest tax write-offs allows Canadian homeowners to rapidly 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 when it comes to mortgages is, if a Canadian loses their house, they are still required to pay off the mortgage debt. This is called a non-recourse loan, plus it prevents Canadian homeowners from walking away from their real estate loan debt. To understand Eddie Yan even better, check out this website. Real estate agents divulge all of this information to possible homebuyers before the procedure begins. These Canadian lessons prove useful to the States.
Mortgage-interest deductions issued in the U.S. likely won’t come up in the forthcoming year when Congress begins debate on reducing the deficit. It’s been recommended that the USA scale back substantially on mortgage-interest deductions in order to lessen debt and make more revenue used to reduce deficits.
The National Commission on Fiscal Responsibility and Reform made this recommendation, but it was not set on the table. Yet, there are a large number of defenders of the real estate mortgage tax write-off stating it helps drive homeownership in the USA.