Investor Presentaiton
Housing Market Structural Differences vs. U.S.
Regulation
and taxation
Product
.
Canada
Mortgage interest not tax deductible
Full recourse against borrowers in most provinces (in Alberta and
Saskatchewan, recourse is only to the value of property)
• Ability to foreclose on non-performing mortgages with no stay periods
Mandatory default insurance for any mortgage with Loan-to-value >80%
CMHC insurance backed by the government of Canada (AAA). Private
insurers are 90% government backed
- Insurance available for homes up to $1 million
-
Minimum down payment of 10% for properties valued $0.5-$1
million, 5% for properties <$0.5 million
Premium is payable upfront by the customer
Covers full amount for life of mortgage
• Customers with LTV > 80% must qualify at a 5-year fixed rate for variable
or less than 5-year term mortgages
• Re-financing cap of 80% on non-insured mortgages
• Maximum 25-year amortization on mortgages with LTV > 80%
• Maximum 30-year amortization on conventional (LTV < 80%) mortgages
.
.
Down payment of > 20% required for non-owner occupied properties
Conservative product offerings, fixed or variable rate options
Underwriting
• Terms usually 3 or 5 years, renewable at maturity
Extensive documentation and strong standards
U.S.
• Tax deductible mortgage interest
creates incentive to borrow and
delay repayment
.
Lenders have limited recourse in
most states
90 day to 1 year stay period to
foreclose on non-performing
mortgages
• No regulatory LTV limit
• Private insurers are not
government backed
• Can include exotic products
(adjustable rate mortgages,
interest only)
.
30-year term most common
Wide range of documentation and
underwriting requirements
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