Investor Presentaiton
Housing Market Differences vs U.S.
Canada's housing market features distinct practices and policies
Regulation and
Taxation
Product
Underwriting
Canada
Mortgage interest not tax-deductible
Full recourse against borrowers in most provinces
Foreclosure on non-performing mortgages, no stay periods
Insurance
•
Mandatory default insurance mortgages with LTV > 80%
。 CMHC backed by Government of Canada (AAA). Private insurers
are 90% government backed
○
Insurance available for homes up to CAD 1MM
o Premium is payable upfront
Covers full amount for life of mortgage
Homebuyers must qualify for mortgage insurance at interest rate
equal to greater of five-year average posted mortgage rate or actual
mortgage rate plus 200 bps
Re-financing cap of 80% LTV on non-insured mortgages
Amortization
Maximum 25-year amortization on mortgages with LTV > 80%
Maximum 30-year amortization on conventional mortgages
Down payment of > 20% required for non-owner
occupied properties
Conservative product offerings, fixed or variable rate options
Much less reliance upon securitization and wholesale funding
Asset-backed securities not subjected to US-style off-balance sheet
leverage via special purpose vehicles
• Terms usually three or five 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
(e.g. adjustable rate
mortgages, interest only)
30-year term most common
Wide range of documentation
and underwriting
requirements
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