Scotiabank Track Record
Housing Market Structural Differences vs. U.S.
Regulation
and taxation
.
•
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
Premium is payable upfront by the customer
Covers full amount for life of mortgage
Homebuyers must qualify for mortgage insurance at an interest rate that
is the greater of their contract mortgage rate or the Bank of Canada's
conventional five-year fixed posted rate
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
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
Product
•
Conservative product offerings, fixed or variable rate options
Underwriting
• Terms usually 3 or 5 years, renewable at maturity
Extensive documentation and strong standards
37
•
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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