Colombian Economy & Banking Sector Analysis

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 75

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