by Harvey Gill
Mathematically, 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. Analysts cannot ascertain where the U.S. will bottom out in real estate for the fourth successive year.
This isn’t the case, yet, in Canada. Little attention is paid to Canada’s mortgage finance system by the U.S.. Historically, not one of the banks in Canada failed when the Great Depression hit, and this trend 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 simply by saying they give loans to individuals able to pay them back. It sounds easy, according to one of the CEOs, but it’s the way the company works.
Relatively speaking, real estate agents in Canada are not quite as busy contemplating the differences in people. There’s an estimated 34.3 million residents living in Canada, and the people of the USA is more than 307 million. Canada ranks ninth in the planet ‘s market, as well as the USA ranks number one.
The World Economic Forum ranked Canadian banks best in the entire world in the last several years. Nevertheless, it’s noted they are a small group of lenders. There are 71 that have national regulators, when compared with 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’s a lot to learn from their regulatory procedure. The standards required are more complex, along with the set-asides in preparation for economic slowdowns or other losses are bigger.
There are also no large write-offs on taxes for Canadian homebuyers. All they receive is a capital gains tax exemption. The reality that there are really no mortgage interest tax write-offs enables Canadian homeowners to immediately pay down their mortgages. There’s also no such business model similar to Freddie Mac or Fannie Mae in Canada.
Another difference between Canada as well as the USA in regards to mortgages is, if a Canadian loses their house, they’re 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. Read more articles about Eddie Yan on this website. Real estate agents divulge all of the information to potential homebuyers before the process begins. These Canadian lessons prove useful to the United States.
Mortgage-interest tax write-offs issued in the U.S. likely will not come up in the forthcoming year when Congress begins debate on reducing the deficit. It’s been advocated that the USA scale back considerably on mortgage-interest tax write-offs in order to lessen debt and create more revenue used to reduce deficits.
The National Commission on Fiscal Responsibility and Reform made this recommendation, but it was not put on the table. However, there are a great number of defenders of the real estate mortgage deduction stating it helps drive homeownership in america.