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Canada Vs. USA – Sub-Prime Mortgages

Several people have asked me if Canada could experience the same high-risk mortgage disaster as our southern neighbours.  XCeed Mortgage Corporation sums it up best in its latest earnings report.

XCeed notes, “there are very significant and important differences between the U.S. (and Canadian) sub-prime market.”

“First, the Canadian housing market remains strong, compared with what is being experienced in the United States. Second, U.S. sub-prime lenders have tended to finance products and customers with a far higher risk profile than those offered by Xceed. Third, Canadian debt-recovery laws are generally more lender-friendly than those prevalent in the U.S. Reflecting cultural differences and other factors, default levels in Canada in both the prime and sub-prime markets have been substantially lower than in the United States. Lastly, U.S. sub-prime mortgage lenders who either securitize or sell loans to other parties are subject to onerous repurchase obligations when these loans do not perform as expected. Xceed’s securitization programs entail no such repurchase obligations as our mortgages are sold on a non-recourse basis.”