The Canadian banking institution has coasted well during the recent economic crisis, as well as during the Great Depression of the early 1900's. Three of the largest financial institutions in North America are Canadian, including Royal Bank of Canada, Bank of Nova Scotia, and Toronto-Dominion bank. These banking identities have collectively grown and prospered during the economic downturn. This is why Canada banks wins over (most) American institutions.
Home Ownership in Canada: Not an Institutionalized Right
Most Americans aspire to live the "American Dream," which typically involves a house, financial independence and success. This sense of entitlement is perpetuated by the American banking system, with mortgage lenders often requiring minimal down payments, or loans with no documentation. Many financial entities like Fannie Mae and Freddie Mac furthered the idea that home ownership is a constitutional right.
Homeownership and mortgage rates are actually in Canada are very familiar to their American counterparts. The Canadian mortgage industry, however, is highly stringent when offering home loans. The Canadian mortgage industry typically requires strong credit from those that are interested in a loan, and are known to be less forgiving than American banking systems. This has kept the Canadian foreclosure rates significantly lower than American foreclosure rates.
"No Document" Loans In Canada: Sorry, They Don't Exist
Canada's banking system does not play around with "no-document" loans. Banks in Canada require verifiable documents by all powers invested in the loan. Income assets, identity, and credit history are all noted during the verification process. This is a stark difference to the numerous "no-document loans" in the United States, which allow homeowners a chance to obtain a loan even when their documents are hard to verify.
In the United States, the lender only has the right to foreclose on a property and not pursue other assets that the borrower might have. Canadian lenders can go to court and institute a judgement to cover the costs and principal of the loan, with the court allowing the lender to secure personal assets to help recover the cost of the loan. Basically, lenders in Canada have more rights than American lenders, lending for a more supported framework of cash flows.
Canadian Banking: Straight to the Point and Simple
The United States banking system is unique, especially in respects to its many financial institutions that support it (8,500 banks to be exact, vs the 70 that support Canada). The Canadian banking system, however, is more straight forward and simple. United States' banks maintain an intricate network of institutions, while Canada has only one relationship with credit and none-credit services, usually being mandated by Canadian commercial banks.