Housing Crisis? Look to Canada for Answers | Jim Powell | Cato Institute: Commentary

Housing Crisis? Look to Canada for Answers | Jim Powell | Cato Institute: Commentary: "More Canadians (68 percent) than Americans (66 percent) own their homes, yet the Canadian government has interfered very little in the private housing market.

* Canada doesn't have an income tax deduction for mortgage interest. Nor is there a tax advantage to converting home equity into debt.
* In Canada, mortgages aren't issued without verification of employment and income.
* Unlike Americans, Canadians cannot walk away from their homes without serious consequences — Canadian mortgages are generally full recourse, which means a bank can attach an individual's other assets and wages/salaries if necessary to pay the deficiency in the event of a mortgage default.
* Canada has nothing like Fannie Mae or Freddie Mac, subsidizing subprime mortgages on a gigantic scale.
* Nor has Canada had anything comparable to the U.S. Community Reinvestment Act that promotes political influence over mortgage lending decisions.

The principal Canadian intervention in the housing market is to require that people buy mortgage insurance if their down payment is less than 25 percent of the purchase price.

As a result of these policies, in Canada people generally buy a home when they can afford it. Canadians tend to have significantly more equity in their homes than Americans do.

The Canadian housing market has been remarkable for its long-term stability"