Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

Full Recourse Loans Won't Save Canada's Housing Market

Emmanuel Dunand | AFP | Getty Images

The Canadian housing finance system is very different from the one that prevailed in the United States in the years before the U.S. housing bubble burst—but that might not be enough to avoid a major housing and mortgage crash in Canada.

When I write about that' country's housing bubble, the most frequent rebuttal is that comparisons with the U.S. bubble and bust are inappropriate because nearly all mortgages in Canada are "full recourse" loans—meaning that borrowers are on the hook for the full mortgage amount even in the case of a foreclosure.