Canadian Funding Corporation |
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Canada |
About Canadian Funding Corporation
Background
Established in 2006 by Moishe Alexander, the Canadian Funding Corporation based out of Ontario has been providing comprehensive loan plans on an individual, group, or corporate level. Canadian Funding Corporation exists as an alternative financing source, concentrating on the human side of an investment, allowing its team to make lending decisions typical financial institutions would normally disregard.
A Simple Financing System
Canadian Funding Corporation offers extensive lending services aimed toward funding projects other traditional lending institutions usually let pass. Attributing its success to its atypical funding methods, Canadian Funding Corporation closely examines a client's funding application, granting an undertaking only after extensive due diligence is conducted. After an investment is approved, the borrower reviews the commitment and decides if they wish to accept the financing terms at hand. Canadian Funding Corporation's simple financing system revolves around personalized interactions between the firm and its clients. While Canadian Funding Corporation may not offer solutions as swiftly as other lending firms that push out transactions inattentively, they carefully pace themselves to ensure that the needs of both parties are met and decided upon, building more custom-made options.
Canadian Funding Corporation's Goals
Canadian Funding Corporation's goals are simple: close specially tailored deals efficiently while producing effective results. Canadian Funding Corporation aspires to this no matter what size the project or how near the deadline, even if it comes down to the final stages for a family seeking a third mortgage to save their home.
Conclusion
Apart from their duties in the financial lending services, Canadian Funding Corporation remains committed to giving back to the community through its charitable efforts. A major portion of Canadian Funding Corporation's salary goes to help families in need of assistance in the local and national community. Canadian Funding Corporation supports organizations that feed and clothe individuals and families and even assist in job and housing placement. Canadian Funding Corporation also supports the Canadian Funding Corporation, the Humane Society, and a variety of other charitable foundations.
Backgrounder on Lending in Canada: The Operating Environment of the Canadian Funding Corporation
Canadian Funding Corporation’s lending approach is centred on the particulars of the Canadian financial system. Canada largely avoided the financial crisis of 2008 through restrictive lending regulations that have ensured the solvency of Canadian businesses, lending institutions, and consumers. In fact, Canada’s approach has been proposed as a model for the rest of the world. The Americans and Europeans have pressured Canada to adopt a global bank tax being proposed to prevent future financial meltdowns, but Canadian Prime Minister Stephen Harper has resisted these overtures, claiming that Canadian regulation “does the job better” than the proposed reforms.
As Canada’s banks and lending institutions are highly regulated, they are also by necessity highly conservative. Since 2008, many creditworthy individuals and businesses in Canada have had trouble accessing financing because lenders have increased their qualifying requirements in order to protect themselves from risks in the international market.
Working within this regulatory environment, Canadian Funding Corporation secures financing for individuals and companies with strong business plans or high credit worthiness but that have been turned down elsewhere because they are not traditional borrowers.
Canada’s Financial Portrait
In May 2010, The Economist magazine described Canada’s financial system as being “boring” in a good way. For over 10 years, Canada has held a reputation for strict regulation that imposed limits on the financial industry. During the subprime boom, Canada was often accused of being too prudish, and there were numerous calls to deregulate the financial industry. Subsequent to the subprime crisis, however, opinions have shifted, and Canada is now considered a model of financial regulation.
The roots of Canada’s financial reform date back to the recession of the early 1990s, in which Canadian GDP fell by 3.2%. Canada had held a long series of budget deficits and faced low productivity. The Canadian dollar also weakened significantly during this period. These factors led the Wall Street Journal in the mid 1990s to jokingly refer to Canada as an honorary member of the Third World.
Austere financial reforms were instigated to solve Canada’s structural deficit problem and pay down its debt. Furthermore, the Bank of Canada introduced restrictive monetary policies to combat the rampant inflation of the 1980s. On the short term, these policies were not popular with Canadians, but they also allowed Canada to enjoy a milder and shorter recession in 2008 than most of the rest of the industrialized world. Whereas Canada’s ratio of national debt to GDP in 2009 was approximately 62.2%, this ratio for Japan was 170.4%. To give another example, in 2010, the U.S. deficit as a percentage of GDP was projected to be 10.64%, which is comparable to the United Kingdom and Greece, whereas Canada’s deficit as a percentage of GDP was projected to be 3.5%.
A comparison of Canadian and American statistics during 2008, the worst period in the financial crisis, elaborates the difference between each country’s respective financial systems.
First of all, Canada had less household debt than the United States, and Canada’s level of debt has stayed relatively stable, at approximately 20%, since the 1980s. By contrast, the United States’ household debt for the same period was 26%, and this amount is substantially higher than historical figures.
Similarly, when comparing the net equity of homeowners as a percentage of home value, the United States fell from around 65% to 45% over the span of the preceding 20 years, with more than half of that reduction taking place after 2000. In Canada, the same figure has stayed stable at between 65% and 70%. Consequently, it is relatively rare for Canadian mortgage holders to owe more on their mortgages than the value of their homes. In the United States, between one in five and one in three homeowners owe more on their mortgages than the value of their homes.
Also, subprime mortgages have not been problematic for the Canadian financial system, because they do not exist in Canada in the same form that they do in the United States. Some Canadian lenders have dealt in questionable mortgages, but Canadian regulations prevented these mortgages from becoming as widespread as they were in the United States. Whereas subprime mortgages made up approximately one in 20 mortgages in the United States during the peak of the bubble, they only made up one in six Canadian mortgages.
Furthermore, in Canada, most of these questionable mortgages stayed on lender’s balance sheets, with only 24% being repackaged into securities. As a result, Canadian lenders always knew the approximate true value of their assets, and consequently the credit ratings of Canadian lenders were accurate reflections of their creditworthiness.
Of the mortgages that were repackaged into securities, these were ensured through the Canada Mortgage and Housing Corporation, a government-funded Crown corporation that guarantees 100% of all Canadian mortgages. In essence, therefore, the riskiest mortgage-backed securities in Canada come with a guarantee by the Canadian federal government, effectively ensuring a level of risk equivalent to government bonds.
Canadian lenders, held accountable by strict regulation and the inability to repackage risky mortgages and sell them off, have maintained a higher standard of underwriting than their U.S. counterparts. At the height of the subprime bubble, some American lenders were providing mortgages without verifying income or job status, so-called NINJA lending. This never happened in Canada, and consequently the foreclosure rate in Canada is more than an order of magnitude lower. The percentage of mortgages in 90-day arrears—homes at risk of being repossessed at any time—in the United States in 2008 was 4.5%. In Canada, the same figure was less than 0.3%.
The net effects of these financial regulations are that Canadian housing prices never went through a bubble. Prices in Canada have continued to rise at approximately 4% to 5% per year since the 1980s. Canada’s biggest banks, which maintained profits throughout most of the credit crunch, have also been ranked the best in the world by the World Economic Forum.
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