Canada vs. the U.S.: Why the Rules of the Game Are Different for Private Mortgage Funds

One key difference? In Canada, lenders are restricted from charging higher interest rates or fees on defaulted loans unless they can document specific expenses. This limits what can be recovered, even in complex or high-risk loans. In contrast, the U.S. allows private lenders to implement “default rates” of interest—often around 24% annually—which compensates investors for taking on higher risk and helps maintain fund stability.

Another factor we love about the U.S. market is the sheer availability of data and the size of the real estate sector. With millions of people within close proximity to properties and a history of data transparency, the U.S. offers a clear view of property values and a robust resale market, crucial for investors aiming to maximize returns and reduce liquidity risks.

At Steepe & Co., our U.S.-based mortgage fund gives Canadian investors access to this dynamic market through a structure that’s optimized for Canadian taxation. It’s a chance to benefit from the lender friendly  U.S. regulations while investing in a much larger more liquid residential real estate marketplace.

Interested in learning more about how U.S. private mortgage funds could benefit your portfolio? Reach out to Steepe & Co. today to discuss how cross-border investing with either Canadian or US dollars can fit into your overall strategy.

For Canadian investors interested in private mortgage funds, it’s essential to understand that investing across the border isn’t just about geography; it’s about navigating a whole new set of rules. At Steepe & Co., we’ve been working with U.S.-based credit managers for over a decade, and the differences in regulations between Canada and the U.S. can significantly impact your investment outcomes.

To find out more, book a meeting with Michael Steepe.