There’s no secret subprime mortgage problem in Canada.

A foreclosure on a family home is a heartwrenching human tragedy. As the recession takes its toll on household income, the number of foreclosures is increasing.

Fortunately, they remain relatively rare, and pose no systemic threat to Canada’s financial system, in stark contrast to the subprime mortgage meltdown that ravaged the U.S. economy.

Despite what you may have read elsewhere, Canada does not have a subprime mortgage crisis. An article in a Toronto newspaper this week carried the alarming headline, Canada’s dirty subprime secret, but it offered little evidence that loans to unqualified borrowers were a secret or dirty — or for that matter, subprime.

http://www.vancouversun.com/business/fp/1408613/story.html

Subprime mess comes home to B.C.

http://tinyurl.com/c9q9zg

So it’s good to hear this, for sure. And yes, I also didn’t overextend my expectations. Which is key to note. I’m paying an interest rate now that is higher than what people can get no? This means that I’m actually putting cash back into the bank’s pocket over new loans.

Here’s hoping they put that money back into the economy somehow instead of shave it off in bonuses.

Actually, to reinforce that I’m not all doom and gloom, I do find my mortgage lender to be straightforward and honest. In the battle of lesser evils, I’m fairly contented with the situation all around.

I would suspect then that there are a lot of Canadians technically drawing too hard on their incomes to have a home.

That said, most Canadians have no choice when it comes to getting paid properly. It’s put up or shut up with employers nowadays.

We make these problems for ourselves as a country by forcing each other to lower standards. I hope that eventually the government can loosen the log jam when it comes to incomes because people just can’t act in their best interest anymore.

There would be less doom and gloom then.

“So is it based on the rate given or the lenience when calculating how much debt someone can handle?”

A combination of both. These people typically pay above market rates because they have no other options.

I’d hate to wake up one day and suddenly Conservative Canada has cooked up another scheme: This time around, it being centered around creating the theory that we’re all overextended so let’s just hand huge contiguous chunks of residential Canada over to them…

And this is hardly paranoid considering it’s already happened in commercial real estate.

Obama has it right in the US if he can just find the right channels to get things going. People should be protected instead of endlessly displaced because they can’t compete with wealthier, greedier people choking the life out of North America.

No more blind eyes.

The story suggests that it’s much like a U.S. subprime mortgage. Loans made to people who would normally qualify for traditional financing.

Given your timing, and assuming that you bought in the Saskatoon area you should be in fine shape as far as equity is concerned. I would say that there is a very good chance that you have enough equity for a “conventional mortgage” that doesn’t even require mortgage insurance.

Have you paid this and any other debts as promised over the past few years?

I think you should make an appointment with a good mortgage broker right away. You’re probably going to have some better options available to you. Don’t sign anything with Xceed until you understand what your other options are.

Special investigation: How high-risk mortgages crept north (The untold story of how elements of the first Conservative budget in 2006 encouraged big U.S. players such as AIG to make a push into Canada, creating our version of subprime mortgages)

http://www.theglobeandmail.com/servlet/story/RTGAM.20081212.wmortgage13/BNStory/Front/home

In addition to the riskier 40-year mortgages (more than half of all new mortgages taken out in the past few years), approximately 10% were taken out with no money down. Now they’re reporting that at least 7% (best estimates) of all mortgages were of the totally reckless, bona-fide US sub-prime variety. The US market real estate market cratered with 22% sub-primes; these numbers would seem to indicate that we’re easily approaching 17% of similarly ‘high-risk’ mortgages.

While the same kind of predatory and sub-prime lending may not be as prevalent in Saskatchewan, we manage to trump this with The Limitations of Civil Rights Act (essentially legalized ‘jingle mail’). The banks will be insured with any CHMC-backed mortgages, but ultimately the Federal Government (and Canadian taxpayer) are going to be on the hook for any losses where funds for the foreclosure or sale are insufficient.

http://www.justice.gov.sk.ca/Limitation-of-Civil-Rights-Act

http://www.investopedia.com/terms/j/jingle-mail.asp

There are definitely parallels, and it has been suggested that the Canadian real estate market is tracking behind the US market by about 2 years. If this pans out, with Saskatchewan arriving late to the real estate bubble party it could mean that our market doesn’t feel the full effects until late 2009 or early 2010.

Subprime also means the people who have 2,3 or more properties financed by credit. They had no business getting these loans.

And now we all can be unwanted landlords.

This type of subprime had a shorter time period and a smaller market share here than in the States. But it should have never been allowed to happen.