Knowing full well that calling these loans will lead to losses, these sub-prime lenders are hard at work using lobbyists to try to convince your government that you ought to be on the hook. Apparently, these are “healthy mortgages” given to individuals with “impeccable payment histories.”  The lenders will be “forced to foreclose on them” if the government doesn’t establish a one billion dollar fund to bail them out.

The effort is cleverly disguised as a bailout of unfortunate homeowners, but hopefully the Canadian people can read between the lines. Apparently, most of these mortgagors would not qualify for financing through a mainstream lender, or for mortgage insurance. As the Canadian Mortgage Trends blog points out, “Makes you wonder how healthy they are if the borrowers can’t re-qualify.”

Ivan Wahl, CEO for Xceed, a sub-prime lender who will call loans on 1,100 Canadians when they come due reportedly said in an interview with the Globe, “The government certainly should step up to the plate to provide some facilities for people who got caught in the crunch.”

It’s clear what a win this proposal would be for these investors who would land on their feet with every penny due after milking this risky scheme for all it was worth. As sad as it would be for those homeowners who took these loans and lived up to their agreement, the taxpayer should not be on the hook for these mortgages. The mortgages should be dealt with in the manner prescribed within the agreement. Some people will lose their homes. That’s a harsh reality of these types of risky ventures. For those that have sufficient equity, the months ahead should provide some strong selling opportunities. For those who are in for more than the home is worth, let’s send that loss back where it belongs, to those who cooked up the hair brained scheme in the first place.

Homeowners that have been notified that their mortgage will not be renewed should immediately explore their options. Can you re-finance with another lender? Is there enough equity in the home that you may be able to sell the property? See a lawyer who understands foreclosure to find out what rights you have under the law.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Real estate geeks can follow our daily updates on Twitter @norm_fisher.

Norm Fisher
Royal LePage Saskatoon Real Estate

Since the subprime mortgage meltdown in the United States, Canadian leaders have assured the public that a similar tidal wave of foreclosures can’t hit here. They have cited the prudence and market dominance of Canada’s five most prominent banks, the conservatism of Canadian consumers and the tiny, 7-per-cent market share of subprime lenders, which is much lower than their 22-per-cent market share in the United States. Just four days ago in a speech, Prime Minister Harper said: “We have avoided the extreme of the unregulated, or barely regulated, financial and mortgage industries that has caused such grief around the world.”

However, The Globe’s investigation shows that while Canada’s real estate sector hasn’t suffered as much as its counterpart in the United States, the Prime Minister and others have grossly underestimated the impact of that small portion of subprime lenders. Until recently, companies who touted their low standards with slogans such as “We Say Yes When The Banks Say No!” and “No Income Verification” proliferated here.

Read the Globe and Mail story here.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Norm Fisher
Royal LePage Saskatoon Real Estate

Good idea Ben! It would be foolhardy to encourage a second mortgage crisis while you’re busy dealing with the first one.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Follow our daily updates on Twitter @SaskatoonHomes.

Norm Fisher
Royal LePage Saskatoon Real Estate

More than 155,000 families have already lost their homes this year. Approximately 1 in 194 U.S. households have received some sort of foreclosure filing.

Nevada is the hardest hit state with 1 in 54 households received foreclosure filings. Stockton, California tops the list for foreclosures in a U.S. municipality. Approximately 1 in 30 homes have received foreclosure notices.

Read the CNN Money article here.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Follow our daily updates on Twitter @SaskatoonHomes.

Norm Fisher
Royal LePage Saskatoon Real Estate

Cleveland, one of America’s poorest urban areas has seen over 7,000 foreclosures through both 2006 and 2007. In some areas of the city entire blocks of houses are abandoned, boarded up, and stripped of anything valuable. Most often, they ultimately meet a wrecking ball at the tax payer’s expense.

The City is claiming hundreds of millions in damages which result from lost tax revenue, the cost of demolished abandoned homes and the added cost of policing neighbourhoods which have become dangerous due to high rates of abandonment.

Mayor Jackson says, “We have to hold accountable those who are responsible.”

CNN report here.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Follow our daily updates on Twitter @SaskatoonHomes.

Norm Fisher
Royal LePage Saskatoon Real Estate

There has been a fair bit of talk and speculation about how the U.S. “credit crunch” may impact Canadians and our real estate markets.

The Canadian Real Estate Association (CREA) has published a brochure titled; “A Credit Crunch Primer” which explains in fairly simple terms what sub-prime lending is and how the practices associated with it have impacted the American lending industry and real estate markets across the country.

The brochure also touches on some of the reasons why CREA believes that Canadians are far less exposed to major fallout.

“Unlike the U.S., the Canadian housing market has not been artificially driven by bad lending practices. Our long-term fundamentals are solid. Canada has a growing population. Our energy and commodities are in high demand, and job creation is strong. Consumer confidence remains high. However, there may be an impact on the overall Canadian economy, which may affect the Canadian housing market. For example, the drop in housing starts in the U.S. will mean lower demand for Canadian softwood lumber products.”

I’ve posted a copy of the brochure here.

A tip of the hat goes to Bill Madder, Executive Vice President of the Association of Saskatchewan REALTORS® who sent me a copy of the brochure. Thanks Bill.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Follow our daily updates on Twitter @SaskatoonHomes.

Norm Fisher
Royal LePage Saskatoon Real Estate

Cass poses a question in another post regarding the hot Saskatoon real estate market. By the time I finished my response I realized that I had written a whole new post so I brought it up front for the rest of you.

If any of my real estate friends have something to add I would really appreciate your input and I’m sure Cass would as well.

Cass said: My husband and I have put offers on 3 different houses and 2 were in bidding wars.  The last house we offered $7,000 over asking price and the house went for $26,000 over asking.  This house had a basement suite and the buyer came in and paid cash and is most likely using it as full revenue property.  This is the 2nd house we lost due to another buyer using it as revenue property.  Can you please give us some advice on how a young married couple with a baby on the way is supposed to compete in a market like this?  It tends to be very frustrating and discouraging when the houses in our price range are being scooped up by investors, as there isn’t too many decent houses on the east side for around the $200,000 mark.  We are fully aware and prepared to place an offer over asking, but how can you compete with someone paying cash?

Norm said: Cass, thanks for stopping. Cash sounds pretty impressive but when I’m reviewing offers it only goes so far with me. The seller is not normally very concerned with how the home is being financed.  However, cash offers do often come forward without any conditions attached and the thought of having a good offer completed right now is very attractive to most sellers. One of our sellers just accepted an unconditional offer which was $4,000 lower than the second best. They see some value in knowing that the sold sign goes up right now and that there aren’t going to be issues that have to be sorted out.

Perhaps you could see your mortgage person and tell them that you want to write your next offer without a finance condition. If that person can assure you that you’re good for $225,000 for instance there is probably little risk in eliminating that condition.

Request and review the Property Condition Disclosure up front. It’s always a good idea to ask your agent to “incorporate” the disclosure but if you view the statement prior to writing, you don’t need to include it as a condition.

The biggest gamble is the home inspection. Do you have the guts to write an offer that is not subject to an inspection?  It’s a tough call but the truth is that it’s rare that significant problems are found. Most commonly we see busted furnaces, grade issues, and other items which are relatively easy fixes. I don’t ever feel good about suggesting a buyer not have a property inspected, but the fact is this one is always a big concern for sellers, even those who are confident in their property. Do you have someone who could help you do a cursory inspection of a property prior to writing an offer? If you can’t get around this gamble, you might consider writing the home inspection condition in a different way which would allow you to back out if major problems are discovered but also provides the seller with assurance that you aren’t going to nickel and dime. “This offer is subject to a professional inspection of the property to determine structural integrity of the improvements. The buyer agrees that they shall have no right to rescind this offer for discovery of defects which do not exceed (insert amount here) in repair costs.”

Conditions like “satisfactory gas line inspection” or “review of local bylaws,” etc are bound to doom your offer. Do your homework in advance.

Scrape together as much money as you can for a deposit and show the seller your good faith. A $10,000 is a strong sign and it’s totally appropriate in this market.

Try writing the seller a personal note to include with your offer. Let them know who you are and how much you love their home. Tell them that you are very confident in the house (if you are) and how much you look forward to raising your family there. Ask them, “Is there anything else which we can do to have you favour our offer? We are open to discussing ways in which we can come to agreement. We really want to make your house our family’s home. We are available at a moment’s notice to address any concerns which you may have.”  Place the note in an envelope with the seller’s name on it and enclose it with the offer in another envelope.  Have your agent deliver it to the house when offers are presented. Go with him. Wait outside in the car. Be sure that the seller’s agent knows you are there; ready to deal with issues which concern the seller.

All other things being equal, most sellers would prefer to see their home go to a family instead of an investor. Try to use that to your advantage by giving the seller a little insight into who you are.

Good luck.  I really hope you get the next one.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Follow our daily updates on Twitter @SaskatoonHomes.

Norm Fisher
Royal LePage Saskatoon Real Estate

CNN runs a program on Saturday afternoons called Open House, which touches on topical issues surrounding home ownership. This week’s program carried the title, Open House: Mortgage Meltdown and focused on skyrocketing foreclosure rates across the United States. CNN reported that 1 in 1,000 American homes face foreclosure. Some markets report much higher numbers, like Denver, where 1 in 365 homes face foreclosure actions.

Of course, after several years of aggressive price increases in many U.S. cities, the housing market south of our border took a turn for the worst. The second and third quarters of 2006 were particularly tough and many people saw substantial amounts of their home equity washed away. Some will tell you that the worst is over and year end numbers seem to indicate that things are turning around but even if it is over, a significant amount of damage remains. I’m hearing stories every day about people who are buried in their homes with a much higher level of mortgage debt than they can realistically sell their homes for. The foreclosure numbers speak for themselves.

In my opinion, one of the biggest contributors to financial hardship is our willingness to continuously borrow against the equity which we’ve built in our homes. The problem is particularly bad in the U.S. where lenders are constantly beating the drum to “cash out your equity,” or “consolidate your debt.” People have financed their homes to the absolute max and in some cases, beyond the property’s resale value. When interest rates creep up as they have in the U.S. it suddenly gets very difficult to manage that debt.

Yesterday, a story published in the Star Phoenix with the headline, Mortgage market robust going into 2007 spoke of all the new mortgage options available in Canada which will “stimulate buying activity in the new year.” 40 year mortgages! Interest only mortgages! 100% loan to value mortgages! Yay! Most of these wonderful opportunities come with the ultimate risk of living in the poor house. We shouldn’t be looking for ways to slow our opportunity to build equity.

In recent years, Saskatoon has experienced higher than normal appreciation in housing prices. All indicators suggest that this trend will continue for some time. However, we are wise to remember that price increases above the norm don’t often continue forever. At some point it stops, and often prices will decline after long periods of growth. We would be wise to make every effort to retain as much of our home equity as possible, avoid “cashing out” and other “attractive” financing opportunities that allow us to treat our homes as a source of income, or discourage us from the opportunity to be free of debt.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Follow our daily updates on Twitter @SaskatoonHomes.

Norm Fisher
Royal LePage Saskatoon Real Estate