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Canadian sub-prime lenders seek billion-dollar government bailout

An estimated 30,000 mortgages granted to Canadians with poor credit or insufficient incomes at the height of the Canadian housing boom will not be renewed when they mature over the next three years, according to a story on globeinvestor.com. The sub-prime lenders who granted the loans say that the investors who financed buyers at above market interest rates, and in many cases charging add-on fees that many might consider unconscionable, are no longer interested in these investments so they’re calling for full payment at the mortgage maturity date.


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 Vidorra

Norm Fisher, Author of the TeamFisher Saskatoon Real Estate Blog

About Norm

Licensed in 1993, Norm brings a wealth of experience to TeamFisher. He has worked in every imaginable capacity including sales agent, office manager, team leader, broker and now, broker/owner. Norm has written a weekly review of the Saskatoon real estate market for more than 650 consecutive weeks which may make him the most consistent industry blogger in the world.Less...

Licensed in 1993, Norm brings a wealth of experience to TeamFisher. He has worked in every imaginable capacity including sales agent, office manager, team leader, broker and now, broker/owner. Norm has written a weekly review of the Saskatoon real estate market for more than 650 consecutive weeks which may make him the most consistent industry blogger in the world.

Norm is known for his passion for technology and can most often be found exploring and experimenting with the next big thing in real estate marketing. He was the first Saskatoon real estate agent to promote a home online and has been an early adopter of new technologies ever since. “Everything about this business has changed over the past 20 years, and it will happen again in the next ten. An open mind and a curious attitude are all that’s needed to continue to find new ways to serve our clients by delivering a faster, smoother, worry-free transaction,” says Norm.

In his spare time, Norm enjoys Crossfit and cycling, some years accumulating over 2,000 kilometres on the road. He’s a strong supporter of the Royal LePage Shelter Foundation and enjoys raising funds by joining fun, fitness-related initiatives like the Grouse Grind for Shelter. In 2015, he trekked the Peruvian Andes to Machu Picchu. In 2017 he walked the southern highlands of Iceland across mountains, sand, snow, ice, lava fields and forest for seven days. Collectively those initiatives raised over a million dollars for Canadian women's shelters.
 

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