Today I nearly lost it but I had to think long and hard as to what to write to The Globe And Mail. The article in question is (unfortunately) hiding behind a paywall but you can see the article on https://www.pressreader.com/ if you search “To Compete, many alternative lending firms target less desirable borrowers” in google, - it’s the first hit (I can’t link it)
So, here’s what I wrote to the two authors of this story. Here goes:
David and Tim
Thank you for misinforming the public once again with your front-page ROB article about the New Rules and how they will challenge non-bank lenders.
“The banks, which account for 70 percent of the market, have the highest underwriting standards in the country”
Completely and utterly wrong. How do you define this versus what standards Street Capital, MCAP, CMLS, etc have? Please…
Today may end up being one of those defining moments in our housing market, that’s why I called this post Monday October Third Two Thousand And Sixteen. It’s a very important date to consider when we look back in a few years’ time in assessing if this move was the right move in trying to normalize activity in our feverish Toronto housing market. Why in a few years? Frankly, I don’t think we’ll see a change overnight but I do think it’ll take some time to figure out what kind of impact this move had.
And what a move it is.
First let’s start with the basics. If you have less-than-20% down payment you’re going to have to qualify for a mortgage at a much higher criteria, called “the stress test”. Prior to today, anyone in the market could (easily) qualify at the discounted rates if they were okay with…
Predictions are useless.
It’s time to enter the arena of making predictions that 9 times out of 10 fall flat on their face, but at least they start a discussion going (for better or for worse). I have been reading a lot of Realtor opinions lately on the direction of our housing market in the Fall 2017 (and beyond) and wanted to add my 2%, errr, 2 cents.
I know a lot of you like to read the newspaper, make comments on Facebook, watch your twitter feed by-the-minute, check out the evening news and generally talk housing in the dog park. How do I know this? Because I hear it, I get asked it, and I love it. I am basically addicted to the topic.
My predictions for the next 3-6 months are as follows, then.
(And remember, I could be wrong, on all of them)
1. Contrary to what…
This sort of thing makes me REALLY REALLY mad. Today morning I woke up and glanced over the Report on Business by the Globe and Mail. Not surprisingly, my arch-nemesis (just kidding, sort of) Rob Carrick writes another article about how hard it is for an average person to save a down payment in Toronto. He touts his new “down payment savings calculator” (which I won’t even link to because it’s rubbish) and shows everyone how the average person who makes $45,000 per year will take SIX YEARS to save for an average house in Toronto.
Why does this make me so mad?
Rob forgets to tell his readers that he failed at basic mortgage math 101. Here’s why.
On average the property price in Toronto is $623,000. Note I said property, not house. Property means house, condo, townhouse, etc., so to get a key to your own…
The body that oversees mortgage financing, OSFI, isn’t happy with what is going on and wants to ensure that lenders are following the rules as set out in their guidelines released in the last 2 years called B20 and B21. Those sound like world-war 2 bombers but they are not - they were the framework for mortgage underwriting and what each bank & lender is supposed to do when processing a loan request.
Note I said, “supposed to do”.
Most of us heard about the “student” who bought a $24M mansion in Van-city and took out a $9M+ CIBC mortgage, here on a student visa, right? Well that’s not what the intention of the B20 and B21 rules was, and now it appears that it’s causing OSFI to cast a wider net and look at five major underwriting components:
Income verification - OSFI is concerned too…
So, my mortgage was up for renewal and I knew I wanted to open a new account at one of our big five banks (for various reasons including that my RRSP loan was there, I wanted to have everything under one umbrella). I’m a completely new customer to this bank except for the one RRSP loan and thought it would be a great process to go through the mortgage process from a customer’s point of view.
What a mistake.
I’m not trumping going through a mortgage broker because believe me, I understand there are times where going to the bank may make the most sense. If my experience is anything like what other people are going through, though, then I have no idea how people actually do this without pulling their hair out.
It has been eight business days counting today that my approval hasn’t materialized. Eight. Business.…
My mentor, tutor, and broker John Bargis from Mortgage Edge brought to light today a differentiator that is clearly emerging in the mortgage industry.
Do you process or service your client?
Are you, as a client, looking to be serviced or just to be processed?
Here’s what I mean exactly illustrated by a real-life example.
I have these great clients who have been engaging with me on every facet since January. We have developed all sorts of different scenarios for them: Keep condo, sell condo, refi condo, buy a house, max down payment, minimum down payment, amortization scenarios, everything under the sun. This is where I present to my clients the true value of working with someone who participates in the service-type of mortgage brokering. I not only love what I do but I know what I do very well and come up with every possible angle, down-fall, or…
Today’s post focuses on a little-known mortgage feature that some lenders do not have, but that can bite you in the rear at the most inopportune time: When it’s time to move your mortgage. We’re talking about blending vs blending-and-extending your mortgage when you’re moving up, across or even down the property ladder. What do I mean by this exactly? Easy:
When you sell your property and buy another one, and if the math makes sense to stay with your bank or lender, you have the option to transfer your mortgage over. Hidden deep deep down in the disclosure documents you received when you first bought your house and took out a loan was the option to blend OR blend-and-extend. Not every lender has both options and here’s why it can get rather messy:
If you’re breaking in the middle of a term (let’s say a 5 year), and moving,…
Today’s post will discuss what to do if you get married and/or have a different legal name vs your “home country” name. This is crucial for maintaining your good credit rating because, borrowing is all based on your beacon score. No beacon? No loan! This is also an example how I #createvalue for my borrowers, by going the extra step required to make their borrowing roadmap without any detours.
Gary and Angela called me to get pre-approved for a mortgage. We discussed things in detail from a high-level point of view prior to pulling their credit. Once they were satisfied with the potential numbers, we did a credit inquiry. Lo and behold, Angela’s credit showed up as the dreaded BEACON REJECT - which is credit-report-slang for “Hey! You have no active/actual credit!”. This was a surprise to everyone since Angela showed me three credit cards she had in her possession…
The Globe and Mail has been selling a lot of newspapers lately with their deep-down investigative journalism about the Vancouver housing market lately. Included in that is this weekend’s piece about The Real Estate Technique Fuelling Vancouver’s Housing Market which, to me, read a lot like sour grapes by sellers of already-vastly-overpriced-homes. A bit of greed, too. Let me not suggest that what is happening in Vancouver right now in light of these findings (and previous ones) is fair or equitable to the average Vancouver-ite. However, reading the reaction of some of the homeowners, I can’t help but think they should only look in the mirror and “blame” themselves for making “only” $4.843M in tax-free money on their home in 29 years. Broken down, that’s like making $151, 172 PER YEAR of tax-free money. So, where’s the beef?
The beef is…