Canada's dirty subprime secret

10 000 forclosures? Over what period of time? Even if it is just over a year, that isn't a remarkable number for a geographical area home to 7.8 million people.

Even our bank was willing to lend us more than we would have been able to afford payments on.

So we were offered a rented out 4 plex plus the empty lot beside it for a ridiculously low price. Googling Canadian mortgages, rates and payments, we found the revenue from 2 units was greater than the payments on a mortgage of 90% that price.
The 2 banks here would NOT consider the gf's previous year T4 as it's a small town and the knew she wished to move here and therefore would not make anywhere near what she did did.
They would ONLY consider my previous year T4 in which I filed a small loss (self employed).
Told us we jointly qualified for only an $8000.00 mortgage.
Asked if I made a $100.000 down payment and they ran the app again, they informed me they would require complete paperwork and full disclosure of where the downpayment came from (none of their fucking business whatsoever).
Two days later the seller contacted us that 2 other people has contacted him they "heard" the place was for sale and wanted to place offers.
One was the cousin of one loan manager. One was the best friend of the other.

The seller withdrew it from the market, and placed it thru an agent at $100,000 more 'cause the market was way hotter than he expected'...
it remains unsold over 18 mos later.
Pity as I used some money to double the stock of the corp, quadruple the user base and paid myself even less. Next time we'll only "qualify" for a $4000 mortgage!
We probably could have rewritten the mortgage this year, dropped $10K-$15 on the principal and taken advantage of the lower rates. Or if the manager was sharp, it would be closed and the bank would be using the 1/2% federal money to make 1600% a profit.

nice banks you got Herbie, didnt know they were allowed to steal
property from their customers..

very professional bunch.

That may be so hurley but no one is forcing you, or others, to take it! People have to take some responsibility for their decisions. I have never entertained the thought of taking the maximum allowable for a mortage because I didn't wish to be "mortage poor". I do have some sympathy for those who have mortages and lost jobs due to the economy but if they had just "settled" for a smaller home they wouldn't be feeling the pinch as much.

Isn't that fraud?

That may be so hurley but no one is forcing you, or others, to take it! People have to take some responsibility for their decisions. I have never entertained the thought of taking the maximum allowable for a mortage because I didn't wish to be "mortage poor". I do have some sympathy for those who have mortages and lost jobs due to the economy but if they had just "settled" for a smaller home they wouldn't be feeling the pinch as much.

Yes, and as we have a good sense of personal responsibility, we didn't take as much as the bank wanted to give us. But where does personal responsibility end and corporate responsibility begin? Are banks to be completely free to offer product they know full well (or really ought to know full well) that their customer will not be able to pay for?

I actually agree that their should be something that prevents banks, trust companies, department stores etc from offering credit to people who obviously don't have the means to pay it back. That being said though, if more people stopped using credit foolishly, and "don't pay for 2 years" bullshit, then they wouldn't find themselves owing $10,000 a month more than they take home!

I went through this as a young fellow, thought my credit card was "free" money. Once I finally sorted myself out, I came up with a plan that I follow to this day. I only use my credit cards for large purchases because I only allow myself a $500 per day withdrawl limit on my account. I then write a cheque for the purchase as soon as the credit card bill comes in for the FULL AMOUNT. Both my wife and mine vehicles are paid for, my boat is paid for, my ATV is paid for and all my guns are paid for. The only debt I carry is my mortage and by doubling my payments I should be mortage free within the next 2 years. This allows me and my wife to take nice holidays 3-4 times per year. Anyways enough about me, good to see you also didn't take the maximum from the bank and have learned that valuable lesson of living within your means. More people should give that some thought during this economic downturn.

That may be so hurley but no one is forcing you, or others, to take it! People have to take some responsibility for their decisions. I have never entertained the thought of taking the maximum allowable for a mortage because I didn't wish to be "mortage poor". I do have some sympathy for those who have mortages and lost jobs due to the economy but if they had just "settled" for a smaller home they wouldn't be feeling the pinch as much.

Yes, and as we have a good sense of personal responsibility, we didn't take as much as the bank wanted to give us. But where does personal responsibility end and corporate responsibility begin? Are banks to be completely free to offer product they know full well (or really ought to know full well) that their customer will not be able to pay for?

Legally yes, morally no. The banks don't own the money, their investors, depositors and stockholders do, so for them to give out loans that they know will never be repaid is basically just another ponzie scam like Bernie Madoff's.

I still can't help but get the feeling that alot of loan managers thought that the realestate market would stay red hot and if a few people defaulted so be it. It'd still be a win win situation for them since they'd be able to sell the homes for more than the original loan.

Although I have no compassion for people who were stupid enough to take loans out that overextented themselves in the vain hope that their property value would rise and they'd make a quick buck while sitting on their fat asses, it's still morally wrong for the banks to offer these types of loans.

Here's a economist blogger on the article:

http://worthwhile.typepad.com/worthwhil ... ian_initi/

He says he can't make out what the article is saying.

Funny you say that. THREE loan managers were convicted at one of the two banks here in the last 15 years.
They actually stole money.
This is just typical small town behaviour. ( It ain't the town's fault, it's the small people in them).

Although I must say my ex and I put a lowball offer on a home in Langley back in '82 that was accepted. The realtor called later that night to tell us the bank would not let it go at that price.
We smelled fish and got another realtor. Guess what: the same house was on the market for $30K more, and SHE was the listed seller.
We reported it.
Dick shit came of it.