More than one in eight adult Canadians will declare bankruptcy or negotiate a debt settlement – consumer proposal – with creditors. That’s a lot of people with devastated credit.
The majority of those people will want a mortgage at some point, but they’ll find their options limited. Following the credit crisis, funding shrank for high-risk mortgages, causing more than a dozen subprime lenders to close their doors in Canada.
Nowadays, riskier homebuyers with subprime (aka non-prime) credit make up less than 5% of borrowers. And with a shaky housing landscape and nervous regulators, lenders are more careful than ever.
For credit-challenged homebuyers, getting the best mortgage isn’t easy – it requires discipline and planning.
Click here to find out what you need to know if you’ve recently gone through a bankruptcy or consumer proposal – a deal with creditors to pay less than you owe – courtesy of the Globe and Mail.
The Globe and Mail’s top story last Wednesday suggested that CMHC is overvaluing the homes it uses as mortgage collateral.
It insinuated that the automated valuation model (AVM) built into CMHC’s “emili” underwriting system routinely overestimates property values. The implication is that taxpayers are at risk if mortgage defaults spike and CMHC can’t liquidate properties at their anticipated prices.
The story is portrayed like a scandal, which will likely undermine confidence in our housing market a bit more. Unfortunately, it’s yet another mortgage-related media story that is long on speculation and short on substance.
Before we begin, it’s worth noting that CMHC says emili (which has been around for 16 years) is not technically an AVM. Its main function is to assess overall borrower risk and not to determine a specific property value. We, therefore, use the term AVM loosely when referring to it.
Click here for more details from CanadianMortgageTrends.com.
Click here to read the Globe and Mail article.
A new poll suggests more Canadians are living debt free this year compared to 2011.
The annual RBC survey found that 26% of respondents had no personal debt – excluding mortgage debt – in 2012, up from 22% last year.
However, the poll found that on average Canadians are carrying $13,141 in non-mortgage debt, up $84 from last year.
Ontario residents were carrying the heaviest load at $15,361 while Quebecers had the least at $10,171.
Click here to read the full article in The Gazette.
The Bank of Grandma and Grandpa needs to toughen up.
It’s one thing for seniors to plan inheritances for family members and provide cash gifts when affordable.
Where they must set limits is in co-signing or guaranteeing loans for relatives.
Seniors guaranteeing loans is bad business and it also comes dangerously close to elder financial abuse, an unseen but serious problem that can leave seniors destitute.
Click here to read more from the Globe and Mail.