Entries by Pat Sawler

Appeal court ruled that ABCP restructuring is legal!

Investors are left out in the cold while the banks and credit union’s receive protection form possible lawsuits regarding the securitization of Asset Backed Commercial Paper or ABCP. The good news is the the plan to restructure the ABCP market can now go ahead. For the complete news story from the source click here other wise this is what this means to you, the mortgage holder or potential mortgage holder. 

Once this is all behind us lenders should be able to securitize their ABCP and as a result offer us the options that we want for our financing needs. This is what I would like to see happen but only time will tell.

Cheers,

Pat

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It's not me, it's the economy!

According to an article in the Globe and Mail this morning it says we are carrying too much debt in comparison to our assets. However don’t worry CIBC conomist Benjamin Tal said that it is because of the economy! So let me get this straight, we are spending more than we make, putting ourselves deeper in debt and it is not really our fault it is the economy. He is right about one thing, the economy is not as rosy as it was just few short years ago. That should not be an excuse to over do it! What people fail to realize is that we make this economy go round, and if we are forced to cut back our spending to keep up with our debt service needs, what will happen then?

The point that I am trying to … Read more

Houses still selling, but for less!

In a report today from the Canadian Real Estate Association, it says that homes in Canada are still selling. In fact sales increased .1% from April to May of this year. However the downside is that the average price of these homes have dropped 3.6%. Even with the drop in values, the association does not sees us experiencing the same declines that our American friends are suffering through right now. 

So what does this all mean? It is a better time to buy, in certain markets the house that you like is now worth less, allowing you to get it at a discount. However for the homeowner, if you really have to sell, you have to be open to getting less for your home that you originally had expected. 

Cheers,

Pat… Read more

Many Canadians oppose tougher mortgage rules!

The great National Post had an article today that said about 25% of Canadian’s polled do not agree with the federal goverment steping in and changing the mortgage rules. In case you have forgotten click here to see an earlier post. 

I have to mention that the poll was conducted by Angus Reid for ResMor Trust Company. Surprisingly 45% agree with the new rules, and when you factor in current renters, the support falls to 25%. This is the group that is affected the most by the new changes. As it takes away a lot of options for them when it comes time for them to look at get out of renting and buy a home.

Our fantastic government apparently thinks that we were too close to acting like our neighbors to the south. It is true we had a … Read more

Debt outpaces home value for one-third of new owners!

Bloomberg News

Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth, according to Zillow.com, an Internet provider of home valuations.

Home prices fell 9.9 per cent in the second quarter from a year earlier, giving 29 per cent of owners negative equity, said Zillow, the Seattle-based service that offers values for more than 80 million homes. For those who bought at the 2006 peak of the housing market, 45 per cent are now under water, Zillow said.

Negative equity and declining prices contribute to the foreclosure rate because some homeowners don’t have the cash to pay off the mortgage and end up surrendering their homes to the bank that holds the loan, said Stan Humphries, Zillow’s vice-president of data and analytics.

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Why the Sub Prime market failed!

The Globe and Mail has done a great job telling the story of the collapse of the Sub Prime Mortgage market. You can read the whole story here or hang out here for my summary.

When the real estate market in the US was extremely hot a few short years ago. People were getting loans to buy homes with no documentation, less than stellar credit, financing more than the purchase price, qualifying for the loan based on a discounted teaser rate and investors were buying these loans up like they were going out of style. They were betting that the market would never cool off and home values would continue to rise, probably using the old adage ” they are not making any more real estate”. However what they failed to realize is that some of these people could not … Read more

Debt reduction will help secure couple's retirement!

Globe and Mail Update

In British Columbia, a couple we’ll call Sylvia, 48, and Henry, 49, have an annual combined gross income of $80,000. They have a house they figure is worth $469,000, a couple of cats, no kids and a life they feel is constrained by lack of money. They aspire to helping others more than to building up wealth, but they would like to improve their standard of living.

“We would like to make improvements to our house and yard, take a tropical vacation once every year or two, and we want to replace our 22-year-old car,” Sylvia says. “But should we pay off our mortgage sooner?”

WHAT OUR EXPERT SAYS

Facelift asked Derek Moran, head of Smarter Financial Planning Ltd. in Kelowna, B.C., to work with Sylvia and

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How ordinary investors got sold on ABCP!

It’s been a year since the ABCP market seized up and a rescue committee set out to salvage $33-billion in notes. A Globe and Mail investigation has found that breakdowns occurred throughout the financial system. On Saturday, the story of how the retail brokerage industry lost its way. On Monday, the two-part package explores the role of regulators

 

Friday, August 08, 2008

Throughout his life, Alan Jones’s father invested his money conservatively, favouring bonds and GICs and avoiding even mutual funds as too risky.

When he died in late 2006 at age 87, Alan Jones and his sister decided to continue with the conservative strategy to ensure their mother’s retirement income would be safe. In the spring of 2007, they moved more than $500,000 into three short-term investment trusts, assured by

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The great Canadian housing myth!

It wasn’t that long ago that economists and observers put a brave face on the health of the Canadian housing market, arguing that tighter credit conditions, relatively moderate prices and a healthy economy would keep things humming, even as the U.S. market slid into oblivion.  

Now, there are cracks in this theory: The number of sales is declining even as the number of For Sale signs creeps higher. Are outright price declines next?

That would appear to be the case, judging from the observations put forth by David Wolf, economist at Merrill Lynch Canada – and if the housing market stalls, you can kiss goodbye any pickup in economic growth next year.

“After several years of great strength, the Canadian housing market has weakened materially through the first half of 2008,”

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Home Trust to offer traditional mortgages!

Alternative lender believes competing with banks will lower risk, allow it to pick up more business

 

00:00 EDT Wednesday, August 06, 2008

Alternative lender Home Trust Co. is launching a line of traditional mortgage products that will compete directly with those offered by the banks.

The Toronto-based lender hasn’t been pushed out of lending to riskier borrowers, a problem encountered by some of its competitors as a result of the U.S. subprime crisis.

Instead, the company, which uses a deposit-based funding model, believes the move will help fuel the growth of its core alternative-loan business and its relationships with mortgage brokers.

“What we can offer is a one-stop shop, particularly for brokers where time is of the essence for their clients,” said Gerald Soloway, chief executive officer of Home Trust’s parent, holding company Home Capital Group Inc.

To

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