Tag Archive for: GMAC

Setting the record straight!

This post is in response to an article in the business section of today’s Chronicle Herald newspaper. While I admire and respect the broker quoted in the story, I believe that some of the message can easily be taken out of context and I just want to set the record straight. 

I have been a mortgage broker for just over 6 years now. During this time a lot has happened and a lot has changed in the Canadian mortgage market. Canada started off with only one true sub prime mortgage lender, several had entered the market and now we are back to only one again. With the advent of rampant sub prime lending here in Canada; we were introduced to 100% financing, stated income products, interest only mortgages and products for clients with less than perfect credit. While 95% of Canadian mortgage holders are unaffected, the 5% who have a mortgage from a sub prime lender should have a game plan (to prepare them) for renewal time. 

The main reason that I place clients with sub prime or alternative lenders is to get them financing until such a time that they could qualify for a main stream insured lender. I look at the sub prime lender as a bridge lender, who will give the clients time to improve their credit and or pay off debt before qualifying for better rates and terms. It would be a disservice if I expected any client to renew their mortgage with their sub prime lender. 

Would I tell all my clients who hold mortgages with sub prime lenders to sell their properties? No I would not. We would have to look at the reasons why they are with these lenders, how much time before renewal and help them develop the proper exit strategy. I do plenty of private loans and this is not any different. Just as with any private loan, you should also know your exit strategy. 

If you are someone who has a mortgage with a sub prime lender (such as Xceed, and others), don’t panic! There are still things that can be done prior to your renewal time. Please call my office so we can look at your options. 

Cheers,

Pat

 

p.s- You can find me on Twitter,Linkedin, Facebookand friendfeed.
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Glad you're not affected by the USA mortgage meltdown? Think again!!

Are you worried because of all the instability in the U.S banking system? The sub prime melt down, foreclosures and the long list of banks closing their doors. Do you think that we are immune up here in Canada? Well we are and we aren’t, let me explain. 

Well thanks to the fact that our banks have large national branch networks, rather than where our American neighbor’s banks are mostly regional focused. We have deposit insurance (provided by CDIC) as do our American friend’s (FDIC), however that will not help the over 10,000 clients of Indy Mac Bank who have deposits or investments in excess of the insured limits. Our strength truly lies in our limited number of charted banks and our national network. 

Have there been effects here in Canada, yes there have. Just in the past year alone, several of our key alternative or sub prime lenders have either scaled back, pulled out or shut down entirely. Here is a short list and it is by no means complete, GMAC, Accredited Home Lenders, Money Connect, Xceed and just recently the involvement of our federal government pulling 40 amortization’s and dropping the 100% financing.

Now have we ever had a bank failure here in Canada? Yes we have had many, CDIC’s own website list’s at least 43 examples since 1970 but none since 1986! Even during the great depression when most of the U.S banks were closing their doors our banking institutions remained mostly intact. 


O.K, Here are the 3 things you must do to protect yourself financially!

1) Know how much CDIC will insure you for in the event of a failure? Don’t get caught not knowing!

2) If you bank with one of the big 5 charted banks, your chance of experiencing a failure is fairly slim to none. 

3) If you mortgage bank fails, keep making your mortgage payments. The loans that are on the books will be bought by another lender. Just because the above lender is no longer lending does not mean that you can get off scott free.

The fact is we’re living in a crisis, right now, and there will be both winners and losers.  Those who take action – prudently, immediately – can protect themselves.  Those who lose are most likely going to be those who thought they were safe. 

Honestly, the situation is likely to be unfolding rapidly over the next few months, and anyone who claims to have all the answers is either misguided or misleading you.  As a professional I am closely monitoring the situation – and I want to hear from you.  What are your questions?  What do you want to know? 

Ask your question by posting a comment on this blog, and I will research and reply shortly on this blog.  Everyone needs to know the answers.

Cheers,
Pat