The Blog

Earlier in August, it was revealed that a presale condo project in North York was in trouble. In fact, it was in dire trouble last year as it was sold through a court order. However, the 141 people or so who put down 40K to 700K back in 2010, didn’t know until now. Unfortunately, the lawyer released all the deposit money to the developer by mistake and he skipped town. We are talking about 14.9M. Soon after the story broke, the lawyer filed for bankruptcy. One can argue that anyone can fall victim to real estate fraud if the realtor/developer and the lawyer are working together and that it is not only in a pre-sale situation. I would say it is less likely for someone

The banks been registering mortgages as collateral charges for a long time. Finally, working with the Federal government, the announcement came this month that Canada’s banks will provide consumer information on collateral charges “to help consumers make more informed choices”. It amazes me that it takes government involvement to get these banks to do what they should be doing from the very beginning. You are selling me the biggest loan of my life and you are making the decisions for me? You don’t tell me that you will register the charge for 125% of the value of my home so that I will not be able to get secondary financing elsewhere? You don’t tell me it will be more difficult for me to transfer my

Here is another example of outrageous pay out penalties charged by the banks. Click here for the CTV News piece.  I am not making this stuff up. Last year this person got an $180,000 mortgage at 2.79% for 5 years. Good rate. Unfortunately, she had to sell a year later. Figuring the current rate at the bank for 4 years term was 2.99%, she thought the penalty would be 3 months interest and not so bad. WRONG. It was a ridiculous $7500! If she went with a monoline lender, the penalty would be around $1400. That is $6100 difference. $6100 for one year’s use of the $180,000 is actually 3.39%. In effect, the one-year mortgage at the bank was 3.39% MORE than the monoline lenders.

Where do you go to get a home equity loan? Most of the time, it would be from a private lender. The banks would like to call their loans home equity loans, but they use the same criteria to qualify their home equity loans as their first mortgages. That is, they have the same credit requirements, income requirements and debt ratio requirements. Home equity loans should be qualified based on the equity in your property. If you have enough equity, then income and credit scores should not matter. These details that would derail an application at the bank is immaterial to a private lender. If you have poor credit and/or have trouble proving all your income, but would like to borrow against your home or

These two terms seem to be confusing some people. Some people seem to think they are the same thing. They are not. The terms describe different attributes of the mortgage loan. Note, a mortgage loan can be both a home equity loan and a second mortgage. Home equity loan is a term that describes the mortgage loan on the basis of how the loan is qualified. Basically, a home equity loan is a mortgage loan that is qualified mainly based on how much equity is in the home as opposed to the credit history or the reported income of the applicant. A second mortgage describes a mortgage based on the priority the lender have on your property. A second mortgage would mean that the lender

I really do not like to buy anything that I can’t see and touch. So when it comes to condos, I’d rather wait and buy it when it is built. Obviously, there are plenty of people who find it acceptable to put 10 to 20% down payment 2 to 3 years in advance of moving in., but there are some drawbacks to buying pre-sale condos. For one thing, it is hard to visualize how your place will finally look. Often you have a show room with some fully furnished rooms. You get a feel for the color scheme and material but you really do not get a feel for the space. Even if they have a sample suite in your floor plan, be aware that

Remember last year’s MAC Marketing scandal? Members of the MAC Marketing Solutions staff pretended to be foreign buyers for CBC TV. Two members posed as sisters who were waiting for wealthy Chinese parents to visit and buy them a condominium during the Chinese New Year break. This month the Real Estate Council of BC (RECBC) handed out its punishment. The former manager was fined $1250 and suspended for 2 weeks. While some may argue that this is a slap on the wrist, there is something else to be learned from this incident. The RECBC has no power over sale associates at these sale centres. This would apply to whether they work for the developer or the marketing company contracted to sell the property. As a

Finally somebody is so upset at the bank’s payout penalty that she has started a class action lawsuit. In fact, this was started 2011, but recently the judge has decided that this case can be “certified”, meaning it can go forward. Erin Sherry was hit with a $47,868.91 prepayment penalty 3 years into a 10 year fixed term from CIBC. This case will affect all mortgage payout penalties collected since 2005 by CIBC. The original judgement is here but basically the plaintiff contends that   1) The language in the contract around penalty calculations are so value it cannot be enforced. 2) If it was enforceable, then it should be 3 months interest rather than IRD 3) And if it was enforceable as IRD, it

The council for Newham, one of the poorest boroughs in England, has approved a plan for an ethical alternative to payday loans. It will be a partnership between government and financial institutions like credit unions to give residents affordable credit. Called MoneyWorks, it will also give good advice to help residents make positive financial decisions on debt and savings, build their credit rating and end their reliance on exploitative finance. Since last year, Britain has been on an offensive against payday loan companies some of which have had annual percentage rate (APR) of over 4000%. Yeah, I am not kidding.  Since then many have closed down and large ones have been fined. The Money Shop have been fined £700,000 and Wonga have been fined £2.6