Mortgage-backed insecurities

smoke1

If you don’t have enough down payment money to qualify for a traditional mortgage, the government forces you to buy mortgage insurance. This doesn’t insure you, instead it puts the government on the hook to cover the bank in case you walk.

These days, with average prices down 15% in Toronto, 21% in Calgary and 19% in Vancouver – and with even establishment types like the Conference Board calling for another 10% slide this year – odds are that more walking will take place. After all, if you bought in the last couple of years with little (or nothing) down, you may soon be in negative equity. This is the case with about ten million American families.

Mortgages needing this kind of insurance are called high ratio. Since banks can only lend 80% of the value of a home without it, you can imagine how many loans fell into this category over the last couple of years – especially when Ottawa was allowing zero down payments and 40-year amortizations. In fact, high-ratio mortgages have been the norm, not the exception.

With high ratio comes higher risk – especially in a situation that few people expected, with plunging home values and an economy on the brink.

But the government’s insurance doesn’t cover the entire loan – just the amount above the bank’s allowed amount, which means lenders certainly have exposure in a crashing housing market. This is unlike in the US, where banks bundled residential mortgages and sold them to Wall Streeters who packaged them into securities which were flogged to pension funds, individual investors and foreign suckers.

However, just like in the States, our government is spending mega-money propping up the big banks – another eight billion on Wednesday alone. In fact, Ottawa is putting more money into the banks on a per capita basis than Washington’s entire giant $700 billion bailout package. In that country, elected politicians got to debate and vote on the deal. In Canada, forget it. Parliament is closed.

So, you might want to know this.

Seventy-five billion in tax money is being funnelled by Ottawa through Canada Mortgage and Housing into the banks through the purchase of mortgage-backed securities. All of these loans which are being taken off the banks’ books are high-ratio. In return, the bankers are supposed to use the buckets of cash to increase lending and lower consumer loan rates. But, that hasn’t happened.

Meanwhile, the government is assuming all the risk for home loans made to young couples who put little or nothing down to buy new houses from builders who asked for only enough cash to cover closing costs. The mortgage was for 100% of the purchase price.

Ottawa is agreeing to carry this risk for the next five years, and will be earning a yield of around 2.5%.  The official inflation rate at the moment is 2.0%, so taxpayers are giving $75,000,000,000 to the banks for a return on investment of half of one per cent, and for the highest-risk mortgages in the land. Last year the banks made a collective profit of $19,500,000,000.

By the way, if you default on your high-ratio mortgage, you will be sued. What a country, eh?

In the News

On sale: $350M of real estate in Lower Mainland

A Vancouver real estate developer is making an unprecedented move to offer a liquidation sale of $350 million worth of its condominiums throughout the Lower Mainland. The marketing strategy by Onni Group of Companies is aimed at selling off hundreds of condos in its inventory.

About 375 unsold condominiums in cities such as Richmond and New Westminster will be offered at 20 to 40 per cent off, a real estate insider told CBC News. It is not known whether the big discounts are based on prices when the condos were completed or current market values. Onni was to hold a media event Thursday to announce details. Onni’s marketing tool might nudge some reluctant homebuyers off the fence, said Tim Silk, an assistant professor at the University of British Columbia’s business school.

“If you see the units being priced below comparable units, then you might see people jump in,” Silk said Wednesday. “But there’s still that hesitation of, ‘Have we reached bottom?’ ” Home prices in the Vancouver real estate market dropped almost 11 per cent between December 2007 and the end of 2008, according to a special price index updated earlier this month by the Real Estate Board of Greater Vancouver. And the number of homes sold in 2008 fell more than 35 per cent from 2007 sales of more than 38,000 homes.

Source

46 comments ↓

#1 colette on 01.14.09 at 9:44 pm

last night I watched the ascent of money on PBS

http://video.google.com/videoplay?docid=-545930454338776455

It was excellent. It exposed how the whole ball of wax is run by a mixture of pandering, elitism, emotions, smoke and mirrors and somewhere it is all based on trust…for credit takes from the latin credo.

so when all the scallywags at the top cook the books, break the rules, skim the fat and get away with it what is to stop the little guys from entering into mortgages or other agreements and then breaking the trust by walking?

And if there is a complete lack of trust system wide how will the system ever right itself?

#2 Home Price Index on 01.14.09 at 10:07 pm

Apologies if this has been posted before — it’s new to me and I hope useful to others.

National Bank and Teranet have created this Canadian housing index.

http://www.housepriceindex.ca

At first glance it looks like it’s based on the Case/Shiller methodology (see FAQ). But it doesn’t take much digging to figure out that it’s got a twist.

I haven’t taken the time to dissect their methodology, but that it shows a slight increase year-over-year in every city except Calgary baffles me when markets like Vancouver are melting faster than a popsicle under a heat lamp.

How do they get away with this stuff? Is this the stuff that National Bank is using to “educate” their customers who buy mortgages from them?

#3 d.watson on 01.14.09 at 10:18 pm

Dear Mr.T

Yes, yes you are my Mr.T and my wife knows you to be the the fortune teller of our day…wearing the heavy gold chain and speaking of some guy, by the name of ‘foool’!(the list is long believe me I’ve been keepin track.) I’ve been a loyal follower of your blog and our morals and thoughts are quite simalar. My thanks for xurbia and good for you makin a buck. I am prepared for the the next several months, financially and survivalistic as well. The only trouble i’m having know is…….the non-stop mental bombardment of negativity and doom. How can a person stay positive in enviroment as this. I am 27; my wife 29. We are expecting our first child on Apr23. We have no worries really because we’ve always lived with in our means. My views are simple and they lean toward community and family sharing,co-op of assets and limited expendature. My particular family plan is simple but instead of innovative its called “socialistic, communist”….. Funny as it seems the huderite and menanites seem to have the right idea….well almost the right idea….
Thanks Mr.T
See ya in Namaimo feb1

#4 POL-CAN on 01.14.09 at 10:30 pm

If you have the time and want a good laugh I suggest watching the “Silly Money: Where did all the money go?” series on youtube.

I love British humour… The John Cleese bits are priceless :)

http://www.youtube.com/watch?v=6R31clHFXfA

#5 B on 01.14.09 at 10:45 pm

I can’t wait for the rhetoric from Flaherty and son-of-Imperial Oil exec Harper.

#6 ThumbsUp on 01.14.09 at 10:56 pm

When 40 year / 0 down misled the last greater fool alive into home ownership;

When Nortel’s margin largely went into its employee’s mortgage repayment;

Our fearless leader is still trying to promote easy credit to find more greater fool to keep the party going.

High housing cost and hence high living cost is simply not a good thing for business, especially export oriented like ours. There’ll be more companys end up like Nortel.

“Ottawa is agreeing to carry this risk for the next five years, and will be earning a yield of around 2.5%. ”

Garth,
As our leaders are making new mistakes to cover a previous ones, more jobs will be lost, home pricing will decline, more mortgage will default, and those 0/40 mortgages won’t even worth what they are paid for. I don’t get it how we could be earning 2.5% interest ? while the US subprime & derivatives are selling 10cents on a dollar, at this point, nobody knows how much those 0/40 mortgages worth, let alone interest.

I asked myself – will I buy those mortgages ? well, not a chance at the price the government is paying.

Hope they get what they want, otherwise the money lost is taxpayer’s money lost, even those who work two jobs and live below their means will have to shoulder it, where did justice go?

#7 Shawn on 01.14.09 at 10:57 pm

By the way, if you default on your high-ratio mortgage, you will be sued. What a country, eh?

Garth, I love your work it’s excellent.

But, I think the bit about being sued if you default is reasonable and is called “the rule of law” a cornerstone to capitalism.

If we let people walk everytime they have negative equity then we allow people to have a free option on a house. Buy with with little or nothing down. If the price rises, keep the house, if it falls walk away. That system is unworkable as we saw in the U.S.

We do need people to honor their commitments. If you have negative equity, suck it up and pay it down. In most cases the people were not planning to move anyhow.

If you absolutely can’t pay due to lob loss then filing bankruptcy is the option we have.

I am surpriseed to learn the insurance only covers the amount above the 80%, I thought it covered all losses for the bank.

In Alberta I believe you are allowed to walk away from a conventional mortage. The deal there is you paid 20% down and at anytime you are legally allowed to give the house back to the bank rather than pay the mortage. That is the deal, I believe. But that does not apply to high ratio mortages, there you are not allowed to walk, even in Alberta.

We could of course see some conventional mortgage walkers in Alberta. Who’d a thunk a $300,000 mobile home, on a postage stamp lot, in Fort McMurray, might not hold its value???

#8 Investx on 01.14.09 at 11:04 pm

“With high ratio comes higher risk ”

How so? I thought risk was determined by the borrower’s credit rating (ability to pay)?

#9 Third Chimp on 01.14.09 at 11:18 pm

#1 Colette
The system will right itself when the mis-trust is spent, when people buy things they need (not stuff) with money they actually have (and how will they earn it ?) If you think about that, then you’ll realize that the amount of pain that lies ahead to get there from here – well, its outside of my experience of five decades….

#10 confused and a little crazed on 01.14.09 at 11:42 pm

Thank you colete I only say a portion of that and I was looking for the rest. i was searching pbs.org

Did you get the part where a cHinese city …i think it was chun Ming will be the next financial capital of the world because at this point China and USA are so closely intertwined, it created Chinamerica

#11 midas on 01.14.09 at 11:53 pm

Excellent Analysis below predicts US RE bottom around 2012 which would make Canada’s bottom around 2014 and another decade or so to recover to 2007 highs. 2024 – ouch! It may seem impossible at this point that it might take this long but remember the 1989-90 crash recovery did not gain momentum until after 2000 and this one is much much worse than that. Back then interest rates were 12-14% and there were no high ratio mortgages, therefore the magicians of high finance had room to lower rates and use other sleights of hands such as no money down to create another American dream of home ownership for all Americans. FDR promised a chicken in every pot. Clinton / Bush went one further and promised a 4 bedroom / 4 bathroom mansion for every American. And of course the blind leaders in Ottawa following the lead of their equally blind American counterparts have taken the country over the edge. It is in free fall now and God only knows how long before we hit bottom but 2013 – 14 seems like a safe bet. Dig in for the long haul!

http://theinternationalforecaster.com/International_Forecaster_Weekly/The_Smell_Of_Panic_In_The_Air_For_The_Economy

“The real estate markets throughout the world will struggle to find a bottom for sometime to come. The world’s biggest market is southern California, a region covered in distressed properties. The inventory overhang is monumental. The mantra of the region that real estate never goes down is dead. The psychology has been broken and may never prevail again. The good years were great. Where could you buy a home for 20% down for $35,000 and 20 years later sell a home for $1 million? That happened to many others, and us but that game has come to an end. The resetting of billions of dollars in Option ARMs, pick-and-pay loans have begun to hit the upper end of the market in full force. The forced sale of these homes will devastate an already crippled market. As California goes so goes the nation.

Currently more than 50% of sales to mostly speculators are distress sales. The affects of SB1137, which delays the foreclosure process, will see its effects vastly dissipate very shortly. It will end up like all price controls causing more harm than good. This reality will send prices exceedingly lower. Bottom line is this market should be reached in 2011 or 2012, if the state and federal governments do not interfere. If they do it could last longer. Not only are ARMs resetting but also unemployment is spiking upward, the state is bankrupt, inventory continues to rise as well as foreclosures and the economy is falling apart.”

#12 Derrin on 01.15.09 at 12:37 am

“Seventy-five billion in tax money is being funnelled by Ottawa through Canada Mortgage and Housing into the banks through the purchase of mortgage-backed securities.” – Garth

This is not new(please correct me if I am wrong).
Hasn’t this always been the case. I thought this was the role between CMHC (a crown corp) and the government. They sell them off and it frees the banks up so they can lend money out for other ventures(business loans ……etc).

Thanks,

#13 midas on 01.15.09 at 12:40 am

Silly Money

Monty Pythonesque Brit humor explaining the current financial crisis.

http://www.youtube.com/watch?v=uSOeZliaCgU&eurl=http://theautomaticearth.blogspot.com/

#14 JET on 01.15.09 at 1:13 am

I just created a chart that shows the ratio of prices in the GTA to sales from 2005-2008. Man, does that chart resemble the chart in “An Inconvient Truth”!

And on that note, I believe all the facts we are seeing today in the real estate market are an inconvient truth to a lot of people (especially the so-called experts).

http://thenumberstheydontpublish.blogspot.com

#15 supersocco on 01.15.09 at 1:36 am

http://www.cbc.ca/canada/british-columbia/story/2009/01/14/bc-onni-condo-sale.html

About 375 unsold condominiums in cities such as Richmond and New Westminster will be offered at 20 to 40 per cent off

#16 kc on 01.15.09 at 2:00 am

#1 colette, there are 6 parts to this series. they are all on youtube if you want to watch them. they are worth the hours to watch.

#17 surferbob on 01.15.09 at 2:35 am

spring condo liquidation in vancouver
http://news.sympatico.msn.cbc.ca/abc/Local/BC/ContentPosting?isfa=1&newsitemid=vancouver-bc-onni-condo-sale&feedname=CBC_LOCALNEWS

#18 Oh my on 01.15.09 at 2:37 am

It’s not just young couples that were insured by HMHC, but people getting back into the market after a divorce or what have you. We ended up taking a 100% mortgage since we had to use the money that we would have put on our down payment towards making a small space suitable for our family. Our landlord in our former place decided to cash in on the market and we were basically forced to look for something stable. We wanted something close to our child’s school and within a neighbourhood that we knew and loved. After much searching, we managed to find a suitable place, but only because we could manage to renovate. We now pay a mortgage that even with condo fees and taxes, amounts to less than our former rent. We feel like we are ahead despite the fact that we bought at the height of the bubble. At the time when we purchased our loft I watched this site with interest and even visited before buying because we knew that we were buying at the absolute worst time (early spring 2008). I remember thinking long and hard about the consequences of buying and basically decided that 1) we needed a place to live; 2) we were already paying high rent and there wasn’t much better out there; 3) we were able to secure a great variable rate (prime – .75) and this outweighed the fact that we were potentially going to enter into negative equity when the bubble burst.
When we talk about the meltdown here in Canada, I think that it’s important to know what kind of beast we are dealing with. There are similarities to the US mortgage crisis, namely the availability of cheap money or cheap debt, but there are important differences as well. In the US many people signed up for ridiculous ARMs, that began with interest only payments and then increased into massively unfair rates. Because these products were bought and sold within a specific timeframe, most sub-prime mortgages adjusted at an absurd rate that would have been untenable for the most stable borrowers. The people that were least able to pay high monthly payments were eventually expected to pay exorbitant mortgage interest rates. This, in the language of the day, is “the perfect storm”. Now in Canada we don’t have people locked into mortgage rates that will suddenly skyrocket, but people will be extremely vulnerable if they lose their job or if interest rates starting moving up the way that they did in the Eighties. We are now in an economic freefall…this much is clear. Obviously though things will get a lot worse if the prime rates of leading banks rise. Everyone has to calculate the position that they are in and how they will be impacted. For us, we will be in dire straights if the rates start to climb at an accelerated pace. Garth I’m interested to find out where you think interest rates are heading for the next few years?

#19 Da Hk Kid on 01.15.09 at 3:07 am

Hey Garth, just another example of how Canada will follow the US down. Analysts (the few I listen too) now pushing out bottom to mid 2010 and another 25% more down to go in the US.

Does anyone think this one will help find the bottom?

“Jan14: Barney Frank links release of remaining TARP funds to rescue package to help stem foreclosures, including cutting interest payments and forgiving a portion of the mortgage principal. He also wants to use TARP funds for muni bond issuers. Moreover, banks will be required to commit to lend money before they receive it”

Any comments?

#20 Da Hk Kid on 01.15.09 at 3:11 am

Further, Garth is correct on the per capita of both stimulus and likely job losses for Canada being greater than the US of A!

#21 TS on 01.15.09 at 6:42 am

There was an interesting piece on CTV last evening in Pat Foren’s section. While Pat’s material is usually of little value, last night was an exception.

His clip was about a couple that bought a new house when the GST was at 6%. By the time the home was actually ready to move into the GST and the real estate deal finalized, the GST had been lowered to 5%. This would have qualified the home purchasers for a 1% rebate on the GST, which in their case was about $7,430.

The home builder offered a special ‘deal’ on cable services which would have saved the couple about $1,200 to $1,500 (if my memory serves). At any rate the couple signed the deal and they did not notice that ones of the terms and conditions was that the pending GST rebate would belong to the home builder. What made matters worse was that the home owners were from Korea and needed an interpreter to tell their story on CTV. Obviously the couple had screwed up by signing the agreement. The statement from the home builder was terse…the couple signed a valid agreement, the terms and conditions were on it, so the home builder was not going to do anything. While ‘legal’ it certainly pointed to the lack of ethics of that particular home builder.

A basic lesson here is not to sign any kind of agreement without reading the terms and conditions and understanding them fully.

#22 TS on 01.15.09 at 6:49 am

The current economic slowdown is not only affecting people in developed countries. This piece from the New York Times provides some details on the closing of 67,000 factories in China during the first half of 2008. While Chinese exports are still growing, many factories are being squeezed by higher costs for labour, energy etc. and are closing.

To try and quell social unrest the Chinese government is paying back pay to workers. It also announced a $586 billion stimulus package over two years, mainly to develop infrastructure, to help create jobs.

http://www.nytimes.com/2008/11/14/world/asia/14china.html?partner=rss

#23 TS on 01.15.09 at 6:57 am

Another interesting piece on what is happening in China…the ‘domino effect’ of business bankruptcies is beginning to be felt. Many huge factories are closing, their owners often burn their books and flee…leaving millions of dollars in debts outstanding for their suppliers, who in turn are dropping like flies.

An interesting sidebar is that many workers are returning to the countryside to farm.

Perhaps a lesson for Canadians in all of this that a shift to a simple lifestyle is not a bad thing at all!

http://articles.latimes.com/2008/nov/03/business/fi-factory3

#24 TS on 01.15.09 at 7:01 am

Garth, thank you for your posting. The Canadian public has no idea what the Harper Conservatives have been doing, and how much of tax payers’ money they are putting at risk.

Unfortunately ‘investigative journalism’ is a foreign term to the MSM in Canada and these kinds of actions go largely unnoticed.

#25 Mike (authentic) on 01.15.09 at 7:04 am

On CNBC during trading hours, 6 commontators talked about how this market crash will remain in the minds of the people for a generation like it did in the 70’s. They also said who will buy the stocks and homes of the baby boomers if the 20-somethings see how bad the stock market is and how much people are losing on Real Estate. It will be viewed as unpopular to own stocks or housing for 5-10 years they felt.

Confidence. That’s what has been lacking in too many areas for too long. Then we had boom fueled by too much greed. Now we have a bust/very deep recession were greed of making money will be replaced by just making enough to survive.

Give money to the banks to help them out, but the banks do not have enough confidence in the public to lend and the public doesn’t have any confidence in the banks or the economy to borrow.

Mike

#26 Mike (authentic) on 01.15.09 at 7:10 am

FYI: The US bailout isn’t 700 Billion or even 1 Trillion USD. It’s over $8.5 Trillion!

Cost Of Bailout Hits $8.5 Trillion
Total sum represents 60 per cent of GDP

The total cost of funds committed to the bailout in its various guises has now hit $8.5 trillion dollars, up from $7.7 trillion in just two days after the federal government committed an additional $800 billion to two new loan programs on Tuesday

http://www.prisonplanet.com/cost-of-bailout-hits-85-trillion.html

Also in CNN too:

http://money.cnn.com/2009/01/06/news/economy/where_stimulus_fits_in/index.htm

The $8 trillion bailout
Many details of Obama’s rescue plan remain uncertain. But it’s likely to cost at least $700 billion – and that would push Uncle Sam’s bailouts near $8 trillion.

http://money.cnn.com/2009/01/06/news/economy/where_stimulus_fits_in/index.htm

Mike

#27 buy gold on 01.15.09 at 7:41 am

Garth, the banks wont have the time and money to sue everybody if they walk away from there homes.

#28 Herb on 01.15.09 at 7:53 am

Reagonomics is alive and well and living in the Fraser Institute – and the CPC. Acording to an article by two Fraser Institute experts at http://www.ottawacitizen.com/opinion/Stimulus+cure/1177498/story.html

The unfortunate economic reality … is that “stimulus” spending simply does not work. If the federal government is truly interested in doing what is best for the economy (and Canadians), the solution is reduced government spending and permanent tax cuts.

Specific recommendations:

1. eliminate the reported 25% waste in the public service: ” it’s time to trim the fat.”

2. “Reduce middle and upper personal income tax rates” as “a good first step to a single-rate personal income tax which would dramatically improve the incentives to engage in productive economic activity.”

3. “Eliminate the Capital Gains Tax”

4. “Accelerate and build on the reduction in the corporate income tax”, and

5. harmonize provincial sales taxes with the GST to exempt business inputs from provincial sales taxes.

Why, if we had more money at the “top”, we could have had even more funny securities to evaporate another trillion or two of somebody’s wealth in someone’s idea of productive economic activity. The relatively “poor” just bought the houses, the relatively “rich” the worthless securities. Is that why nothing has trickled down so far?

#29 john on 01.15.09 at 9:13 am

Were screwed! Id like to see the figures on how many mortgages are already in default in Canada and our government being “accountable” keeping us updated on how many billions of “our” bailout funds are now backed by worthless paper.Every new mortgage going into default drives the market lower. Id like to ask Mr Flaherty one simple question “if this was his money would he be investing it in high risk mortgages”? In my opinion the downhill slide is doing nothing but picking up speed. Quite a change from a government who less than 5 months ago told us we were immune to the problems in the US to today and the billions being pumped daily into what they said was not a problem. Its time for some truth–we have been had!

#30 CJ on 01.15.09 at 9:31 am

http://www.geocities.com/WallStreet/Exchange/9807/Charts/SP500/Outlook.htm

#31 David Bakody on 01.15.09 at 9:34 am

From this morning Washington Post:

Pressure grows on president-elect to allocate more federal rescue money as financial firms report worse than expected fourth quarter losses.

24 TS on 01.15.09 at 7:01 am

That is why Harper plans to shut down the CBC …. while he recruits another Duffy …..

This is going to be one hell of a year ….. Obama can not fix the world let alone the US ….. think Iraq, Afghanistan and now Gaza ….. bad news …. California and the Gulf Coast …. real bad news …. and the whole US financial system really big bad news …. Good news is: The Canadian Economy is as strong as the Canadians shield …. over 5 Billion people on the planet and King Harper will fix it with a population of 32 Million ….

World Economic Crisis ….. think? on the second thought don’t ….. go have a coffee …. and start saving those pennies……

#32 Jonathan on 01.15.09 at 9:35 am

Garth,

You touched on this back in October but I can’t find your post.

You had a chart showing that the 75 billion was coming from the BOC coffers, used to back up our money supply. You should include that here.

#33 smwhite on 01.15.09 at 10:20 am

You should be sued, and then kicked squarely in the ass for being stupid and believing in the tooth fairy, santa, the easter bunny and sustainable 10% gains in real estate.

That 75 billion is already working its way through the system, BMO just picked up AIG’s Canadian wing, on the cheap… So does this mean banks are moving to the Manulife and Sunlife model, with their hands in EVERY piece of the pie.

#27 buy gold

The banks will FIND the time to get their money, they are very determined when it comes to pillaging the pockets of their customers.

Shit, this could the start of a whole new business model for banking institutions, package these lawsuits up in paper securities and sell them around the world… Ha Ha

#34 Bobby in Victoria on 01.15.09 at 10:22 am

Now that the real estate industry is spiralling downward many are forced to take an objective look at what they have signed on for. The realities of mortgage insurance, sales contracts for condos yet to be built that are losing their value and 0 money down purchases are starting to hit home.

Sadly for many, the people that they turn to for advice are the same ones flogging the product. It is like trying to get a straight answer from a used car salesman. Unfortunately, they are now tied into contracts they know nothing about.

I’ve always said ask a lot of questions and get it in writing. If a salesman won’t do that, there is your first clue.

It’s getting uglier out there!!!!

#35 Bottoms_Up on 01.15.09 at 10:31 am

Sell-it-yourself sites are now guaranteeing that a real estate agent will not be able to sell your house for a higher price (this shows they have confidence that prices are dropping like a stone, or that they offer a superior service. You choose what to believe):

http://bytheowner.com/guarantee

#36 john on 01.15.09 at 10:31 am

Thanks for your blog and advice Garth,the only positive thing i have read for some time.Acceptance of a problem and dealing with it as best as we can during these uncertain times guarantees survival. I have totally lost hope in our government finding a solution–their methods of solving this crisis are like “going to the horse races betting everything on the worst horse and hoping for sucess”

#37 Bill-Muskoka (Not Anymore) on 01.15.09 at 11:11 am

Garth,

Being from the Muskoka I follow some news back there. This illustrates the serious problem people have with those whom they deem wealthy.

Muskoka liquor probe ‘shoddy,’ critic charges

“How are you going to tell a guy, or even the son of a guy who is worth 10 or 12 million dollars, `No, I’m not serving you?'”

Simple ‘Just say NO!’ and if management overrides your decision report them to the AGCO.

To me it is very simple. We have laws that prohibit them from being served, so, what’s the problem? Are these egomaniacs above the Law the rest of us abide by? NO!

Have they achieved some form of Divine Forgiveness? NO!

What kind of a society do we have where money is the determining factor of character? SICK!

Just wanted to throw those thoughts into the fray, because, after all is said and done, this Blog is now about the worship of MONEY!

Not a smart god to be worshiping in my opinion.

The police and Crown are going after those ultimately responsible, and THEY SHOULD! If we had more such prosecutions these money loving clowns would take the responsibility for their actions (and greed at all costs, including human life) a Helluva lot more seriously.

The days of hiding behind corporate walls needs to be OVER! Look at what that has done to millions of people and the economy.

People should not have to buy books to find out (too late anyway) how to survive being made victims of such ruthless, greedy, arseholes! We should have laws in place that are enforced. Oops, sorry I forgot, that would require politicians to do their job instead of campaigning for an extension to their worthless existence as Lawmakers.

I think 99% of politicians are genetic mutations of Bush. Denial as a way of life.

This entire mess came from trusting government to do its damn job of regulating commerce for the security of the people. They FAILED to Get It Done!

#38 Ray on 01.15.09 at 11:15 am

I booked a house in Milton last year, paid 25 K, and am closing in Aug 09. Should I walk away and loose 25K – if I don’t have a job, I can maybe sustain the property for 1.5 years max. Asked the builder if I should get a rebate/discount as their prices have dropped – NO was the answer.
Have a leased car too. What would be your advise?

Thanks
Ray

You have a lawyer, right? — Garth

#39 Niergen on 01.15.09 at 2:49 pm

#38 Ray,

If you are not qualified for a mortgage, you can go away from the deal without your deposite. A lot of peope in Calgary were/are doing that. Hope you understand the trick.

#40 jess on 01.15.09 at 3:13 pm

sign of times to come?

As the global financial crisis jeopardizes the future of private pension plans, the Quebec government is taking the unprecedented move of guaranteeing benefits to pensioners and workers of companies whose plans go bankrupt.

Nearly a million workers and pensioners in Quebec are registered in more than 950 private company pension plans with assets worth about $100-billion. A handful of those pension plans could become insolvent this year if the companies declare bankruptcy, Quebec Employment Minister Sam Hamad said yesterday.

Under a bill tabled yesterday, the Quebec Pension Plan (known as the Régie des rentes du Québec) will take over the management of insolvent pension plans and guarantee retirement income for five years to those who are entitled. If proved successful, the measure could be extended beyond the five years and perhaps become permanent, a senior government official said yesterday. The fund could also be transferred to an insurance company.

#41 dekethegeek on 01.15.09 at 8:10 pm

GASP!
No Earth Shattering predictions from Real Estate Expert (aka North Van Grow Op Dude) about Onni Developements’ “price slash”?
I’m shocked and discombobulated, ‘Twas hopin’ you’d have some sage words of Real Estate wisdom for all them there Eastern canadian folk about immigrating to the”Wet Coast” and snapping up all those cheap,leaky condos. Even at 40% off they’re still crap. California stucco on top of soggy particle board( and they wonder why these things leak )>
So all you easterners who are shivering in minus-40-god-awful-winter-like-conditions.
Dont sweat it. Just wait for the HOUSES to drop to a more reasonable price like $350,000 for a 2000 sq ft North Van hacienda.( 2-3 years, tops!). Dont waste you hard earned schekels on leaky,mouldy ,noisy, bee-hives that devaluate like a bicycle tire at a thumbtack convention. Wait for the HOUSES to drop . Then buy.
You heard it here first.
Over to you, North Van Ganga Smokin Real Estate Expert.

#42 #2 --> Home Price Index on 01 on 01.15.09 at 10:35 pm

my friend, they forgot to include NOV and DEC data, so the graphs averages are skewed

#43 Basement Dweller on 01.16.09 at 12:18 pm

I was reading your book last night when the power went out in West End Toronto. Luckily I had bought a hand crank flashlight, and emergency candles. It was much easier to convince my wife we should get a generator then it would have been otherwise.

How many people here are spreading the word about preparedness to friends and co-workers? I’m finding it awkward. A co-worker put $20,000 on a condo which is just about ready now… She bought it at peak prices. I suggested she should walk away. The condo is 6 months late, and she might get her deposit back.

A few other co-workers and friends really resent the thought of prices dropping, and so I’ve become very careful about speaking about the economy/housing.

I feel obligated to mention it, but tread lightly…
Anyone else

#44 Declan on 01.16.09 at 1:38 pm

Just to clarify: Any mortgages that are insured through CMHC are fully insured, so the bank has no credit risk and the government has the full risk, even if the house sells for next to nothing and the entire amount of the loan is lost (incidentally, the mortgages insured by Genworth are also 90% insured by the government (with a 10% deductible)).

The reason the government bought the insured mortgages from the banks was not to transfer credit risk, but rather as an indirect way of providing a low interest loan to the banks.

The way it works is the banks get the cash up front and in return they give the interest on the mortgages in question (plus some additional amount) to the government. You could say that the banks have mortgaged their mortgage assets.

It doesn’t really change the main point of the post though, that the government is on the hook for a whole lot of losses, I hope they saved up enough money during the boom years to cover them.

#45 Sun Tzu on 01.16.09 at 9:03 pm

I just got this e-mail.

DELETED – Post that kind of commercial stock pumper junk again, and you are off the blog. — Garth

#46 Sun Tzu on 01.16.09 at 9:15 pm

this is a foreclosure in sylvan lake Alberta. Is this how foreclosures work? $300,000+?

http://www.realtor.ca/propertyDetails.aspx?propertyId=7829543

These are on the same street and are not foreclosures

http://www.realtor.ca/propertyDetails.aspx?propertyId=7705531
http://www.realtor.ca/propertyDetails.aspx?propertyId=7834797
http://www.realtor.ca/propertyDetails.aspx?propertyId=7823780

Do realtors inflate the price of foreclosed homes?