This is a story about broken promises. At the least, shattered expectations.

Samantha and Bill bought a three-bedroom town in suburban Toronto three years ago for $272,000. Not the most creditworthy people in the world, but at least Bill had a steady job working at Hallmark Cards, enough to support a family with four kids.

They went to the bank for a mortgage, but because they were ‘Alt B’ borrowers, ended up having the branch direct them to another, smaller lender – still, a company big enough to have a $2 billion loan portfolio. And, joyfully, they were approved for 100% financing. Even better, says Sam, “we were told that renewal in three years was practically guaranteed.”

In the meantime, the world rushed past their door. Hallmark closed its Canadian operation, and moved its plant to China. The US real estate bubble popped and helped create a financial crisis. Oil at $147 a barrel stopped the global economy in its tracks. Their mortgage company went from making money to losing it.

By the time Sam got around to emailing me for help, they had been forced into foreclosure. The lender told this family it did not qualify for lending anymore, period. This was despite the cash that had been drained from this Brampton townhouse to the downtown Toronto tower. Sam and Bill have paid 9.15% ($2,700 a month) while most homeowners financed at half the cost. They’ve also seen their mortgage principal actually rise, since closing costs were capitalized and amortized, bumping the loan amount to $303,000.

“I feel that the company is acting in poor faith here, and even beyond the moral aspect, I think they are acting insensibly,” Sam says. “I mean, the house is worth less than what is owed so wouldn’t it make more sense for them to renew our mortgage at a REASONABLE RATE OF INTEREST than force the eviction of a family and a short sale which would then likely result in the family having to go bankrupt in the face of an unpayable debt?

“Is there any help for CANADIANS who are caught in this sub-prime crunch?  I have searched and searched but cannot seem to find any government aid for Canadians in our predicament.”

And, of course, there’s none. We have no laws forcing corporations to show compassion or respect, and there is now no sympathy for people who bought houses without money. So, they are trying to bail. The house is now listed for sale, at $310,000. Even if they sell for close to that, say three hundred, after commission, legals and moving expense, they will be underwater by at least $23,000.

So, after paying $97,000 in mortgage payments (plus property taxes, insurance and maintenance), they will have negative equity of $23,000, for a total outlay of $120,000. Enough to wipe a family out. Enough to make a man, forced back to school to learn a new trade, despair. Certainly enough to make an industrious woman ask, “Where is the morality in mortgage companies being able to pick and choose which customers they will continue to do business with?  I really think, especially in light of these economic times, that the government needs to provide some legislation and relief to families to keep them in their homes.  I cannot see how it benefits anyone to have this sort of thing going on en mass.”

Some relevant points:

I know this company and its head guy. I know its history in being associated with one of the Big Five banks. I know how, about the time Sam and Bill got their loan, it was on a hard and fast track to mainstream respectability. It even pulled off an IPO.

I’m not naming it now, since I told Sam I’d try to put in a good word for her with the man. Let’s see what he says before he gets hammered.

Second, I have often said on this blog that things will never end well when people without money buy houses. Case in point.

But who’s to blame? A couple with four kids falling victim to the social disease of homeownership when they’d have been vastly better off as tenants? The realtor who sold them a piece of real estate? The housing executives who urged everyone to own, and the media who repeated it? The lawyer who executed their deal? The bank which referred them to an alternative lender? The company that approved, and wrote the mortgage?

Did they not all walk off with a piece of Sam and Bill’s life?

Where are the checks and balances in the system that prevent people without means from ‘buying’ assets they’ll never be able to afford? And how’s this different from the lack of morality in the US subprime business, or the 0/40 loans the Government of Canada approved?

The smell of prey, irresistible still.

Update, 6 pm EDT:

Sam has read most of the comments posted here, and sends me this note:

I saw the article on your blog and thank you for taking time to write what you did.  I can understand that most of your readers would not be sympathetic to the situation.  In a time of economic crunch, you cannot expect people to philosophize about the American (where that term is generic) dream and how people will try to own their little piece of whatever country they are in for their kids.  Was it stupid to purchase with no money down (actually we did have to pay about $20000 for their insurance!) … yes, it was.  However, the bigger picture here is that it will ultimately, in my opinion, cost the proverbial tax-payer more if families are removed from their homes and real estate is sold for less than its value than if something is done to keep families in their homes.  Ultimately, home owners are good for the economy.

My husband was management within Hallmark so his salary, while he held that position was good.  And, Hallmark is being given lots of time by the government to issue things like pension – which could be accessed to help pay off debt – through the very type of legislation your readers feel shouldn’t be extended to help people such as us!

Again though, I do understand why people might not be sympathetic to our situation or might consider us financially illiterate, bordering on imbecilic.  We are not imbeciles though!  Which makes this type of situation all the worse I think.  At least being an idiot might be an excuse for this mess!


Second wave of crisis coming: Brown -- here.


#1 rant in Calgary on 07.07.09 at 10:45 pm

Can you protect people who were denied at a bank and did not take a hint?
I’m sure their realtor will send them a “Made in China” Hallmark card expressing sympathies!

#2 Republic_of_Western_Canada on 07.07.09 at 10:45 pm

What the hell were they doing with 4 damn kids, in an urban area no less? Idiots. Financial illiteracy is the least of their problems.

Note to those who still don’t get it – perpetrating overpopulation DOES NOT morally entitle you to preferential treatment over anyone else, nor special consideration when times get tough. (Even regardless of such rancid provisions in the tax code.)

#3 Wesley Moxam on 07.07.09 at 10:54 pm

Interesting Read on housing affordability in the Anglosphere:

The report looks at Price / Income Multiples.
Some interesting fact:

“Among the major markets, Vancouver is the least affordable, with a Median Multiple of 8.3, followed by Sydney (8.3), San Francisco (8.0), San Jose (7.2), Adelaide (7.1), Melbourne (7.1) New York (7.0) and London (6.9).”

“Winnipeg is Canada’s largest “affordable” market”

#4 davers on 07.07.09 at 11:32 pm

Sounds like they got the short end of the stick, but they aren’t completely blameless. When they say things like this it aggravates me a tad :

“I really think, especially in light of these economic times, that the government needs to provide some legislation and relief to families to keep them in their homes. I cannot see how it benefits anyone to have this sort of thing going on en mass.”

First of all, sad as it may be, it benefits me when this happens, because I want to purchase a home at a reasonable price. I am not saying I want people to lose their homes, but if people keep buying places they can’t afford with no consequence, it drives the price up for me, a responsible person trying to get a home he CAN afford.

Second, if the government were to help people keep their homes (by spending my tax dollars) how is this fair to me? Basically she wants the government to use everyones tax money to help the people who irresponsibly purchased a home they could not afford. It just doesn’t seem fair to help the people who made mistakes, which in turn, screws the people who tried to be responsible.

I sympathize with their problem, but it seems they were refused a mortgage by a reputable bank and went to a more risky one. The risky ones get hurt the most when things go bad, so they have to make up for it by charging higher rates.

It’s like getting turned down by the bank, then going to the loan shark down the street who will take your liver if you don’t pay. The fact that the bank turned you down should have set off some warning bells.

#5 AppleCrunch on 07.07.09 at 11:34 pm

It is their own fault for buying something they could not afford but what’s done is done… It is time for them to learn from their mistakes and start anew.

#6 TJ on 07.08.09 at 12:05 am

This is a special day for Lisa Boland.

She is getting her wedding ring out of hock.

She pawned it recently at Money Town Pawn Shop, 2425 S. Oliver, to get quick cash for an emergency trip out of town.

The half-carat diamond ring was presented to her three years ago by her husband, Scott, who is stationed at McConnell Air Force Base at a rank not yet high enough to provide for sudden emergency trips out of town.

“It’s a very good day,” Boland says as she and her husband walk out of the shop.

In this recession, more and more people have been forced to pawn luxury items for the small temporary loans that banks don’t make — to cover emergencies or simply to make it through the week.

A man recently laid off after 30 years in aircraft brings in a Hoover vacuum cleaner with no bag on it. He gets $20 for it to get through the day.

“Times are bad,” he says on his way out of the store, declining to give his name out of embarrassment. “Times are real bad.”

Sadly, many have fallen ‘prey’ to the loan sharks. I mean, lets call them for what they are. Sharks.

There is a rumor that the total OFF BOOKS for absurd ‘casino like’ – Credit Default Swaps and arcane Structured Investment Vehicles, total $500 Trillion.

Whole Countries, like Hungary and Ireland, and now Austria and even Switzerland have been choking on their Derivatives and crap loans.

California was downgraded to BBB today. Now California bonds are no longer investment grade and can’t be included in many Pension plans and Investment pools.

Too much ‘easy money’ has swamped millions.

Oh, and there is no such thing as ‘easy money’.

Just ask Sam and Bill.

#7 Lance on 07.08.09 at 12:12 am

100% leveraged on an illiquid, price volatile investment worth many multiples of your annual income… how could this be a bad idea? Just think of the upward potential!

Far too few people understand the serious risk they undertake with such an investment decision. The false illusion of expecting house prices to always rise will end up financially destroying millions of familes. It seems that every generation has to learn this painful lesson. I am lucky enough to remember watching my parents learning it in 1981 (went from prosperity one year to requiring the food bank the next).

#8 Jon B on 07.08.09 at 12:14 am

How typically Canadian. Thinking the government has a duty to bail these people out a bad decision brought on by their extreme stupidity. I guess that’s why this place is called a Nanny State. I don’t care how pushy the Realtors are or how aggressive the lending institutions get, the only people to blame when things go wrong are the borrowers.

#9 i'm sorry... on 07.08.09 at 12:22 am

what am i supposed to feel for people who financed at 100% ?
i am terribly sorry, but i cannot extend a sympathic thought for their plight. they wanted the house and they got a house. using the wrong financing, and buying at a bad time.
i find it ironic that we post stuff on this site all the time preaching to each other about getting the right financing and waiting for that opportune time to purchase a house. and yet, we also post comments about people who made wrong choices. and along with those wrong choices, come the suggestions about damage control.
sorry, i cannot see why this posting is titled ‘prey’ when at the end of the day, they made the consious choice in signing the papers. as for the past economic history and events, that is how things had happened. it is always a gamble and putting the blame on governments and corporations is simply just using them as a scape goat for their unfortunate condition. i do understand that the government and corporations don’t really give a damn but at the same time, the choice is theirs, and theirs alone.

#10 Alberta Ed on 07.08.09 at 12:26 am

Seems like there will be a lot more of this going around, soon. Alberta’s ripe fruit, ready to fall…

#11 Bailing in B.C. on 07.08.09 at 12:49 am

It amazes me how otherwise intelligent people, even in light of what has happened down in the states, can still ask “what difference does it make what your house is worth, if you’re not going to sell it?”

I guess it makes no difference if you have no mortgage on it, but the couple in question certainly have learnt the hard way, that it makes a hell of a difference if you do.

#12 Nostradamus Le Mad Vlad on 07.08.09 at 1:22 am

“But who’s to blame?” — Easy for me to say, but why was the bank so eager and happy to set the couple up without doing some basic research, instead of just rubber-stamping an overly-large mortgage?

It was more than willing to reap the benefits when the cash started flowing in, increasing their profits. Perhaps top brass at the bank didn’t bother looking beyond the ends of their noses, expect a 15% down payment and the other fees added on top.

The RE salesperson, housing executives, media-types, lawyer(s), etc. — they are no more than bricks in the wall, simply passengers at a bus stop, all shuffling papers between one another.

When it comes to sitting in ivory towers, filled with shimmering glass then greed knows no boundaries.
Are we comfortable? Good! Then let’s begin! Deux links. — /\

From the first: “. . . the automobile industry, the airlines, 37 out of 50 states, are bankrupt. The lending industry, Fannie Mae, Freddie Mac are bankrupt. Insurance giant AIG, bankrupt. . . . In 1929 personal and corporate debt had risen to 365% of Gross Domestic Product, or GDP, before the Crash. We are now at 375% of GDP. . . .”

From #2: “British Currency May Crumble . . . The probability of a real sterling crisis is around one in three, and the probability of major tax hikes and cuts in public spending is roughly one in one,” the British financial historian told Bloomberg Markets.” [This could be why Russia, China, Brazil, India and others are pushing for a new global currency.]
If the Soviets, who had 500,000 ground troops and yet retreated from Af’stan, it’s not all that surprising to see that things aren’t going well for the US, Brits and Canada, with less than half the original troop total there. —

Exactly the same as Vietnam. Vietnamese went underground, America lost. Could be that is the reason why Israel trashed the tunnels in Gaza. —
Sumtin’s knot kwite ryte with the vaccines! —
Curious that one country can lecture another about invasions. Say, where ARE those damned WMD in Eye-Rack? Gotta be here somewhere! —

Talk is cheap, but the war drums are heating up to replace the near-lifeless economies thruout the world. —

#13 Philip on 07.08.09 at 1:29 am

Shouldn’t the amount this family would have paid out to rent an equivalent condo be subtracted from the $97K mortgage payments? I don’t know what rental rates are in TO, but googling “three bedroom condo to rent suburban Toronto” turned up at least $1500/month. Over 3 years, that’s still $54,000.

As you noted, the mortgage had a very high interest rate, so at a more reasonable mortgage rate over that period, say 5%, the total payments would probably not be more than 10% above the rental equivalent.

Garth, I think you need to factor equivalent rental into your calculations. My philosophy has always been that whether I rent or own, I have to pay someone for the accommodation, so I might as well keep some of the money in my own pocket (through equity gain) instead of putting it all into a landlord’s pocket.

#14 Munch on 07.08.09 at 1:43 am

Let’s not confuse morality and business – nobody HAS to lend to anybody, ethical or not. Personally, I wouldn’t hammer anyone for not lending to someone who cannot pay it back, especially if he’s running the book with MY money!

And let’s not confuse intelligence and the ability to work with money, either. As the great PJ O’Rourke once wrote about the Russians who were highly intelligent (“chess was a spectator sport”) yet generally poor (“boiling stones for soup”).

Everyone is conditioned to “making a quick buck” through housing or other schemes. Not to be happy though – to be less UNhappy! As someone famous once said [coughing into sleeve] “Money can’t buy you happiness, but it CAN buy you a much higher quality of unhappiness”

#15 Coho on 07.08.09 at 2:24 am

97 grand over three years for a roof over one’s head. And we consider ourselves “free people”? Pretty soon we’ll have to ask the HOUSE for permission to go for a beer or have dinner out. Talk about a ball and chain…not just for these people, but for many others in western countries where house prices have hit insane levels.

I don’t think the intent behind mortgage lending has ever been checks and balances to prevent people from buying things they can’t afford. Rather it has been banks setting up guidlines that will give them the best chance of getting paid. Reasonable enough, but let’s not kid ourselves that the welfare of Sam and Bill, or John and Mary Homeowners are at the heart of any loan, particularly nowadays.

Unfortunately Sam and Bill are finding out the hard way about the “morality” and “compassion” of lenders, or lack thereof. After all, they are corporations concerned only for their own welfare. By their very nature they are psychopathic, much like some people, except corporations have no feelings.

It’s costly education but not as much as many of these first time buyers will pay for theirs.

#16 Mike (Authentic) on 07.08.09 at 2:25 am

It pains me to say this, but both sides are in the wrong and both should not be shown much sympathy. The bright side is that both have learned a life lesson (an expensive one).

The buyers knew being turned away from the bank and going to a Alt-B lender for 100% financing that they were on “not so prime” financial ground to buy a home, but they accepted the 100% and insane 9.15% mortgage rate.

The lender, looking to boost it’s profits and take advantage of the bubble gave out money like free timbits, most likely knowing it was on “not so prime” financial ground via it’s borrowers.

There should be no bailouts, no gov’t support or aid, both parties were cognisant of what they were doing, lending and buying. A deal is a deal.

It must hurt; hurt a lot (for both) and I’m sorry for that, but next time let’s hope neither (and others) repeats the same mistakes. That lesson is worth more than a bailout.

But we do have MANY different systems to help Canadians in Canada that are out of work, can’t afford to live or support their families.

Want sympathy in Canada, our gov’t is one of the best for it and we pay our taxes to offer it.


#17 Phil on 07.08.09 at 2:30 am

Sam and Bill are out of luck… But don’t worry, the government will bail out the banks with our tax dollars. Crazy times!

#18 Zoronqueen on 07.08.09 at 2:41 am

Where are the checks and balances in the system that prevent people without means from ‘buying’ assets they’ll never be able to afford? And how’s this different from the lack of morality in the US subprime business, or the 0/40 loans the Government of Canada approved?–Garth

IMHO–this system is bound to fail but not before they can squeeze the last drop out of the working middle/poor.

Alberta new health care reforms—Now Alberta health regions are combined to one region called the Alberta health services. Another political scam to deteriorate the health of people by providing poor service in a universal health care system. They are trying to make it like it’s the politicians/economist vs the health care workers. However it’s really about depressing the wages of everyone. Maybe a good thing but ultimately it’s the consumers of health who suffer.

This will ultimately discourage usage and probably save money but it will also lead to people with money putting it into private health care rather than wait in line like the rest. IMHO

#19 BBC on 07.08.09 at 3:27 am

This is JUST like the subprime mess! I don’t know the answers to all your questions Garth but I do know that I don’t want to have to pay for Sam and Bill’s problem via gov’t bailout or the sort. I feel for the their perdicament but I have a family of my own to look out for and it just doesn’t seem fair for them to own a home if they can’t afford to. Ultimately, all Canadians will have to ‘pay’ for these problems to some extent (inflation, taxes, etc.) but it is time for all of us to live within our means. People are what make a ‘Home’! Time to rent and move forward.

#20 Rick on 07.08.09 at 6:04 am

I hate people with NO MONEY cry boo hoo. It’s because of financially stupid people who bought homes with NO MONEY which have made homes for people WITH MONEY more expensive. If you have NO MONEY you should not have boguht a house. I can only hope those who bought with NO MONEY or 5% suffer the same fate. Went shopping the other day and stood behide this NO MONEY who had to split a bill into three parts. One part on debit and two parts of credit which one part of credit was declined so mr.NO MONEY got another credit card to complete the transaction. When NO MONEY enters the market NO MONEY artificially increases the price of everything from consumer goods to homes and services. Why do I with MONEY have to bid against people with NO MONEY? Stop your crying NO MONEY. If I have NO MONEY I simply DO NOT BUY.

#21 robert j on 07.08.09 at 7:24 am

question: Where does Harper and Flahertys CMHC Bailout Out of the chartered banks with taxpayer $$$’s fit into this mess ? Ohhhhhh yes …. it’s a loan guaranteed and will make money. hmmmmmmmmmmm ……

#22 Herb on 07.08.09 at 7:35 am

We are not blaming the victims enough: the nerve, being one job loss away from poor and wanting a slice of the advertised good life!

Let’s put the Sams and the lenders into perspective:

To steal a flower we call mean,
to rob a field is chivalry.</i) – Khalil Gibran

Anyone know what bailing out the customers vice bailing out the banks would have done to or for the economy?

#23 Ben on 07.08.09 at 7:46 am

Sad story.

A lot of people not showing much sympathy. And it’s true that ultimately people need to be accountable for their actions – the buck has to stop somewhere.

To me, this story is a symptom of how the world works: the strong and rich prey on the weak and poor.

Those of us blessed with good genetics and higher education are able to learn the ropes of this world quickly, and play profitably within the rules, learning easily the financial pitfalls to avoid and the mitigation steps to do so.

Those with lesser abilities, education and financial literacy stagger like a punch-drunk boxer from round to round, absorbing blow after blow from the corporations and having the coins shook from their pockets to roll across the canvas into the hands of the greedy shareholders filling that arena.

I am sorry for Sam and Bill. I am sorry Hallmark moved its plant to Mexico, putting Bill out of work. I am sorry those 4 children will not know what it is like to have nutritious food in the home, experience a camping vacation, get a new bicycle at Christmas, or go on school trips with their classmates. Many years have passed since my family’s dance with poverty in the growing years, and the memories have faded somewhat, but thinking of these kids brings the memories flooding back.

We can debate how much of the blame is due the parents – this is arbitrary. The children are blameless victims – this is absolute.

#24 D from London, ON on 07.08.09 at 7:49 am

# 20 Rick

I understand your point completely. Now what would have happened to the price of equities over the past 25 years if corporations and investment vehicles with NO MONEY were not allowed to buy (other corporations and/or their assets)? Likely we would not have seen the run-up of the stock markets, nor their current and continuing unwinding…

No credit, no bubble. At least that’s what my Grade 10 history teacher told us in 1979 (he did – seriously)…

#25 lgre on 07.08.09 at 7:54 am

They are all responsible, but the buyers more so as they make the final decision on a purchase, and will be making the payments. Why anyone would take on that kind of debt with one income, 4 kids and no dp boggles my mind.

My sister and bro in law bought their house 2 years ago with an 8% rate and a 12% second mortgage because he had a bankruptcy..they did put $40k down on a $220k TH but it just shows that rates are low but not for everyone.

#26 Munch on 07.08.09 at 8:16 am

hey Rick?

Why don’t you tell us how you REALLY feel about people with NO MONEY?

You know you want to, and I’m dying to hear it!


Munch (for Garth)


#27 JT on 07.08.09 at 8:16 am

Let’s see.. I pay $1,475, utilties in, get my grass cut, snow shoveled, plumbing and electrical paid for, live five homes away from the lake, south of Lakeshore Rd in Lorne Park / Port Credit Mississauga.. right on the Waterfront Trail, huge century old trees lining all the streets (for those who don’t know, it’s an amazing lifestyle down here – waterfront park after waterfront park).

Or I could pay $2,700 for a town in the middle of brampton – add in utilities, taxes, benefits, and you are up to $3500 a month.

So I pay $2,000 less to live on the water in one of the nicest communities in Ontario, rather than one of the most monotonous, road ugly places suburbs.

#28 JeffinPickering on 07.08.09 at 8:27 am

Like most so far, I have little sympathy for what happened here. It is unfortunate that they are going to go through an absolutely miserable time financially for likely years to come.
However, why should we bail them out? And I say ‘we’, because that’s where the money comes from.
The social safety net in Canada is designed for when you fall ill or injured, or when your job gets shipped to China because someone there will do it for 50 cents a day, etc. In other words, circumstances that are often beyond your control.
It’s not for when you make an immensely stupid mistake, regardless of who or how many parties enabled you to do it.

However, if they drag it out long enough, they might just get lucky when it comes to a consumer level bailout….that’s after the greedy little banks and mortgage companies get their bailout.
And all of us who didn’t make stupid decisions to spend beyond our means will have to pay for it.

#29 pbrasseur on 07.08.09 at 8:33 am

I think the point is here that if you buy something with credit, without any king of cushion, and then loose you job then you’re screwed.

If you bought with no money then you run the additional risk of owing more than what you house is worth. If the market declines that could become a problem in Canada where non-recourse loans are not the norm.

Things are very different in the US, this study shows that at least 26% of mortgage defaults are strategic.

“We use survey data to study American households’ propensity to default when the value of their mortgage exceeds the value of their house even if they can afford to pay their mortgage (strategic default). We find that 26% of the existing defaults are strategic.”

I think this explains in part why the RE market is less volatile in Canada than in the US. However I still think that home prices will eventually align with household income in both countries.

#30 john m. on 07.08.09 at 8:35 am

Sadly Sam and Bill’s plight is only one of thousands sitting in the shadows.We all have been told by our Government that all will be fine in’s only a technical recession… we have been encouraged to borrow (offering the lowest rates in history)….facts about the economy are being “whitewashed” to encourage increased household debt… etc……..our Government is functioning on a credit card in the taxpayer’s names creating a false economy belching out propaganda that is not remotely truthful IMO. Daily more lambs are led to the slaughter and the numbers are increasing—things are not getting better! What is the motivation behind this propaganda..i wonder? Is it deliberate fraud to destroy the economy or stupidity? Anyone who believes this propaganda and is banking on a quick cure after the destruction of years of wealth,and jobs is certainly out of touch with reality. IMO

#31 Bill-Muskoka (NAM) on 07.08.09 at 8:46 am


The real problem is the idiotic Canadian 5 year mortgage term. In the U.S. your mortgage is for the full term. Make the payments and no need to re-qualify every five years, and yes, you can refinance if you like and it makes sense. That seems to be the main problem this couple is facing.

The real scam is by the lenders who have a nice GOTCHA opportunity every five years. Who ever thought that was a good piece of legislation?

#32 TS on 07.08.09 at 9:06 am

Hi Garth,

Very insightful posting (as always). Until people start to take personal responsibility for their decisions these kinds of situations will continue to happen. As you always point out, when people buy homes with no money down – it never ends well.

The following link will take readers to a very interesting piece on whay may very well lay ahead for North America…a major economic downturn with what we’re going through right now only a small sampling of the future. The bull market rally in 2009 is set to end soon (or perhaps already is/has ended) and we’ll see significantly more unemployment, economic contraction and with it a huge “sssssssssssssssssss” sound as the air drains from the current real estate bubble.

#33 Peter @ Canadian Banks on 07.08.09 at 9:07 am

As adults they have to take full responsibility for their actions. They gambled and they lost; now they have to pay the price. More cases like this will force the inflated real estate prices down, and will ultimately make housing more affordable, which is a good thing.

As for morality, how moral is to borrow 100%, buy something you cannot really afford and help inflate the housing bubble, while leaving prudent savers eating dust?

#34 Soylent Green is People on 07.08.09 at 9:11 am

These financial morons are looking for government aid?

Are you kidding me?

When I bought my first house, we starved ourselves to make sure we had 25% downpayment. I had no help from MSM, my parents had no clue, my real esate agent obviously wanted us to buy, I had no one to advise me re what the market was doing, I was all on my own.

Guess what, I figured it out by myself.

Government aid…

I think what they want is simply to have their mortgage renewed. It is in good standing. — Garth

#35 Signal Loss on 07.08.09 at 9:27 am

four kids and a job at hallmark = a $300,000 house? the die was cast the day they decided to get in the car, hit the timmies and then drive to the bank to mortgage themselves far beyond their means. i feel sorry for the kids in having to suffer through a precipitous decline in standard of living, but the experience might instill something in them that ends up being positive. Attacking the bank and the lawyers on this? Why? The lawyer was retained to facilitate a transaction and therefore was owed a fee. The bank offered to give someone money under certain terms. The person reviewed the terms and took the bank’s money. I guess the bank can be accused of lack of judgment in lending the money in the first place and in killing off its own client base by not working with its debtor to recover something, but legislation? I’m not sure.

#36 Toronto C9 Renter on 07.08.09 at 9:31 am

Sad tale, no question. But I do agree with those Posters saying that “ultimately people need to be accountable for their actions”. Just part of being an adult.

Having said that, I don’t agree that financial leverage is evil. Used properly, with appropriate risk mitigation, it’s an essential tool for business and for individuals.

Personally even if I

#37 Toronto C9 Renter on 07.08.09 at 9:33 am

dang that submit button Garth! too close to the comment box :)

Personally even if I could use cash for my next RE purchase (which I can!) I don’t intend to. I will finance part of it to increase leverage, take advantage of tax opportunities, etc etc

#38 X on 07.08.09 at 9:43 am

Agree with #4 davers, I do feel sorry for the couple, but am aware that the lender is in business to make $.

I think a gov’t bailout for any home owner is unreasonable.

Perhaps changing the rules about the mortgage terms/length (like the states) or making it law to have to put down 20% on a house would protect this type of home buyer from themselves.

#39 Chris no longer in England on 07.08.09 at 9:49 am

Dear Republic of Western Canada, I was not aware that it is illegal to have four children in “an urban area”. What else do you frown upon?

#40 Denis on 07.08.09 at 9:50 am

#13 Philip on 07.08.09 at 1:29 am
Shouldn’t the amount this family would have paid out to rent an equivalent condo be subtracted from the $97K mortgage payments? I don’t know what rental rates are in TO, but googling “three bedroom condo to rent suburban Toronto” turned up at least $1500/month. Over 3 years, that’s still $54,000.

As you noted, the mortgage had a very high interest rate, so at a more reasonable mortgage rate over that period, say 5%, the total payments would probably not be more than 10% above the rental equivalent.

Garth, I think you need to factor equivalent rental into your calculations. My philosophy has always been that whether I rent or own, I have to pay someone for the accommodation, so I might as well keep some of the money in my own pocket (through equity gain) instead of putting it all into a landlord’s pocket.
You’re right in having to look at the opportunity cost when evaluating the rent vs own. But in this case it still doesn’t make any sense to own for them, regardless of the “principle paydown” … In Total, they were looking at $97k mortgage payments – $54k Rental Payments = $43k additional cost of owning. Would they have built up $43k of “equity” through principle pay down/forced savings over 3 years? Doubtful.

Divide by 3 and then by 12 … That’s $1194.44/month. I’m guessing that’s about 2-3 times greater than what their principle pay down actually was in their mortgage (probably even more of a dismal principle pay down if they extended the am to 35 years leaving them with next to no principle pay down).

They would have had much more cash flow renting and if they paid themselves 10% first (which would be much less than that $1400/month), they’d be in a much better position today.

#41 Larry on 07.08.09 at 9:50 am

Firstly the whole system needs a revamp, there is no way this couple should have considered or been considered for a mortage of 300k on 1 income with 4 kids. We can say SOL to them but the bottom line is that we all pay for easy credit. Heck my ING savings account dropped from 3.5% to 1.85% in 2 months because of this mess. They are in good standing with thier payments so the lender should reach a compromise alas in this world of greed they are screwed.

#42 wakeup & smell the coffee on 07.08.09 at 9:51 am

I say: sell and be thankful the market is up for now. Over $30000 a year is unsustainable for them no matter what.

They will be under water soon and no skin in the game! That spells default sooner than later. Lender knows that. So we all, here.

Why hang on?

#43 Dan in Victoria on 07.08.09 at 9:56 am

Theres no shortage of blame to go around here.But if I understand properly they have lived up to their end of the bargin by keeping current on their payments.”If so”,they have played by the rules,the goal posts have been moved.Hopefully something positive can be worked out.No, they should NEVER EVER have bought in their circumstances,we all know that.And the government should NOT bail them out.Let the checks and balances work.On the other hand show some compassion for your fellow man,money is not everything.Think of how these people have scrimped to pay that mortgage every month,what are the kids wearing,what are christmases like?How many sleepless nights for the parents?I grew up with nothing,was teased at school for wearing home made clothes,and bowl haircuts.I see that bunch is still around.Let us know how this one plays out Garth.

#44 Larry on 07.08.09 at 9:57 am

Interesting read on how to fix the mess.

#45 smw on 07.08.09 at 9:59 am

Its not a subprime crunch… The general public has attached the stigma that “subprime” is a crack addict loan. These Alt-A, ARM loans have been handed out to people with good credit scores and bad credit scores…

…its a credit squeeze, its a margin call, its an attack on the middle class. No prejudice in these loans, they are bad for credit worthy and non credity worthy alike.

And guess what Canada, they’re here and they’re unfortunately being used more and more as affordibility is erroded. And there is no throwing the keys away in Canada, unlike in America where you can walk away, you owe the bank the difference in a POS here in smarter than the rest of the world land…

Rick, great attitude. Do you know what empathy is? You may have a point, but do it with some dignity and class.

#46 PTDBD on 07.08.09 at 10:00 am

Ahhhhh – now for the good news!

1) The IMF says that the wurst of the Global Recession is behind us. Even so, drumbeat bleatings of a needed “second stimulus” are echoing from the subway walls. Once you plug into that prestidigitizerpaperpleasurizer it feels ever sooooo good. Why would you ever unplug?

2) More good news…The G8 heros of magic have discovered the world global thermostat. They will keep global warming to 2 degrees C. (I kid u not)

3) It is rumoured that so much ?”real money”? is being generated in virtual games played by millions that venture capitalists and government think tanks are uniting to bootstrap these earnings into the Fed balance sheet
:-) going forward ;-)

#47 ethics 101 on 07.08.09 at 10:06 am

Garth is right on asking the question whether it’s the duty of these financial/industry savvy to forewarn them. Or our society has became so vicious and make for the kill at any chance they can get.
The mortgage company did make a right business decision to foreclose their home because down the road these 2 wouldn’t be able to pay. Ending their misery early and that’s the ethics. $2700/month on a single income and not at executive level? Who are they kidding?

#48 LS on 07.08.09 at 10:18 am

“I think what they want is simply to have their mortgage renewed. It is in good standing. — Garth”

This is very interesting. I figured banks would continue to renew mortgages as long as it was still being paid, and that’s what everyone has been telling me.

The fact that this is not the case, and the bank would rather reposess the home than continue to collect on the mortgage could be bad news for all those jumping in at today’s rates.

But the real question is, is it actually better for them to renew their mortgage? Sure they stay in their house, but they pay an astronomical amount for it. Wouldn’t it be better to take the loss while they can (since the market is good now) and then rent?

#49 Munch on 07.08.09 at 10:19 am

Perhaps no-one is to blame?

If you trace back to the motives of everyone involved, you can make a case for everyone just “being human” – insofar as everyone just wants to make a buck and give the best they can to their families.

Ignorance IS an excuse, in my book!

Where someone acted wilfully then yes perhaps they should carry blame, but on the whole I think we just have to accept that this is how human beings behave – they always have and they always will – and that apportioning blame serves no purpose.

or NOT!

#50 Leonard on 07.08.09 at 10:24 am

The Government responsibility is to protect the common good and the people against private interests.

Several years of deregulation later – all favourable to the market place – and here we are with tragic results like this couple.

I am not saying this couple has not the responsibility to educate themselves before making such a huge investment decision, but the Government role is to protect the people from preys. We are suppose not to leave in jungle but in a civilisation? Politicians did and continuous to fail us big time.

Preys are there because the GOVT let them play around, and yet, it seems not interested in stopping them anytime soon.

Cheers from Shanghai

#51 Dean on 07.08.09 at 10:25 am

Too late to regulate now Garth. Don’t worry though, once it all collapses everyone will be tripping over each other in Ottawa to introduce this regulation and post-emptively save us all.

These people are victims, plain and simple. The system is set up to extract maximum profit from people’s ignorance. When you walk into a bank, then deal with a lawyer and buy insurance from the CMHC to get this crap deal — I think somewhere along the way you should be tapped on the shoulder and told that you’re being screwed.

It wouldn’t take a hell of a lot of regulation to get rid of most of these questionable practices. The key is to keep it simple.

#52 PTDBD on 07.08.09 at 10:32 am

A cruel headline:
New Canadian swine virus may be dead-end

#53 AndyE on 07.08.09 at 10:44 am


I’d suggest that by refinancing they are doubling down on the same mistake made in the first place. As home prices decline they are ultimately in a worse position. By taking their lumps now they are out $21k and can significantly lower their monthly payments. The market is able to operate freely where folks who don’t warrant recieving credit aren’t recieving it. And ultimately the home price distortions are brought in line.

The solution to too much easy credit isn’t more easy credit.


#54 Rick on 07.08.09 at 10:48 am

smw “Rick, great attitude. Do you know what empathy is? You may have a point, but do it with some dignity and class”

I do not think you understand how NO MONEY effects your wallet and life. Now that NO MONEY is running out of credit , stores are empty and sale discounts are everywhere. I no longer have to haggle with sales people to lower their overvalued product items. I no longer have to wait for an hour to eat at a restaurant. Now that NO MONEY is maxed out , sale discounts are everywhere and for the most part the only people buying is people with money. This recession/depression is a CREDIT issue where people with NO MONEY bought and bought and bought until they maxed out/ lenders put in a ceiling . Sorry if I have little empathy for NO MONEY but I WORK and SAVE while NO MONEY lives it up because they feel they deserve it?

#55 kenken on 07.08.09 at 11:00 am

Garth, I question why you should put in a few words for this family.

Dont get me wrong.. I feel sorry for the family and kids but then again, I have to feel sorry for all those who are living in poverty around the world. The difference is…those people did not chose to be poor, they are.
Whereas this guy and family, like millions others who are contributing to make Canadian RE prices soar to records, got into this mess by his own deliberate actions.

I am of the view that everyone should have a roof and food. But doesnot mean you should live beyond your means. When my wife and I were unemployed, we chose not to go and eat a $25 steak but have another decent $12 meal each, although we had much much room on our credit cards.

Some people are greedy and at fault here
but those buyers are too stupid – a roof is a roof, owned or rented – whatever you can afford.

People who are stupid, deserve to pay for their stupidity. If we are in a mess today and in the future, it is mainly because of them

They were offered a mortgage and have abided by its terms. Foreclosing on them, or anyone who is current with their payments, is a decision that should be questioned. — Garth

#56 squidly77 on 07.08.09 at 11:07 am

took me and the wife 6 years to save a 20% deposit on our house
now people buy a house like its a can of soup from macs milk #@&^$%$$##@@(*&

wheres all the gold bugs
where are the energy pigs
speaking of pork wheres eduardo ?;range=2y

cry me a river sunshine shes going over the edge now
bail now

#57 bobotheclown on 07.08.09 at 11:08 am

I’m tired of reading sob stories from those people who were so greedy and weak that they bought without the means to do so. Did they not have a calculator with them when they struck the deal?

Where is the greed? — Garth

#58 squidly77 on 07.08.09 at 11:10 am

im getting all worked up..wrong link

#59 lgre on 07.08.09 at 11:16 am

Free market is dead, I am starting to believe that eventually all these defaults will get bailed out..just like Obamarama is handing out $8k to homebuyers and wants to increase it to $15k..the government, agents, banks love high prices as it benefits them to have it high..governments are destroying economies and are propping up irresponsible people with taxpayer money on a regular basis…its time to learn how to get in the action and not be the guy getting that shaft for being responsible.

Does anyone know if there is a reset as to a previous home owner becoming a ‘first time buyer’ again. I think in the US, after 2-3 years of not owning you become a first time buyer status again..anything like that in Canada..I heard 5 years but not sure if that’s true.

#60 kenken on 07.08.09 at 11:17 am

Garth, thanks for your comments.
Arent you the one preaching that people must know what they are into and not overburden themselves with debt?
Thousands of such foreclosure cases in the US
and as per your forecasts, same will be happening here at mortgage resets.

Middle income families nowadays are being preapproved for mortgage amounts of $600K. Even if they are able to pay their monthly amounts (despite forecast increased in int rates), they may be in trouble at reset in 5 years. Eg, House $600K and Mortgage $570K (5%down) @ roi 4% = monthly of $3000. after 5 years, they owe the bank $500K approx. If the house price has gone down 20%, obviously the bank wont renew. And moreso, if roi are up, monthly payments may hit the roof and hence become un-payable by the family.

MY POINT: given we are in a recession, and everyone is warning of increasing int rates, soaring unemployment, inflation (food, fuel), increasing taxes (to repay the govt mess) – why are stoopid ppl buying and why should others feel sorry for them?

#61 Chris no longer in England on 07.08.09 at 11:19 am

Bill Muskoka (NAM) #31: “The real problem is the idiotic Canadian 5 year mortgage term. In the U.S. your mortgage is for the full term. Make the payments and no need to re-qualify every five years, and yes, you can refinance if you like and it makes sense. That seems to be the main problem this couple is facing.

The real scam is by the lenders who have a nice GOTCHA opportunity every five years. Who ever thought that was a good piece of legislation?”

Couldn’t agree more, Bill and it is the same in the UK. As long as you pay the mortgage, you keep the house, and no periodic hoops to jump through in your dealings with the bank/mortgage lender.

There has been much debate in the past year or so about the British government’s obsession with nailing biometric ID cards to our skulls (these cards, in their original incarnation, would have contained something like 32 separate pieces of information about the individual in order to combat “terrorism” and “identity theft”). There was quite rightly, an outcry over the proposed invasion of privacy, but still a significant number of people popped up bleating, “If you have nothing to hide, you have nothing to fear”. Perhaps not from the government that orders it (though personally I have my doubts on that score) but maybe everything to fear from future governments who will have the power to arbitrarily move the goalposts and criminalise anybody they wish to.

It strikes me the Canadian mortgage system is a similar beast. A benign and kindly force offers a mortgage based on criteria the applicants qualify for at the time of asking, and then a few years later the goalposts are moved, seemingly irrespective of whether the mortgagee is still able to make the payments under the original arrangement.

There have been examples on this blog where people in negative equity were refused a mortage renewal and had no choice but to sell quickly in order to retrieve something – if possible – or lose their home. How is this fair, when under a more sensible system that didn’t demand a review every few years, they could just continue to make the mortgage repayments? Why isn’t it their choice if they want to carry that negative equity for years if need be, and offload the house in their own good time?

I’d say that just like the proposed ID cards in the UK, there is everything to fear in signing on the dotted line and accepting a mortgage from a bank when you have no idea what punitive requirements they might have in mind five years from that date. It seems from many of the comments today that we are all feeling quite full of ourselves, preening about our education, our clever decisions, our ability (as people WITH MONEY) to operate successfully within this system, but as long as the banks/mortgage lenders have the power to make us jump through hoops every few years in order to refinance, the advantages seem to be wholly with them.

In addition, we are all just one (maybe two) job losses away from a similar scenario as Samantha and Bill find themselves in. However smug we may feel about our abilities (as people WITH MONEY) and superior education, to be the chosen ones and own a home, we are all at the mercy of events. And while the banks can legally force a review of the circumstances every few years, instead of agreeing to lend a sum and sticking to it, there is precious little to be congratulating ourselves about. The power is on one side and in taking out a mortgage in these circumstances, how does anyone really know what the eventual price might be?

[Chris the Foreigner, who of course does not understand the intricacies involved, but is nevertheless appalled at the idea that in order to borrow a large sum of money Canadians are not told the whole story at the point of entry into the loan, but instead must be ready to ride any financial wave the banks choose to throw at them for the duration of the term.]

#62 lemontory on 07.08.09 at 11:31 am

So, everyone’s true colours come out.

It doesn’t sound like they were irresponsible. Like everyone else, they just wanted a house they could call their own. And as Garth has pointed out, although they were given harsh terms, they’ve lived up to their end of the bargain. This is about the lenders refusing to renew their mortgage, NOT about them defaulting on payments.

How ironic that this post is called “Prey”. Seems to me that there are a variety of vultures out there – many who inhabit this board.

#63 Maureen on 07.08.09 at 11:50 am

It seems to me that the ‘b’ lender in this case has not offered a renewal to the client. I’m disappointed so many posting here are not more empathetic. Hindsight is a wonderful thing. I arranged a mortgage last week for a client who was in a similiar predicament. The new mortgage was with a major bank with a 2.85% ARM. The appraisal was lower, and we were paying out a ‘b’ lender. The client had a rate of 10.65%. I counselled the client to negotiate a payout with the lender and he was successful at having the payout reduced by $10500.
Generally a mortgage broker is the only conduit to a ‘b’ lender. You have to remember that they were paid extremely well for the placement of a ‘b’ deal..usually 110-150bps commission of the mortgage amount. The question then is was that broker working in the best interest of the client? A hapless customer has the seemingly benign forces of a realtor and broker helping then achieve the Canadian dream..after all, isn’t it Dudey Kravitz who said :A man with no land is no man”
I have some sympathy for the plight of this family.

#64 Linda Pearson on 07.08.09 at 12:01 pm

Thanks Ben #23 and Dan in Victoria #43 for your thoughtful posts that somewhat temper the unrelenting disdainful and insulting comments contributed by so many of today’s posters.

While reading the majority of the posts, I’ve been sitting here feeling awful because, years ago, my husband and I also bought way above our means at the time. It was 1972, married only a year and already pregnant, and not wanting to have a baby in an apartment (how stupid we were!) we bought a poorly built new house out of town where we knew nobody, with no money down. It cost $27,000 – a fortune at the time to us. We were so strapped for money every month that I could not make even ONE long-distance phone call because every pay cheque was spoken for to the penny.

Now, we are very comfortable but I remember those years like they were yesterday and still budget as if my life depends on it.

But in 1972, we weren’t “stupid”, “undeserving”, “immoral” or “ignorant”. We weren’t a sap on society like so many here today imply with their ready criticism of this couple. Yes, they were ill-informed, naive, didn’t take the long view of their actions. But that doesn’t make them bad people.

What troubles me a great deal is that no one has pointed out that the lender has received almost $100K over the course of their “ownership” of the house on a mortgage of about $300K AND WILL LIKELY BE LOOKING FOR ALMOST $300K BACK WHEN IT FORECLOSES ON BILL AND SAM. Doesn’t that strike anyone else as immoral or stupid or undeserved?

#65 PTDBD on 07.08.09 at 12:03 pm

Canadians show exceptional generosity on the World Stage…the are handing out money in bucket loads:

– Ten Bbbbbbillion$ to IMF today – duz we even get a few bonds for that Mr. Flaherty? At least Brazil, China and India gets bonds. (IMF raises Canada’s Growth forecast to 1.6%)

– You have forgiven $2 million in debt owed by Haiti

– You are giving $5 million to build a youth centre in L’Aquila, Italy

#66 JAY on 07.08.09 at 12:07 pm

Hey Garth,

A bit off topic could you tell me when the job numbers will be released for June? Whta is your prediction for job losses?


#67 [email protected]!t on 07.08.09 at 12:13 pm

What are you talking about Garth?
According to the Toronto Star.. houses are really affordable right now.. only take 54.6% of your pre-tax income to buy a $494K bungalow in Toronto. So I guess everyone is bringing home $200K a year in Toronto.

#68 David Bakody on 07.08.09 at 12:13 pm

Hi everybody, just returned from a wedding in Nice France ….. what got was Canadians came via Ireland/London/Halifax/Toronto/Montreal and who knows where and there were only 2 (Two) customs people at the gate who stamped our passports … well kind of, they put a sticker on them on the back as we passed through on a slow walk. Returning to Canada (Montreal) we were over 1 1/2 hours in customs and there were no less than 2 dozen custom people asking each person silly, silly questions. (a lady in front of us with two small children missed her connecting flight)

The high speed train from London to Monaco went non stop across borders!

There is much more of course but suffice to say people come first from asking for a Coke Cola to a fine meal and the wedding ceremony took only a few minutes by a justice of the peace ….. then party time …. I can only imagine other area’s of daily life requirements are made simple. Trams and Buses are all one Euro and seniors have discount cards and I had a medical issue and the hotel called a Doctor and he came to our room ( about a half hour later) and wrote me presciption sitting at the foot of my bed ( asked questions and explained everything and his thoughts) I paid him cash 50 E$ two weeks medicine was about 15 E$ because of after store hours ( they keep a few open for such things and the cost is just 9 E$ extra per) ….. each emergency vehicle carries a fully qualified Doctor, my Doctor who was on call came in his own car. Had I needed hospital care I was on my way on his word.

Are things tough there perhaps so but I saw few street people anywhere and most people are slim and healthy looking and saw no run down areas. Luxury homes are expensive but far less than any in Canada’s top cities. Upscale condos are 3/4 times as large as any here we sat 6 for a late evening meal and there was a smaller breakfast set a few feet away off the kitchen. Try that on for size in Toronto or Calgary. Price of this unit was about 5 to 6 with pool and tennis court and the usual.

Yes ladies the wedding was beautiful as were many of ladies ( shoe stores extraordinare with styles galour, the malls have snack places on every level with elevators in middle and escaltors and stairs at each end) …. my tired old neck is far better now gents from looking up down right and left!

I was asked by bus drive coming back from the Matiess Museum if we were American ( we unsure of way back) we said NO! Canadian and he gave us the thumbs up … he did not speak English but chatted until he found out where we wanted to go then kept us onboard until we very close.

What does this all have to do Real Estate “Everything” get it? buy what you can afford listen to Garth and others here so when an opportunity comes along to visit the world you do not have to stay home looking a four walls telling yourself, wife & children …. some day we will can sell this and we can enjoy life.

#69 Mrs Loquacious on 07.08.09 at 12:18 pm

It seems to me that the biggest problem with this whole spring “dead cat bounce” and the RE bubble as a whole is the fact that it is driven by two very unattractive character traits in human nature: greed and entitlement.

The former is evident but the latter is far more sinister, IMHO. So many 20-and 30-somethings feel as though they somehow deserve to own a home simply because they have seen others take the plunge into RE, not bothering to factor into their decision the economics of such a purchase. Worse yet, they often compare themselves with boomers who have saved hard and worked long in order to get the “dream homes” with granite counter-tops and heated flooring. This entitled generation has no patience to save up 40% down, but insist on near-immediate gratification of their desires.

I do not see many of these new buyers purchasing fixer-upper, old condos. Instead, many lust after the new townhouses in the suburbs or the luxury-living condos of the urban centers. It’s as though they not only demand the best, but they refuse to make the sacrifices or take the time required to save up for this “best” kind of living.

It is the entitled attitudes, the “I deserve it” mentalities, and the petulant “If they have it, why shouldn’t I?” reasoning that get many young couples in trouble. It takes a bit of introspection, self-control, and courage to live differently than the herd, but this seems to be lacking in many of the people in my generation. Many seem to be chasing after material wealth and high living, and I fear that it is this sort of entitlement that will be their undoing in the end.

PS – I rent.

#70 rory on 07.08.09 at 12:20 pm

I think the overall sentiment is turning angrier and more fearful …from my unscientific observations, on this blog and others, it appears the populace is starting to look inwards and fretting about themselves versus the ‘all’ …it is getting more dangerous as we all try to hunker down and preserve our wealth from others and the huge feeding machine called government with its bloated bureaucracy and over the top pensions.

The same governments that refuse to fix the fundamental problems at the macro level instead of inserting themselves into every aspect of our lives, at great financial cost (and ongoing) and time I might add.

BTW, when was the last time you ever said gov’ts were more efficient then the private sector …exactly!!!

Second topic …So what rules the world today – how about the 7 deadly sins – pride, envy, gluttony, lust, anger, greed, & sloth.

Apply your own interpretation of each to the RE market and see how Bill and Sam are the product (by-product) of all this bubble crap and ‘its about me’ crap that we have overly embraced the last 40 years or so. Until this changes, nothing will change….as always, IMHO.

#71 Coho on 07.08.09 at 12:29 pm

Well Garth,

Your recent posting has exposed the hate many of your blog readers are harbouring. They are tearing a strip off your friends for being denied refinancing even after they have faithfully kept up their payments.

Is it a wonder why agendas can be pushed through to the detriment of the public? It is so easy to divide people through fear, money etc. And why is it when it comes to the subject of money, and the issue of those fallen on hard times through little or no fault of their own, seemingly good people suddenly turn viscious?

#72 Mike (Authentic) on 07.08.09 at 12:40 pm

“Second wave of crisis coming: Brown ”

IMO, Brown can stuff it. He is not popular in the UK with the people and is on the edge of losing his job as UK PM. He is completely out of line with what the Englanders want from what I hear and see.

I’m very glad to see Canada stand up to the UK and do matters our own way. We are not Warmongers (USA), we are not Imperialists (UK) and we try not to blindly follow the US.

Cheers Canada!


#73 Mike (Authentic) on 07.08.09 at 12:55 pm

#35 Signal Loss: “four kids and a job at hallmark = a $300,000 house?”

Great point!

Heck, both my wife and I working (O&G and IT) just qualified for a $215,000 mortgage in 2003! We spent $178k (5yr @ 4.65%) of it knowing it was better to be under the maximum and to pay it off sooner.


#74 ottawa pete on 07.08.09 at 12:57 pm


NEW YORK (MarketWatch) — The Treasury Department sold $19 billion 10-year notes Wednesday to yield 3.365%. Bidders offered $3.28 for every dollar sold, compared to $2.62 at the last auction in June. Indirect bidders, a class of investors that include foreign central banks, bought 43.9% of the sale, compared to 34% last month, though the proportion of sales going to indirect bidders jumped up significantly last month after a change in the way bids are tabulated. Analysts have paid more attention to the government’s debt sales in the last few months, looking for signals of whether investors, particularly foreign central banks, remain willing to buy U.S. debt. The broader Treasury market extended gains, pushing 10-year yields to the lowest since May 20, as stocks extended losses. Yields on the current 10-year note /quotes/comstock/31*!ust10y (UST10Y 3.41, -0.05, -1.39%) , fell 12 basis points to 3.33%.

#75 Devil's Advocate on 07.08.09 at 12:57 pm

They were offered a mortgage and have abided by its terms. Foreclosing on them, or anyone who is current with their payments, is a decision that should be questioned. — Garth

While I very rarely disagree with you Garth but on this one I have to express a contrary point of view;
1. The lenders right to renew, or not, would have been a written and agreed to term, by both parties – lender and borrower, of the original mortgage. Such a term, to the lenders sole benefit, would not have been concealed from the borrower. That the borrower fell upon unfortunate hard times is not the fault of the lender. That such might happen is the very reason such a term of the original lending agreement was included. Again the borrower agreed to that condition.

2. The borrowers (Sam and Bill) ought to have known their personal covenant was weak when denied credit in the first place and referred to an ‘Alt B’ lender of last resort. But instead they agreed to higher rates of interest among other terms and conditions in order to borrow to buy that which they wanted NOW which they clearly had not yet earned the right to.

3. It is the responsibility of the lender to ensure the profitability of its operations and preserve the investment of its shareholders. What otherwise would you propose Garth; something akin to GM and Chrysler bailouts where such lenders who made bad business decisions were denied ability to negate them as per the terms of their contracts thus their only option failure or bailout? We are not talking about Habitat for Humanity; these are profit driven commercial enterprise financial institutions.

4. It is people like Samantha and Bill who are, largely, the reason real estate prices rose so high so quickly in the first place. Supply and demand; an irrational exuberant demand by a large segment which really could not afford to purchase real estate in the first place caused an unwarranted increased competition against those who could thus bidding up prices beyond reason in the face of a limited supply. Now that supply has surpassed demand and the markets are “correcting” those who entered the game and gambled on credit are now learning their lessons, lessons you yourself have said we all need but seem not to have yet learned.

5. If you are going to blame anyone, I am sure you would agree, it is those governments which artificially lowered interest rates such that they negated the incentive to save and increased a borrowing feeding frenzy on cheap and easy money. Print a new fiat buck and after 50 times of passing hands at a simple tax rate of 25% the government has recouped it in taxes in addition to having added $3 to the general economy – all from the printing of one fiat dollar. No good magician will tell you the tricks of their trade but you can trust it is nothing more than illusion.

Education is a bargain at any price.

A fool and his money are soon parted.

#76 Industrial Guy on 07.08.09 at 12:59 pm

WOW! The News Gods must be crazy.

The Toronto newspapers are reporting area building permits were up 26.8 per cent in May!!!!
This is still down 24.5 per cent when compared to May 2008. …. so the collapse in now more like a steep slide. This is good news??

Crude falls below US$63! This great news for consumers. But there is a hidden story here and once again it’s troubling. Memorial Day weekend is the unofficial start of America’s “summer driving season”. The oil Industry reports say that gas stockpiles of gasoline have increased the last four weeks. Shouldn’t gas stockpiles be going in the other direction? The sad reality is, people are staying home.
Not good news for the seasonal tourism industry on either side of the border. Yikes!, More unemployment.
I wouldn’t want to be a student looking for a summer job this year. No money = no tuition. Since mom and dad are unemployed and their EI benefits are running out. It’s time to visit the OSAP office ASAP.

June home sales increased an incredible 27 per cent compared to June 2008.
Yet the average home price was $403,972, up only 2 per cent from 12 months earlier. This doesn’t sound right. There is a huge increase in demand, but a small increase in price. The only explanation for this could be the market was overflowing with available houses. Far more than the latests crop of Greater Fools could consume. The sellers must be smart followers of some economic Guru named “Garth”.

Ontario consumer bankruptcies rise 39%. I guess all these people missed the good news about all the green shoots.

Pension panic subsiding? This will come as a shock to the technical service unions at Air Canada. Didn’t they just reject a contract over pension issues? They risk pushing the airline into bankruptcy again.

Since many people consider the value of their homes as part of their retirement nest egg. The panic will be back when the RE market falls down to Earth. It’s a great time to sell. Buy a used motor home. It will make moving to find work a lot easier.

#77 Bill-Muskoka (NAM) on 07.08.09 at 1:00 pm

And why is it when it comes to the subject of money, and the issue of those fallen on hard times through little or no fault of their own, seemingly good people suddenly turn viscious?

#71 Coho

I agree! In a world where politicians cater to the rich and elite without humanity or compassionate ethics and then write, or fail to write, laws that protect people it is of little wonder there is not more violence spured on by injustices.

When we look at the world as a whole we see the constant struggle between the meek and the arrogant. Yet we continue to worship money over fairness and people’s lives all disguised under the term ‘Law.’

Somewhere the principles of Magna Carta have been lost in favour of brute force by paper. Every human being deserves to have a clean and habitable home. The investment community has become, together wth the legal community, the greatest demagogue to our society.

People are made homeless when they should be given a helping hand. Those who say ‘Pull yourself up by your own bootstraps.’ have not had to do the same. Some people have neither boots, nor the means, thanks in large part to unjust laws that protect the haves, the greedy, the insensitive, and unscrupulous.

In a world where Losers are worshiped for their fame and fortune, we have become blinded to the average person in need. And we have the audacity to call ourselves CIVILIZED!

#78 Rhino on 07.08.09 at 1:12 pm

#71 Coho on 07.08.09 at 12:29 pm

Great post dude (or dudette?)

Too many folks were convinced by neighbours, the government, the real estate industry, and others that you MUST have a mortgage. Like Goebbels said, if you tell a lie often enough, people will believe it.

So, they went after their dream, and even with an established job, took a chance. how many others with “permanent” jobs are now facing reality?

Our government are bailing out those who PROFITED from preying on these people, but the actual victims are being told to just deal with it the best way possible.

If you ever needed proof the present government is NOT “government by the people, for the people”, you have it in spades. Sure; other governments were headed this way, but these CPC clowns pushed our economy and financial controls over the edge.

#79 Bill-Muskoka (NAM) on 07.08.09 at 1:12 pm

#61 Chris no longer in England

Hard to believe England was the place where Winston Churchill re-stated FDR’s famous statement ‘We have nothing to fear but fear itself’, eh?

How simple it would be for all the real Patriots to stand up, speak up, and blow the whistle on the corrupt politicians and bureaucrats. They fear for their paycheques and pensions more than their country’s future, and that is why the scoundrels are able to get away with so much. We need more Kevin Pages who are willing to speak truth over convenience.

That includes the MSM who are the Messengers of FUD. Just look at most ‘national’ news broadcasts and what do you see? Troubles abounding everywhere but on home soil. Goebbels would be so proud of them I think!

Until people realize that a partial truth is still a lie things will not change much, if any, for the better.

#80 MarcFromOttawa on 07.08.09 at 1:13 pm

#50 Leonard

Deregulation of the markets did not cause the problems this couple is facing.

Government regulation in the mortgage business (CMHC) ensured this couple to get financing when they would have otherwise been denied. The federal government created regulation to make home ownership more affordable. More people qualified for a loan which then pushed prices higher which is opposite of what was intended.

I don’t believe more government regulations in the housing and mortgage business is the answer. I’m curious though, what kind of changes would you propose?

#81 Rick on 07.08.09 at 1:20 pm

chris “However smug we may feel about our abilities (as people WITH MONEY) and superior education, to be the chosen ones and own a home, we are all at the mercy of events”

The problem is we have a system which rewards those who spend and live beyond their means while punishing those who work and save which is REAL wealth and leads to REAL GROWTH. The system in place is a pyramid scheme which now needs stimulus money to keep the ponzi scheme from crashing down to reality. I would rather see interest rates at 15% and 225000 homes which would need 25% down payment. Owning a home is NOT a RIGHT. If the governement continues on this scam against people who work and save I will then work less(cut back on hours already) and borrow as much as I can(have lots of credit but not used) and if I go bust , will leave Canada. I really do know people who simply will leave Canada if all else fails and they laugh about it.

#82 JustJanice on 07.08.09 at 1:22 pm

I cannot believe the comments on here today, from Canadians, about their fellow Canadians. I used to believe we were different from our American cousins, that we somehow held ourselves to a higher standard when it comes to our fellow countryman. My god what an eye-opener it is to see the hate and wrath directed towards Sam and Bill, just for wanting a piece of what everyone else was getting and maybe less in the sense that I do not read that they were looking to become rich through home-ownership, rather I sense that they were looking to become secure and have a place to call home. They made their home payments at an onerous rate of interest, on time. They are not really asking for anything other than what everyone else seems to be able to get (a mortgage at a fair rate of interest). They do not want to sell their home, they want to stay in it. They want their kids to grow up in a home that belongs to them. There’s nothing wrong with that.

What’s wrong is that the system failed them in the first place, that the regulations in place allowed the banks to prey on them and their lack of financial acumen and credit-worthiness made them vulnerable. Know if they bought, with full knowledge of what they were really doing, I would be less sympathetic.

The folks on this board seem to think that it’s better they be left to the ravages of welfare. That their children be left knowing that it is unlikely they will ever escape the cycle of poverty. That the world is a cruel and unkind place – and that even when doing the right thing (making payments on time), folks will screw you over if given the chance. They believe that the school of hard knocks and the lessons it gives is worth the insane amount of tuition paid. It’s like saying a kid deserves a severe burn for touching a hot stove, when the parent really ought to have told the child that the stove was hot in the first place but chose to allow the child to ‘experience it for themselves’ instead.

I’d much rather see my tax dollars go to helping Canadians realize their goals and assist them to contributing to making Canada a better place than to assisting those who really should know better, and really aren’t ignorant (the Banks, CEO’s, etc). I’d much rather my government provide financing to Bill and Sam, with a loan that sounds as though it is likely to be repaid (much unlike other sums given to other entities less deserving) at a fair rate of interest and keep them in their home. I don’t think Bill and Sam are asking for a handout, they’re asking for a hand up.

We should be ashamed on so many levels.

#83 lgre on 07.08.09 at 1:24 pm

#64 Linda Pearson on 07.08.09 at 12:01 pm

Your post sings the tune of ‘blame everyone, but dont dare take responsiblity”

banks are in business to make money, it is up to your discrection to take on loans that you can afford under different circumstances.

Housing is the biggest purchase most make, yet the smallest amount of time is devoted to educating ones self prior to purchase..

Be thankfull that free market no longer exist or otherwise their $276k house would be worth $176k at the current date.

Now lets all go back to watching American Idol, I heard Simon is wearing a polka dot shirt tonight.

#84 Rhino on 07.08.09 at 1:36 pm

About “second wave”…

Great article – particularly with the comments about harpo’s bizarre CPC…. BUT…

No one seems to be talking enough about the ripple effect this is having on Moms & Pops & families across Canada. Folks like Sam & Bill.

This is about lots more that just real estate.

As the good manufacturing jobs were going offshore, our wunnerful gooberment was proudly broadcasting all the new jobs created – mostly low paying retail/service industry or folks like me becoming self-employed to survive.

Well, folks, i can tell you there are a lot of folks who are having their retail hours cut, service industry jobs lost, and cannot find options as even the low paying low skill McJobs are becoming harder to find. My “new career in retail” for an international hardware chain, has been thrown into the dirt, as my PT hours were cut in half, then cut in half again. This directive came from the American Head Office – not the local management.

This, to me, is the REAL “Second Wave”. Good jobs gone, other folks paranoid, means greatly reduced spending. No spending = no retail + no services = no jobs.

Fine, as demonstrated by too many here with “I’m o.k. too bad for you” attitudes, it is still the minority being hurt. However, watch their insurance rates go up, as the little guy has to find questionable ways to survive. Watch tax rates go up as governments need to increase these to provide expected services. A great movement to a cash society to avoid these taxes exacerbates the situation. Folks like me who ALWAYS operated morally, and proudly paid my taxes, are being forced to take cash just to survive. This does not make me feel good at all, but it means 15% off for the purchaser, and more off for me in income taxes. What ever it takes to survive…….

No longer can those who “have” look away. If society collapses, what will they be left with?

Funny thing though. Since most of the folks directly affected are in part-time or self employed segments, these revenue/income losses will not show up as “unemployed”… I can just hear the retorts from some of the above posters as many more folks will have to “suck the welfare tit” to feed themselves and their families.

Anyone remember the concept of the “Canadian caring society”? We used to think this is what made us different from the Yanks, and others.

Careful what you post. You could be “NEXT”!!!

#85 kenken on 07.08.09 at 1:56 pm

#64 Linda Pearson

I understand your point and am sure most here do too.
The thing is MAN has been the evil creator of the mess of today. Banks and other financial institutions are where they are today because they got customers willing to over-debt themselves. Let’s assume that ppl were ill-informed in the past and did not have access to information.

However you cannot say that over the past few years. People are more educated. there are plenty of info on internet. The US housing market is down as a result of credit crunch and over-indebtedness.

STILL, people in Canada are overborrowing and not listening to important education and informational sources. If you listen to Harper, everything is rosy. if you listen to the banks, everything is fine. If you listen to RE agents, there is no recession.

BUT the truth is, there is. And with ppl taking more and more debt, is giving birth to greedy financial institutions willing to take the risk on you.(like in this case here)-rip you off for few years, then force foreclosure and get their money back.

WHO feeds them? Stooopid buyers like the family in this case, who knows well they cannot afford (similar to thousands of others who bought this spring and summer), but still buy properties, through price wars. They are the ppl who artificially create a bubble.. So, I do not really feel any sympathy for them. If they borrowed the money for studies, medical care, I’d feel for them. But not in this case!!!

#86 Marc on 07.08.09 at 1:59 pm

#68 David Bakody on 07.08.09 at 12:13 pm

I hung out in Nice for 3 days in early June. Dog crap everywhere, I don’t think the locals know how to pick it up, and trow it out. Every night the streets are hosed down. No homeless you saw? I saw many sleeping in corridors etc near the main square, 2 blocks from the beach. Great place to visit, but next time I go there, I am taking the ferry to Corsica to hang out for a few days rather then staring at the ground when I walk so I don’t step in dog crap. I was at Hotel Ostende, great place, 45 Euros per night. No need for anything fancy, as I only sleep and shower in the room.

#87 MikeB on 07.08.09 at 2:12 pm

Ahhhh the arrogance of realtors… yes I know off topic… but I spoke to a couple recently and got responses that just defy logic. The first one flat out refused to talk to me for at least two weeks until she came back from vacation and indicated that she would only work with a buyer who signs a buyers agreement for one year. So much for that one….
The other one I spoke to indicated that he would rather not travel all the way uptown to open up a house to show unless we were interested in paying full asking price. Can you believe these A-holes. Four months ago I could not beat them back with a stick and now they think their shit doesn’t stink… UNREAL
On the real economy side I just learned that two companies in my building, one in advertising production and the other a captial company, were either shutting down or were evicted for lack of payment . People talk about how manufacturing is just being hit but reality is that many other companies are feeling it as well. As for real estate…who can figure that out but surely people over leveraged will pay the price at some point..

#88 David on 07.08.09 at 2:14 pm

When it all boils down to the “personal responsibility” argument, it becomes quite easy to issue facile dismissals of the plight this family is facing. Not only are they out going to be out of their current home, they have an R9 credit score that will preclude them from buying a home for a long time.
I have actually had savants from the real estate industry tell me that there was no such thing as sub prime non conventional mortgages or predatory lending practices in Canada. A company with $2 billion in assets offering 100% financing is no mere cottage industry and there are lots more like it quietly flying under the radar with the nudge nudge wink wink from the Big 5 chartered banks. The housing bubble managed to elevate any warm body cosmetologist into a mortgage consultant expert and the lure of fast bucks managed to quell any ethical considerations they had if that might confound the signatories to these “practically guaranteed” mortgage renewals.

#89 JT on 07.08.09 at 2:17 pm

#31 Bill

While a 30 year term right now does sounds sweet, the 5 year term has been to the benefit of Canadian borrower for the past thirty years as rates have only headed down. Mortgages have only become easier and easier to hold on to.

Now we are 4% and want to lock that in for thirty years. Sounds like we want to have our cake and eat it too.

The next twenty years can only be the opposite – with rates ever increasing. Every time a mortgage renews, it’s going to find itself at a higher rate.

#90 kitchener1 on 07.08.09 at 2:20 pm

Garth, the Prey headline is misleading.
The simple fact that a bank declined this couple 3 years ago when credit was easy shows us how marginal they were at the time re credit.

When a bank give you 100% financing there is always the risk of the market turning against you. From my viewpoint, the family basically brought a call option on the future of real estate market going up. The reason that banks usually only do 75-80% loan to value is to protect themselves and the consumer from this exact scenerio that you describe.

When (not if) RE values go down, all of these people buying homes with 0 or 5% are going to be wiped out.

The family in your article agreed to the terms on the mortgage, they should have READ the fine print and paid for some advice, even there real estate lawyer could have told them.

My guess is that they beleived that they were “owed” a home, I mean I am sure that their banker(that declined their original mortage) told them they were not in a good posistion to buy a home, along with countless others.

People, new buyers etc… reading this blog have to understand that if you buy at 95-100% leverage on the house, when the market turns against you, the bank will demand the difference.
ie. 300K home 100% financied, 5 year renewal, market turns bad, home is now worth 250K, you– the borrower are responsible for the difference. If you can not cover the loss equity, the bank will sell your home—as it should, why should the bank take the loss when it does not take the gain if you sell your home for more.

A mortgage is a contract between two parties to borrow money on the value of your home, no one is forced to take a mortgage and no one forces a bank to give one. its all about PERSONAL RESPONSIBILTY

#91 GR on 07.08.09 at 2:21 pm

I am still waiting for my “renters” subsidy to make up for all the lost equity and appreciation by not participating in the housing bubble.

I trust the government is looking into that for me right? Doesn’t it want to reward the financially prudent?

Should Canada embark upon US style bailouts and relief programs for over-leveraged, and underwater homeowners, I will be starting an anti-bailout campaign in BC. Several renter friends, who are all professionals, with substantive portfolios, have all said that would join such a campaign despite being apolitical.

As this RE bubble pops, these types of “sad” stories are only going to increase in number, putting pressure on the federal government to “do something.”

#92 PTDBD on 07.08.09 at 2:22 pm

New home rebate from new NDP party in N.S. – max. of $7000 for first 1500 homes

#93 jess on 07.08.09 at 2:26 pm

G8 heros of magic have discovered the world global thermostat. They will keep global warming to 2 degrees C. (I kid u not)

geo engineering – humans are going into the cloud making business. hurray now and buy your weather derivatives.

#94 kitchener1 on 07.08.09 at 2:31 pm

Its funny,

If the market would have gone up and the 300K house would be worth 400K now, then the home buyer would be a savy investor

but…when the market turns against them its the banks fault, the governement has to step in and help etc…..

#95 Sally on 07.08.09 at 2:34 pm

@Coho #71

I couldn’t agree more. These folks PAID their mortgage commitments – the bank is scurrying out on the renewal leaving them in the lurch.

It seems like many of the posters today have misread (or not read) Garth’s post and have missed the salient point. Sam and Bill have not defaulted, are not looking for a handout, but merely want their previous contract renewed…something I imagine many if not all of us with mortgage take as a ‘given’. Maybe we should all be a little more fearful (and empathetic) on this point.

#96 X on 07.08.09 at 2:36 pm


I think the June jobs #’s are to be released this Friday…

#97 JT on 07.08.09 at 2:42 pm

Let’s hope inflation stays low and there is no international currency crisis:

35 year ams, Monthly payments, $400,000 mortgage

2.85% = $1,506
5.6% = $2,174
7.0% = $2,555
10.0% = $3,438

I’m not sure if anyone is calling for 10% variable interest rates. It’s unlikely, but is possible if something goes awry in the currency markets or inflation comes back. But even at 5.6%, well below historical norms, and a very likely target for interest rates within the next two years if everything goes to BOC’s plan, payments increase by 44% per month.

#98 char on 07.08.09 at 2:42 pm

Why is everyone so bummed about the RE bubble ? When manias end, prices fall to BELOW the the price at which they started their runup. If you own, you have an opportunity to sell and pick up maybe 2 houses later. If you’re a renter, so have a little patience. It will be way worth it. A little perspective is good.

I think we can relax about the bailouts. Long run, big picture, they backfire. One example, George Bush gave Americans who bought SUV’s tax breaks; it was to prop up Detroit. That really worked.

As for this this couple, it’s a really hard lesson, but they had nothing in writing about renewal, and even if they did, you know you can’t trust that. That’s a lesson way worth learning .

#99 smw on 07.08.09 at 2:51 pm

Might be FOUR years for oil to recover.

But IMF says growth will be better than first predicted.

That solidifies the 3 – 5 year call on at the least a period of stagnation and continued asset deflation for Canada.

#100 Vancouver Rent-O-holic on 07.08.09 at 2:58 pm

#3 – That PDF says it all about Vancouver RE, yet most people here still think the prices won’t come down much. Hilarious!

#101 Kestral on 07.08.09 at 3:09 pm

Rick, love your posts about NO MONEY. You speak the truth, people can say it’s harsh, but you’re just telling it like it is. People who have NO MONEY have no business bidding things up, making it hard for people who have been making it hard for people who made sacrifices and saved.

#102 timbo on 07.08.09 at 3:26 pm

#71 Coho,

I don’t know if it is hate or viciousness that have most people post here. For me it is to try and see ahead of the curve even though it might be futile. I post and leave links not to be self-serving but to foster debate and bring news from other sources for people to see. If it helps them in decision making , great. You and I cannot know what will truly happen and I do not presume to know it all ,otherwise, I would of had the lotto 8 years ago and bought Microsoft in the 80’s.

As for discussing anything about a downturn to others with vested interest, outside in the real world, is futile. To counterpoint a decision others make strikes at ego and self worth and will be attacked. I have completely given up on trying to talk to people who already are in trouble. If they go under I will be hated even more for trying. You know the line “don’t shoot the messenger.”

#103 corina on 07.08.09 at 4:02 pm

When you say “that things will never end well when people without money buy houses” – what exacly do you mean? It might sound like a stupid question but is being able to put 5%, 10% or 20% as a down payment and nothing else bad? How much is enough to avoid getting caught in a mess?

#104 infernalmachine on 07.08.09 at 4:04 pm


Normally I would not reply directly to a commentor but I feel compelled to in this case.

Your remarks about 20-30 year olds (gen Y I believe) are plain ageism. Yes, I am one of these mid-20s lost children you all disdain. It is true that a few of ‘us’ act like whiny, entitled, lazy chuds. But the same could be said for the ‘boomer’ set, many of whom would simply die of embarrasment should they be suddenly forced to sell the cottage or downsi2 their home or -gasp- give up a vacation.

I am not entitled. I am the child of immigrants who came here to forge a better life for their families. (The usual). However I wonder if it worked. I went to a good university, worked my arse off, got a degree, landed a job, and still work my arse off. I rent and save. I don’t buy crap on credit.

My grandparents both worked labour jobs (clothing factory and carpentry) for low pay, yet were able in the 1960s to pay a mortgage for a pretty nice house in the downtown of Toronto. This is simply no longer a possibility even for hard working university educated people. Let alone immigrants earning low wages.

Gentrification of cities and high property values help no one but banks and realtors.

Stop blaming the young ones for this mess. Boomers were just as complicit, and I don’t doubt they will be wanting top dollar for their mansions when 65 hits. The 20 to 30 crowd I know all either rent or live at home. Why? They can’t afford anything else.

#105 TakingResponsibility on 07.08.09 at 4:09 pm

The rather simple emotionalistic responses to this couple’s issues with financial fraudsters is a good example of how divide and conquer works. Rather than discussing financial policy development/regulation, many posters here have fallen into the predator’s trap of blaming other citizens or engaging in nebulous regionalism, ageism/generationalism, etc., rather than dialoguing on how or if financial institutions should be governed.

Geesh. Why doesn’t that same virulently emotionalist response arise in reaction to unbelievably criminal pay structures for bank/university/healthcare institution’s presidents?? Who are you shillin’ for, anyway?

And, lmao, at those who deride regulation by whining about “nanny” states. lol. What about the Nanny States to The Rescue of the Financial Masters of the World???? As long as the markets kept rising, the financial masters of the world despised the “nanny state” and said so and their shills took it up. Ah, but now they want and need her comfort in the form of low interest rates and public insurance. Again, why no hostile emotions directed to your Financial Masters?

But enough of that. I’m getting rhetorical. My bad.

Perhaps this particular blog could lead to a question for those interested in legislation and policy development such as: “Is the behaviour by the “b” lending institution criminal?”

I do apologize for rhetoric as I am actually keenly interested in politics and emotions as an area of study.

Seriously, I confess I am “feeling frustrated” these days. I don’t know about other posters here but I’m getting really frustrated rather than stimulated by Harper’s stimulus ‘package’….

#106 meggie on 07.08.09 at 4:13 pm

Enough about the public sector pentions already.
My husband is a municipal civil servant and over his 20 years with the local government he could have taken, and was offered TWO-THREE times his salary in the private sector. He opted for security over $$$$. No Christmas bonuses, no free coffee, no employee shares, ect. We laughed when his private sector brother paid more in income tax in a year than my husband grossed. But we are GRATEFUL for his steady work. We all make carreer choices for various reasons and motivations. They all come with their plusses and minuses. Please stop whining.

#107 Art on 07.08.09 at 4:25 pm

Maybe it is Sam’s last question what has got a lot of attention…

“Is there any help for CANADIANS who are caught in this sub-prime crunch? I have searched and searched but cannot seem to find any government aid for Canadians in our predicament.”

I think that they have in mind a bit more than a simple renewal. What is a “reasonable rate of interest” anyway? What is reasonable for Sam, might not be for the lender…

#108 Peter in TO on 07.08.09 at 4:34 pm

Hey All,

I have a slightly different perspective. If this couple wanted security why didn’t they get a 10 year mortage? Oh? Is it because the cost would have been even higher?

I sympathize with their plight but isn’t this just a symptom of easy money and ignore risk? Everyone is assuming that the bank is the owner but they are not. Every GIC contributor and bond holder is the owner. Would you lend $300K to an unemployed couple with no kids much less 4 kids?????? The banks are criticized for being too much of vultures but in this case isn’t it the responsible course of action?

I know Garth is really fond of short term variable rate but this is one of those examples of how volatility can really kill you. There is an premium cost for removal of that volatility. I don’t think this couple should have bought. I think the underlying issue is the 0%/5%/10% downpayment. Would you let people leverage this much to play the stock market? Why then is it okay to do this with a less liquid investment?

Garth I normally think you are bang on but in this case I think you are wrong. There is a moral hazard to a successful intervention. If you are sucessful in this case there are 1000’s more in a similar situation. Isn’t this really a ninja loan? That which the US is still recovering from?

Without income and in this economy I think it is best if the family takes the lumps and moves on. Nothing for them to look forward to here but more grief.

Step back, the family owns nothing and will likely own nothing going forward. They will have to deprive their kids for the sake of ownership (If they can continue to make payments, which seems unlikely). Why would you advocate for this? Help them get the best deal on bankruptcy and move onto a nice apartment so that they can focus on getting on their feet again. The parents and the kids do not need this stress.

Just my opinion


#109 homeboy on 07.08.09 at 4:50 pm

Oil is testing $60 a barrel and now the US Feds are going to clamp down on speculation (Goldman Sach moves about 36% of the futures market alone).

The way I see it, oil will be at $10 a barrel and the whole of Alberta will be wiped out.

#110 Nostradamus Jr's Analyst on 07.08.09 at 5:00 pm

Dear Sam & Bill,


#111 gold bugger on 07.08.09 at 5:04 pm

The blame falls 100% on the couple.

Nobody forced them to buy a house. Nobody forced them into a high-ratio mortgage. Nobody forced them to fail to save enough for a significant down payment.

Weak, innumerate, pathetic LOSERS.

As are all the mush-headed nanny staters like Bill the Marxist who think it’s MY responsibility as a taxpayer and saver to bail out greedheads and morons. Or that a lending institution ought to lend more money than the value of the real estate that secures it.

Idiots. Learn something about how economics work in the real world. Not in some fantasy world invented by 19th-century German philosphers.


#112 Nathan in Edmonton on 07.08.09 at 5:15 pm

The only people who buy a house they can afford are the ones who pay cash… everyone else borrows (most for 25 long years) and it doesn’t matter if it’s from the bank or Vinny at the meat shop; it has to be paid back with interest. Very difficult to do with no saving, no income and no EI. This will be a very common situation as the unemployed masses start losing their benefits.

#113 Bobby on 07.08.09 at 5:19 pm

Sadly, more people than we think are caught in the same trap. Banks are more than willing to lend if the market is perceived to be rising. But once it starts to fall many of the buyers are quickly in negative equity. When that happens, watch out, as banks will now want equity to renew a mortgage.

Unfortunately, many Canadians lack any real financial knowledge to make sound decisions. So who do they turn to for supposed sound advice when making a house purchase. The same people that rely on the commissioned sale for their paychecks, realtors, mortgage brokers etc.

Most of the activity is in the low end of the market, with first time buyers. It is a recipe for disaster. Just look to the States to see what will happen.

#114 catamaran guy on 07.08.09 at 5:40 pm

No sympathy,I live on a boat I made myself,paying 500 a month rent for a million dollar view.

I make 40,000 a year,maybe I should buy a $250,000 condo?
I am debt free and intend to remain so.

And a winning personality. — Garth

#115 lgre on 07.08.09 at 5:44 pm

“The way I see it, oil will be at $10 a barrel and the whole of Alberta will be wiped out.”

I dont know about $10, but I can see $35 by the end of the year..speculation drove oil up and now its dying out.

#116 ncoffee on 07.08.09 at 6:02 pm

Re: #111 gold bugger

“Nobody forced them to buy a house. Nobody forced them into a high-ratio mortgage. Nobody forced them to fail to save enough for a significant down payment.

Weak, innumerate, pathetic LOSERS. ”

Wow, that’s just really harsh. It’s one thing to debate where the blame should be placed, but there’s really nothing gained by kicking people when they’re down, especially this down. There’s probably a lot of stress and crying that household right now and I have no doubt you’ve added to it by posting this kind of pointless insult on a blog you know they read.

#117 dd on 07.08.09 at 6:05 pm

Where are the gold bulls this week?

#118 Dan in Victoria on 07.08.09 at 6:07 pm

Sams update,You bought with your heart,not with your head.You made a mistake,NOTHING wrong with having a dream,or a goal in life.Dust yourself off, get back up and keep going.Now you are just starting to see what is just below the surface,wait till there are some supply problems or infrastructure failures to see what” civilized” people can be like.LEARN from this.Give your kids a hug, and your husband a kiss. Hold your head high, take the high road, and try to be better than how you have been treated.Good Luck in the future.

#119 dd on 07.08.09 at 6:10 pm

#109 homeboy

…The way I see it, oil will be at $10 a barrel and the whole of Alberta will be wiped out…

Sure it could. Suncor, Syncrude, and OPEC would shut down supply and coming out of the recession $200 oil would be the norm.

There is an over supply issue short term but that is it. Short term.

#120 Opportunity on 07.08.09 at 6:12 pm

The West keeps rolling

#121 timbo on 07.08.09 at 6:13 pm

#109 homeboy,

$10 a barrel, holy underwear batman!

Jingle mail to the banks and a light switch at the city limits. Going to check on the net for a used hot-dog cart to cash in on the traffic jam heading east. Hope this does not come true this winter as Sask and Manitoba are pretty brutal.

#122 David Bakody on 07.08.09 at 6:20 pm

Sorry but many still just do get it! RE with no money down and holding more than 40% debt was and is a foolish move. Think young people if the old rules were still in effect governments, banks and the building industry would ensure affordable smaller family homes were being built around 1200/1400 sq feet on larger lots so that people could afford them leaving McMansions for the rich. But they saw big homes a means to sell sell sell everything on borrowed money and time ….. but time and money ran out and all the stimulus packages are borrowed money so what do you think is coming next?

#123 Samantha on 07.08.09 at 6:20 pm

Hold on…Important –

Garth or (Sam/Bill) re update 6 pm EDT:

“Was it stupid to purchase with no money down (actually we did have to pay about $20000 for their insurance!)”

What kind of insurance was this? Life, disability, loss of work etc….?

I’ll wait for a response before commenting further. If it’s what I think it is, then I’ve seen this before. Sorry for not elaborating – been a long couple of days and sparing energy right now. Promise to respond asap once this point is clarified.

#124 Solitario on 07.08.09 at 6:21 pm

Thank You for trying to help these people who are going through hard times.

#125 rory on 07.08.09 at 6:51 pm

#106 meggie you said: Enough about the public sector pensions already.

Meggie, I will when public service pension plans become realistic and taxpayers that do not have pensions quit funding their shortfall. Gold plated is over …here are a 2 links to dispute your position …is really easy to find lots more …wake up girl a fight is brewing.

#126 lgre on 07.08.09 at 6:58 pm

CBS 60 minutes, 1976 swin flu vaccine this before considering vaccines.

#127 lgre on 07.08.09 at 7:04 pm

Economist: FDIC gearing up for bank closures

#128 kc on 07.08.09 at 7:10 pm

OK I read Brown’s speil, where is this 2nd wave?? feeding africa and “climate change”??? And us poor souls in Canuck ville who (what? aren’t jumping on the band wagon) are villians? My opinion and belief on this Mystery Climate change crap is still strong. it is a NEW TAX GRAB in any way that can be implimented. Carbon tax, cap trade, it is all crap to make you feel soft and fuzzy while making you feel you have done something great. It is all complete Bullshit, sure we in this country can tax our producers and suppliers to the tune of 99% of the total price, while on the other shoe we IMPORT billions of CHEAPLY made and priced shit from Asia, then tax the trucker who drives from the ports to the stores, cap and trade his exhaust pipe, (or what ever other scam they get into law) while the countries that produce the cheap stuff arn’t held to any laws of “cap & trade” and pollute every drop of water near the factories with ZERO penalties. Call it cap trade Global warming or revenge of the turds, it is all the same.

Keep shutting down Canadian industry and cry the blues…


#129 homeboy on 07.08.09 at 7:13 pm

Ever heard of buy low and sell high?
Do you buy berries in the winter time?
This family went into a bank and bought a home with no money down; They also spent his 20k to finance this deal that was doom from the start.

Then his wife comes on here, pretty much threatening the prudent members of society that if we don’t pay up now, they will get the money in the end.

You need to hear the cold hard fact, you made your own decision and now you have to live by it.

Live within your means and if you cannot afford to buy a home, then rent like the other apartment people on here.

As for me, my own that is worth about 400k (paid 190k) will be paid off in two years.

29, single, money in the bank and a big back yard..

Damn its good to be king :)

#130 Mrs Loquacious on 07.08.09 at 7:14 pm


I belong to the same “Gen Y” 20s-30s group that I commented on, and though I might be painting with broad strokes in this case, it would hardly be accurate to say that I am ageist or wrong to pinpoint greed and entitlement as culprits in our economic disaster.

Though I do not disagree that there are likely just as many entitled boomers as there are Gen-Ys, it seems to me that the bulk of our generation has never known high interest rates nor depreciating real estate values, and many of our peers do not have the experience or patience to wait until they have 40% down before buying into RE, period.

Like you, I am the child of immigrants. I am educated (two degrees), I work hard, and I rent and save my money. My point is that you and I – we – are anomalies and exceptions to the rule.

Many of the buyers this spring are young couples and families, and many are buying on borrowed money at cheap interest rates, some underwritten by boomer parents with a heart full of good intentions. A good number of these folks are not buying tiny little places that are within their realm of affordability, but instead are opting for luxury living and giving in to the “condo hype” of big shiny new homes (e.g. look at the bulk of buyers and inhabitants in the new suburbs of south Edmonton, like MacEwan and Summerside).

Your example illustrates my point – your grandparents worked hard and were able to save up and buy a “pretty nice house” in downtown TO, because they could afford the mortgage. The fact is that in this economy, many of the Gen Y’s cannot afford to buy “pretty nice” homes in any urban downtown areas, nor can they afford McMansions in the burbs. However, they refuse to “settle” for something within their realm of affordability, or wait until they have the money to actually pay for such lavish living. As a result, they’re borrowing to buy bigger and “better;” they think that real estate is bound to go up and interest rates won’t reach a level beyond what they can pay.

They are not the only ones responsible for this “mess,” and as I stated previously, there is a dynamic that includes both entitlement and greed at work driving the current RE market madness. People of all ages possess in their human nature the capacity for greed and entitled attitudes.

However, I find it hard to believe that every age-peer I know (save for maybe half a dozen couples) can legitimately afford to buy or build 1700 sq. ft+ homes with Kohler fixtures and granite counter-tops and stainless steel, top-of-the-line appliances. And yet, these Gen-Y’s not only enjoy the elixir of cheap money, but they have convinced themselves that they can afford it and deserve it. This is reflected in their purchase of brand-name items and luxury vehicles, as well as extravagant trips taken every 6 months. How can they afford all of this? Some have borrowed on their now-dwindling equity, and others have tapped out their LOC. And did I mention that at least half of the households I’m thinking of only have one full-time income-earner?

Incidentally, the smartest young folks I know both work in finance, investment, and accounting, and they rent a humble townhouse in NY state. Ask them about RE. They would never buy in this economy.

Maybe you know only smart, savvy, financially-astute 20-30 year-olds, but I certainly don’t. And I cringe when I think about what their brand-name, luxury living and entitled attitudes are going to bring them in the half-decade to come.

#131 john m on 07.08.09 at 7:17 pm

Sam and Bill are in a predicament for sure but im sure the provinces of Alberta and British Columbia have many similar scenarios but on a much larger scale…(3/4 of the income for a roof over their heads) and this is not new news this has been the situation there for years.Anyone who thinks a 700 square ft condo is worth $300,000 .00 or a 2400 sq ft home is worth !/2 a mil (anywhere but heaven) probably believes in the tooth fairy also!

#132 Nostradamus Le Mad Vlad on 07.08.09 at 7:21 pm

With today’s announcement that the govt. is sinking another $5 bln. into the military for Af’stan [an endless, pointless war] this link — — from Jan. 22/07 is quite clear on the escalating costs, which are shouldered by taxpayers. Out-take:


“According to in their “Afghanistan, by the numbers” report, “The military costs for the mission in Afghanistan reached $1.8 billion in May 2006, or about $1.45 million per day of the mission. The costs are projected to exceed $3 billion by 2009.”

“Yet, quotes Defence Minister O’Connor as saying that by 2009 fighting the Afghan war will have cost Canada close to $4 billion. A CBC The National report put the price tag at $1.5 billion this fiscal year alone.”

Further, this link — — puts the cost at $28 bln., and as the forces will [supposedly] be there until 2015, this is probably a little more accurate. Methinks there is quite a lot more going on than meets the eye.

Add to that the $50 bln. (so far, but increasing daily) deficit and debt, Chalk River plant staying closed longer than expected because of problems with the reactor (no isotopes for those that need them), gas / diesel / propane / all kinds of taxes (including and eventually GST) travelling to the moon and back, one can see the near-immediate future, and it ain’t pretty.

Not surprising that physical violence over most of the globe, right-wing skinheads (primarily neo-nazis who are anti-Muslim in Europe) is increasing. Isn’t the so-called ‘fake’ war on terror akin to another Crusades?
A 5:21 clip of an interview with a banker, except he is quite smart. No CDS, etc. —

China is taking a time-out from buying. If they are not buying as much now, who is? —

Further to the link I posted yesterday, about the three people in Poland who died after having the swine flu vaccination leading to other consequences. —
For those that are into astronomy, further evidence that our monetary system is not the only thing collapsing! —

#133 MenWithHats on 07.08.09 at 7:26 pm

Theory of ‘The Greater Fool’


Belief held by one who makes a questionable investment, with the assumption that he/she will be able to sell it later to a bigger fool.
Might as well believe in ‘Cargo Cults’

Fits nicely with the above arrticle .

#134 Shawn on 07.08.09 at 7:27 pm

It is a bit sad that those who can afford the elast are hit with the highest interest rates. But that is just the way it works.

Some poor people pay high interest rates to cover the risk that other poor people default on their payments.

#135 Bonnie N BC on 07.08.09 at 7:31 pm

Dear Sam,

I am more than sympathetic to your plight. The next move will be critical to your health and welfare for your family.

Along time ago back in the early 80’s – we thought we were being so smart flipping our house and buying an overpriced townhouse to live in. The 18 month result was declaring bankruptcy or making a deal with the bank.

Garth has the right idea – negotiate with the head honcho for the lender. It’s much harder to turn you down sitting across from them in their office if you ask them to waive foreclosure based on you selling the property. Do a personal balance sheet and be honest.

It worked for us and as we shed our “so-called asset” and ended up owing 20k. Not a pretty picture but you can recover if you let the property go and normalize your life.

I know, your may need to relocate your kids into a different area but you cannot maintain this stress on your family.

“We” waited so long to do this in our situation that a divorce entailed.

I am sure this is not the option you want or need for your future.

#136 X on 07.08.09 at 7:41 pm

I applaud Garth for his efforts to help these people. I find it hard to believe that there could be only one lender who would be willing to lend to this couple, however this could be there last chance to stay in their home. It is too bad that they have kept up with their payments and upheld their end of the agreement. Hopefully they will find a lender (soon) that will at least help them. If not perhaps this will be a blessing in disguise to help them get their credit worthiness in order, even if it takes 7 years to do so.

I am against a gov’t bailout of any kind for any home in distress.

If they couldn’t get a regular mortgage there obviously is a reason for that, perhaps the credit card company or local home hardware, or previous LL that they stiffed should get a bailout too! (and yes I know that I am being presumptuous, but my point is there is a financial reason for not qualifying for a bank mortgage)

#137 Thompson on 07.08.09 at 7:42 pm

The fact that this couple can’t get their mortgage renewed because of a job loss is the real issue here. The only reason someone should lose their home is because they have missed payments…this hasn’t happened with them. With the increasing unemployment rate, many of us are at risk of this happening when it come time to renew our respective mortgages. With the impending fall of the real estate market, it may not matter if you put 5, 10 or 20% down depending on what you originally paid for your home….if the value of your home falls dramatically you’re screwed. So people, don’t be so smug. Some of these postings are disturbing. As far as criticizing people for having four children in an urban area? Crazy. For the record, I know a lot of people who are living way beyond their means, and most of them are very well educated…sure they may lack common sense but they have lots of degrees hanging on their walls.

These people are not greedy…they bought a modest property for their family at a time when things were good. Very few people saw this coming. Show some compassion because it might be you next. Thank you to Sam and Bill for sharing their story with us…hopefully sharing what has happened to them will help someone out there avoid the same fate.

#138 Rich in Calgary on 07.08.09 at 7:44 pm

#4 davers,

Well said.

#139 (Halton) on 07.08.09 at 7:44 pm


This happened during the Great Depression.

Everyday in Canada people are falling hard.

Sad Day in Canada Garth.

As a long time fan of CFNY / Edge 102, I was sad to learn recently that Martin Streek had been fired after over 20 years of service. Soon enough, Martin Streek himself chimed in to say thanks.
At first, I thought it was a cruel joke. Martin Streek seemed so vibrant, so full of life.
Martin Streek has taken his own life.

#140 David on 07.08.09 at 7:51 pm

That personal responsibility argument only goes so far to my way of thinking. Are all the blog meisters going use the same argument if interest rates hit 14% or down payment requirements become 25% or amortisation periods are shrunk to 15 years? I actually have seen that and lived through that in Alberta in the mid 80’s. I owned a house and didn’t spend my waking hours wondering why people were abandoning their homes due to “personal irresponsibility”. My lawyer friend had stacks of dockets of quit claims thicker than a New York phone book scattered around his office.
This family would probably be $60K to the good if they had shooed the realtors off and been glad to see the back of them. Perhaps the key to personal future financial freedom might be in realtors having their “worst year EVER”!

#141 Devil's Advocate on 07.08.09 at 8:24 pm

“I have often said on this blog that things will never end well when people without money buy houses. Case in point.” G. Turner

I was out not long ago showing property to a first time buyer who is financing 95% of their purchase. This person has a good very secure job. I recommended they not rush in, that prices are likely to start falling again in the next few months negating this recent real estate bear market rally. I discussed the probability of rising interest rates, increasing taxes, increasing unemployment, increased available housing supplies, demographics… yada yada yada and how they should approach the market methodically especially in light of a high ratio finance as they shouldn’t want to end up side down shortly there-after.

Long story short… they bumped into another REALTOR at an open house who “sold” them something this past week for more than the client told me they were willing to spend and not a particularly wise choice in any event.

So what’s the moral of the story? Depends who you talk to; that other REALTOR, my wife and kids who depend on my income, the haters of Realt-whores and housepimps, the vultures who prey of such greater fools

There appears to be no shortage of greater fools. Certainly more than we can educate in the conventional sense. The only way they will learn is from their costly mistakes.

Ironically… I may myself be one of those who needs to learn. Fools and their money seem hell bent on being parted.

#142 Prairie gal on 07.08.09 at 8:26 pm

After reading all the above I have nothing to add aside from “ack!”

And $20 k for insurance? What up with that? Didn’t that raise some red flags? Why wasn’t that the down payment?

#143 taxpayer like you on 07.08.09 at 8:40 pm

106 Meggie

The fact is most in the private sector make LESS than the public sector for similar skill levels and work. The public sector jobs are lusted after by many, but have limited availability.

As of self-employed professional, I can attest that I have probably made – in my very best year – close to twice that of a similar position in the public sector NOT including
their pension and benefits. I have also had years when Ive made less than the garbageperson.

What we “whine” about is the “gold-plating” of many of
the public sector defined benefit plans. Those pensions often get their mgmt costs paid by the employer, whilst we in the private sector pay maybe 2% every year on
the holdings, depending on what they are and where they
are held. This can cost over 1/3 of total value long term.

The public sector plans really just invest in much the same things as are available to the rest of us. So if the investments tank, who do you think is going to make up the difference?

#144 Shawn on 07.08.09 at 8:49 pm

Maybe gold bugger should go bugger himself for being so insensitive.

#145 TJ on 07.08.09 at 8:51 pm

U.S. mortgage fraud reports jumped 36 percent last year as desperate homeowners and industry professionals tried to maintain their standard of living from the boom years, the FBI said on Tuesday.

Suspicious activity reports rose to 63,713 in fiscal year 2008, which ended last September, from 46,717 the year before. California and Florida, centers of the housing bust, had the highest numbers of suspicious reports as foreclosures jumped, the stock market dropped and credit dried up.

#146 kc on 07.08.09 at 8:52 pm

A follow up to my last post about exporting jobs and importing CHEAP shit…… for anyone who actually sits and wonders why they work 2 part time jobs and can’t rob peter to pay paul… read the truth here…..

Another Victim of America’s Ponzi Scheme Economy (Part 1)

#147 john m on 07.08.09 at 9:11 pm


PM did not pocket communion wafer: spokesman

Canada may have its own fuzzy Zapruder film.

08/07/2009 8:27:03 PM

Prime Minister Stephen Harper stands during the funeral mass for former governor general Romeo LeBlanc last week.

Prime Minister Stephen Harper stands during the funeral mass for former governor general Romeo LeBlanc last week. News Staff

Controversy has broken out over a film clip that shows Prime Minister Stephen Harper taking a communion wafer, but does not show him consuming it.

However, a spokesperson for Harper said the prime minister “immediately” swallowed the wafer, which the Roman Catholic church considers sacred.

“At the end of the service, he was offered communion. He accepted communion and he consumed it,” Dimitri Soudas said

But video of the incident, available on YouTube, shows the prime minister accepting the wafer from the priest and not consuming it for the duration of the time Harper is in frame, which lasts about five seconds.

The incident occurred at the Roman Catholic funeral of former governor general Romeo Leblanc in Memramcook, N.B.

A Roman Catholic priest says it’s unclear if Harper pocketed the wafer — as some critics allege — and said if that allegation was true it would be scandalous. ………….Hmmmmmmmmm wonder if he has rubber lined pockets at barbecues lol :-)

#148 Jeannie on 07.08.09 at 9:19 pm

I wonder how many of you have ever had the experience of being turned down by landlords because you have 4 kids?
In Canada the alternative to owning can be substandard housing in rough neighborhoods…can you blame this couple for wanting a decent place to raise their family?
The cost of housing in Canada is beyond the affordability of many young families.
These people did the best they could, and no one told them they couldn’t have the $300.000 house…so what about the responsibility of the ‘enablers’? The banks and builders were happy to have this couple sign on the dotted line when Sam’s husband had a decent job.
These people didn’t miss payments, they are not irresponsible ‘flippers’ they’re a family desperate for a roof over their heads.
I hope Garth can use his connections to get them a break.

#149 Herb on 07.08.09 at 9:22 pm

[Gold] Bugger @ #111,

perhaps you could tell Sam and Bill where Enron, Goldman Sachs, GM, Madoff, Nortel etc. etc. are giving lessons about “how economics work in the real world. ”

There’s got to be more than socialism for capitalists and the hell with anyone else.

#150 The Van Man on 07.08.09 at 9:45 pm

It is unfortunate hearing the sad news of Bill and Sam and their mortgage woes with the lender. Everyone blames both of you for not being responsible. I beg to differ. You were responsible for the payments laid out on the contract you signed with the lender and perhaps you have every intention to keep on paying, or at least find ways to continue with the payments even with the loss of your husband’s high paying job. The problem is with the ALT-B lender who is willing to lend them based on their below than ideal credit rating that the bank won’t touch. Now that credit has tightened, borrowers like Bill and Sam must meet a higher and stricter credit worthiness for which they never did have.

The sad part is, they got into a house that they think they can afford based on false pretense and now, got refused a renewal because the lender raised the lending bar, thus forcing Bill and Sam out and ruining their credit rating at the same time.

Bill and Sam are victims of the bubble and credit tightening. The blame is with easy credit and it seemed, easy credit is still easy credit today! I’m sure that a few years from now when the bubble finally collapsed, Bill and Sam stories will become the norm played on the tube or on radio.

#151 77yldiuqs on 07.08.09 at 9:52 pm

Here are some quotes from Squidly77 from the AlbertaBubbleBlog that are relevant to this story:

“the future is good..not for you
but for me and my family”

“hehe.. your gonna lose it all”

“it’s going to be fun to watch this pig unravel.”

“thy are gonna lose it all and that makes me smile”

“ha ha. you don’t own anything. the bank owns you bitch lol.”

“i feel pleasure as they experience pain”

Squidly, quit promoting your stupid blog on here. It’s 100% censored. You’ve deleted all the comments. What’s the point?

#152 Dave on 07.08.09 at 10:02 pm

So here is what I really don’t understand about this — perhaps because there aren’t enough details in the posting. I’m operating under the assumption that the husband was the sole breadwinner for the family and that he is now unemployed / earning substantially less money if he is employed (please correct me if I am wrong). It would seem to me that no bank or lender, sub-prime or otherwise would renew a mortgage in this climate to a family that is without an income? Isn’t this just sheer stupidity on behalf of the lender. Regardless of their past payment history things for the future don’t really look particularly bright if there aren’t and dollars coming in the door so to speak.

However, that being said, if I am incorrect about the employment situation it would seem to me that this family has a fairly strong history of repaying their debts. The irony of this particular situation is that with interest rates where they are now the family’s payments would be less than before, even with the larger principle value, making the family more capable of sustaining their debt load. Ironic really.

A 25 year mortgage with a five year at the following rates

5% = 1782
6% = 1938
7% = 2122
8% = 2312
9% = 2508

Ironically, the house is actually more affordable for the family now than it was before. Perhaps one of the crueler ironies in life, but ironic nonetheless.

#153 Sean in E-Town on 07.08.09 at 10:11 pm

Any institution that requires credit default insurance, financed by the borrower, should be legally required to approve an extension of a mortgage on the same terms it previously offered, vis-a-vis the prime lending rate. To not do so is to act in bad faith. Whether or not the bank now feels that this family is a good risk, they demanded 6% in loan insurance, got it, and should bloody well let the insurance they forced this family to buy stand as a guarantee on the loan.

That’s not a government bailout, my fellow, sneering, hoping-for-a-real-estate-crash-and-scummy-landlords-over-extended-yuppies-and-upwardly-mobile-Gen-Xer’s-to-lose-80%-of-their-net-worth, blog dogs. That’s basic fairness and common law. This loan was extended in bad faith by the lender and the family ought to at least be allowed the chance to pay it off if they feel able. Don’t you dare blame these people for trying to honour their debts.

And while I don’t think that the state should subsidize child bearing, I don’t really prefer to heap shame on a family of four. It’s purile and miserly at best. Not everybody in Canada needs to have 1.8 children. There will be plenty of childless couples enjoying higher standards of living and retiring in their fifties to balance these guys out. Get over it and draft some taxation/benefits plan that accrues to people who don’t have children while still allowing children a higher standard of living so that we can simultaneously subsidize childlessness without impoverishing and under-educating children.


Your resident Krugmanite

#154 Mike Hunt on 07.08.09 at 10:21 pm

Nationwide Building Society has introduced a mortgage allowing borrowers to take loans worth 125% of the value of the home they are buying.

It will only be available to existing customers in negative equity who want to move house.

Negative equity means that the value of someone’s home is worth less than the amount they owe on their mortgage.

The Financial Services Authority is considering limiting mortgage loans to 100% of a house’s value.

Nationwide only offers new customers mortgages worth 85% of the value of the home they want to buy.

There has been much criticism of the loans above 100% that were available at the peak of the housing boom, which immediately placed borrowers in negative equity.

Under Nationwide’s new product, borrowers would take out a loan for 95% of the value of their new house at a fixed rate of 6.73% for three years or 7.48% for five years.

They would then be able to add on the negative equity from their old home, up to another 30% of the value of the new property, at a higher fixed rate of 7.23% for three years or 7.98% for five years.

#155 Samantha on 07.08.09 at 11:57 pm

#153 Sean

Good one.

I am glad that you raised the insurance issue (see also my post #123).

The reason this one raises my hackles is that someone very near and dear to me was victimized by a company who offered disability insurance on a loan. When the person became disabled, the disability insurance was not honored.

I got involved, did some research and discovered that the FTC had the company in court in the USA. So, I called the Federal Trade Commission in New York. Nice gentleman. He told me to get a lawyer. Not possible on disability income.

If you want a fun read, do a search on The Associates (who were bought up by Citigroup) and the FTC. The Associates were nailed big time in the USA in court. Nasty predatory lending practices and multiple court cases and grounds.

Citigroup tried to avoid paying for the sins of their new acquisition, however, the judge upheld their culpability as the new owner. Fair? You bet. The new owner had some interesting methods of doing business and a little research will clarify that comment.

In the case of the person I knew, my pursuit of government assistance regarding this outrageous practise was fruitless. Bottom line, class action lawsuit and so far I haven’t found anything on this side of the border.

Some predatory lenders were underwriting their own insurance, charging the customer, then denying the claim and that leaves one wondering about how they recorded “the loss”.

In the case of the person I know, it was discovered that the “insurance” did in fact pay out to the company just before they sold the “bad debt” to a third party collection company. So, where’s the “loss”?

I have a feeling that we are going to see more of these predatory lending practices surface. In the case of Sam/Bill, they did make their payments. Unfortunately, as I have pointed out before, lenders can change their policy with great facility, and create great hardship for borrowers.

#156 slickdealer on 07.09.09 at 12:04 am

104 – infernalmachine
130 – Mrs Loquacious

I do agree with both of you and am (very) glad how you both think: entitled gen Y and entitled boomers. It shows your self reflection and ability to stand outside the status quo and to think deeply. I definitely agree that our generation (I am 28) has a sense of entitlement, though I think that it is even ingrained stronger than the previous generation. I have friends buying things on whim, following their hearts desire, without the capacity or means to pay for it. Worth = Assets, they refuse to accept the other half of the equation, Assets – Liabilities. My parents and friends have it, so I deserve it. We are perhaps the most narcissisitic generation: everything we do must be praised, regardless of failure or success. The notion of hard work, success, and patiently waiting is easily dismissed. However, was it not the boomers who raised us, spoiled us, praised us for every little thing we did? I’d like to fault our generation, and I do, but at the same time, not many think outside the box and reflect (how me, myself, and I feel, is not reflection) and are a product of their environment — an environment controlled and manipulated to take advantage of the “sheeple”.

In regards to buying nice things, going on vacation every 6 months, buying on credit (cards) — I do that, and do that proudly. Buying with credit cards, I earn 1-3% cashback which helps pay for my trips and I earn bonus points (free flights) for every credit card I sign up for (credit score = excellent). I buy nice things, high quality and (normally expensive) brand names, because I go to the clearance aisle and find them cheaper than paying for the same thing at Walmart. I go on trips every 6 months because the flight was free or I bought the ticket at over 50% off. In general, I only buy when the item is above 70% off. I don’t think it is necessarily bad to buy or want good things, especially if it’s a good deal. Do I feel I deserve these things, not at all. But, quality of living does matter, just, not living as if we were kings and queens daily.

PS – I also rent, and proudly too.
PPS – Despite buying stff, I still save over 50% of my gross income.

#157 jd on 07.09.09 at 12:13 am

I have to commend families that believe in their dreams of home ownership. Yes you may have lost this time. Yes you may have lost this job now. But you have learned many valuable lessons and you had to live somewhere during those years and you will get another job.
If things go terribly wrong in the economy, opportunities of a lifetime may be available in the future to anyone with a steady job and income. The $97,000 loss ( 3 years rent = $70,0000 so really a $27,000 loss) may be a drop in the bucket compared to the losses others might have in their home values. So who is the lucky one? You had to leave and take your loss now but the majority might hold on and take masssive property value losses later. Who knows? Just keep trying.

#158 D from London, ON on 07.09.09 at 7:37 am

# 156 Slickdealer

Well said.

An observation on your point – “… a product of their environment — an environment controlled and manipulated to take advantage of the “sheeple”.” –

Gen Y’s have also seen the decoupling of the elites and their corporations from the rest of society, and the breaking of the implied contract that was used to buy the loyalty of previous generations (i.e. – Gen Y’s have seen their parents and grandparents lose their jobs due to ‘downsizing’, ‘outsourcing’ and shipment of jobs overseas). I believe Gen Y’s have a much shorter planning horizon than previous generations because they are much more aware of the uncertainty of continued employment, etc.

#159 Herb on 07.09.09 at 8:43 am


there is a problem with your analogy at #133 –

Marketing has conditioned all of us to be greater fools and to fall for one sales-job or another, so there is a good possiblity of finding a greater fool. But no amount of staring at the sky has ever produced another cargo-carrying aircraft.

#160 dd on 07.09.09 at 9:26 am

#129 homeboy o
…As for me, my own that is worth about 400k (paid 190k) will be paid off in two years….

Great … it might be worth $300k by that time.

#161 Mrs Loquacious on 07.09.09 at 11:53 am

#156 – SlickDealer

Two thoughts:

1)”Nice things” are morally-neutral and good to have if one can afford them. Kudos to you that you can! We have been blessed that way as well, though by no means do we think we deserve such a treat! As long as one is prudent, I do not see anything wrong with nice trips every few months or brand-name items (especially if bought on sale).

2) Though many boomers have raised their children to have everything that they themselves did not have, this does not absolve Gen-Y’s of their responsibility to be critical thinkers and to accept the consequences of their decisions, nor does it excuse their poor entitled attitudes or greed. The nature vs. nurture theory aside (since both play a part), ALL adults are by law responsible for their own actions, and it seems to me that many of our peers are expecting to be “bailed out” should their extravagant RE purchases and high living yield a bad return. They haven’t practiced self-control, patience, or forward-thinking, and I think that this can only end badly for the ones who have over-indulged beyond their means because they feel they somehow deserve it. They will most certainly also deserve the consequences of their actions, though I will bet that if that day comes, you and I will hear a lot of whining about how “unfair” the world and everyone is being to these entitled greater fools.

PS – We also bank a huge chunk of our gross and rely heavily on points.

#162 Just a Girl on 07.09.09 at 1:27 pm

#106 Meggie

Everyone is accountable for their own career choices in life. For some folks, the grass will always be greener on the other side of the fence. Coulda, woulda, shoulda … doesn’t really mean anything.

By the way, from my side of the fence (the nonprofit world), the pay and benefits in the municipal government sector looks two-three times higher! … but heck, I’ll stay over here on my patch of grass, I like the professional freedom …. that’s my choice, and I’m accountable to my future security.

#163 pjwlk on 07.09.09 at 2:40 pm

#129 homeboy “paid 190k”…

You did not! You paid 190k plus interest, plus property taxes, plus maintenance, plus…

I made up a spread sheet showing the purchase and selling of my own home using real numbers. Bought for $160k and 16 years later sold for $365k. In the end when everything was considered, the spreadsheet showed that I actually paid more for the house then I sold if for. Chances are you probably will have too…

#164 Jonathan on 07.10.09 at 7:43 am

Sara – The companies didn’t move from Scarborough back the US. They moved to China. Have you ever driven through the industrial areas in the US in the past 5-10 years? They are non existent. Everyone has moved and poverty has set in to these communities. They have turned into third world ‘cities’.

I was a US Account Rep working for a Canadian firm. I went around all these towns. I spoke to many people. Not a single one was ever happy about the economy – not in Chicago, not in Boston, not in Hartford, not in Philadelphia or Atlanta. They were all miserable. They said Toronto and China had stolen all their jobs. Their roads looked like ghosts streets as you described.

When I returned back to Toronto, I was blown away by the development. By all the businesses that were running and the streets were clean. The sheer size of Toronto’s manufacturing base was unbelievable. I knew right then that they were right. That we had taken the skilled manufacturing up here, thanks to a low dollar we were still competitive.

But then we lost the low dollar. We are no longer competitive.

#165 Jonathan on 07.10.09 at 8:12 am

#163 pjwlk

But you lived for free

#166 albertared on 07.10.09 at 10:29 pm

Here I am at 56, separated from my wife I am at a quandary as to whether to buy a house or rent. The last time I rented was in the late 1970’s when Alberta was a boom and awash with money. I have 240,000 in cash from a house sale, I am retired because of poor health with a small income to carry me month to month. Rents in my area for a modest home in central Alberta is around $1200 a month. Housing has come down but not nearly as much as Calgary or Edmonton. A simple 1000sqft home sells in the 250-280 range. I do not want a mortgage nor can I qualify for one. Moving is an extreme strain on my health and thinking of moving and renting only to move again is a thought that bothers me greatly. What to do?