A precursor of the US real estate mashup was serious trouble at big lenders like Countrywide – famous for agents giving loans to people who could breathe and sign a document at the same time. Those days of pre-bust madness were characterized by falsified mortgage aps, NINJA loans (for folks with No Income, No Jobs and no Assets), interest-only payments, fat home equity borrowings and adjustable-rate mortgages, offering people ‘teaser’ rates for a year or two – just to get them into epic debt.
Of course nothing like that could happen here, right?
Hmm. Well, we have interest-only payments, a burgeoning HELOC industry, teaser rates and now the largest independent lender stands accused of application fraud. It also happens that Home Capital Group is Canada’s biggest sub-prime lender, doling out billions to people the banks found too deplorable to actually qualify as homeowners.
How serious is this? Are there lessons?
Serious enough that CEO Martin Reid ended up with a big boot mark on his pinstriped derriere Monday night as the company fired him. “Home Capital requires leadership that can bring to bear a renewed operational discipline, emphasis on risk management and controls, and focus on improving performance,” the board of directors said in a release, as the coyotes from the Ontario Securities Commission circled outside.
This was not enough to keep the company’s stock from being spanked badly on Tuesday, shedding more than 9% of its value in a single session, taking it back to 2010 levels. Home Capital has been an investment star for years now, soaring from around a buck a share to a high of $55 three years ago, before being pummeled back down to the $25 range now. There could be more blood coming.
The company has received an enforcement order from the OSC and the regulator is apparently unsatisfied that Home Capital did enough in response to evidence agents fibbed on mortgage applications for at least two years – handing out loans to borrowers who simply didn’t qualify to get them. About 45 brokers and brokerages were punted after the news broke, but it’s probably a safe bet that where there is smoke, fire’s not far behind.
The OSC has also served a number of company officers, directors and former execs with enforcement orders, which Home Capital admits are related to the NINJA-like fraud. Making matters worse is a class-action lawsuit that’s been filed against the company claiming it lied on public disclosures in 2014 and 2015, which helped drive company stock into the stratosphere and misled investors.
Mortgage changes brought in last October have already hurt HC, making those poor, house-horny moisters pass a mortgage stress test, knocking about a fifth of them out of the market. If Ontario makes good for a foreign buyer’s tax or a speculator levy in next month’s budget, there’ll be more grief at head office.
Is mortgage fraud and lax lending rampant in Canada, or is this just a company caught with a mess of rogue agents? How many clients actually received loans to buy houses they probably can’t afford? We’ll see. Meanwhile the real estate market continues to be driven higher by borrowers who can legally use credit cards for down payments or whose parental loans mask their income deficiencies. Realtors push values higher with blind auctions and engineered bidding wars, while lenders offer 1.99% short-term financing in a world where interest rates are destined to plump.
Meanwhile, CMHC’s decision not to offer mortgage insurance for homes above $1 million – in a market where the average is $1.5 million – means buyers are forced to have 20% down payments, a big chunk of which comes from outfits like Home Capital, and the rest from the banks. This is why 65% of the $2 trillion in personal debt (rising daily) is in residential mortgages and real estate borrowings. Outta control.
As for DIY portfolio-builders, if you need a fresh example of why owning individual stocks is gambling, not investing, here ya go. Home Capital’s share values detached from reality about the same time houses did, and now we know there are enough irregularities within the company to cost Martin Reid his head and have the regulators kicking in the doors. You’re far better off with a broad-based ETF owning an index than trying to score with a handful of companies you really know nothing about.
And what does this say about the Canadian housing market?
Maybe nothing. Perhaps these are just careless, greedy dudes. Or maybe they’re harbingers.
166 comments ↓
For ETF holders this article is moot. Stay invested safely in safe ETFs. Just like Rowat was talking about on the weekend.
Where there is $, there is greed and lies.
But this only happens in the housing market, never in the financial services marketplace nor the stock markets…
Never. Ever.
My my, when THESE things blow.
DEMAND TANKS YEAR-OVER-YEAR ACROSS GREATER VICTORIA
FEBRUARY DETACHED SALES DOWN 25%
Early last year I predicted that Victoria’s inevitable housing market correction process would begin soon.
It turned out that April (approximately) marked the beginning of falling detached sales across the region, which, of course, also marked the beginning of the market correction process.
This downward trend has steadily worsened, resulting in the concerning year-over-year sales numbers we have seen early in 2017. This is a clear sign that Victoria’s correction process is solidly in place and following Vancouver’s lead.
* January’s sales drop: – 18% year-over-year
* February’s sales drop: – 25%
With the correction process solidly established in Victoria, we can look forward to what inevitably follows in the deflation of any housing bubble – falling prices and a deep price decline.
As is the case with all bubbles, prices will fall back to the mean (mean reversion) and likely overcorrect beyond that level. Think of the overcorrection as the cherry on top.
HOUSING BUBBLES ARE ALWAYS BRUTALLY DESTRUCTIVE
There has never been a housing bubble anywhere in the world that has deflated in a slow, steady, gradual, gentle, quiet, controlled, managed, safe, harmless, nice, sweet, tender or soft manner.
There is no such thing as a “manageable” housing bubble. That’s the sort of thing Canadian bankers or economists (paid shills) come up with.
There has never been a housing bubble that has been permanently maintained through market intervention to avoid the economy-crushing consequences of the inevitable major price decline. It’s simply not possible to do so. If it were possible, it would have been done in Ireland, the US, Spain, Greece, Japan, etc. What’s worse is the longer a housing bubble is maintained through intervention, the more brutal the outcome.
The fact of the matter is – once you have a housing bubble, a bad outcome cannot be avoided. A bad outcome, that is, that involves a deep price decline that has brutal, long-lasting effects on the entire economy and household finances of families.
When a housing bubble obviously exists, those who ignore the self-serving “it’s different here” rhetoric and wait for the inevitable deep price decline to run its course before buying are always rewarded. Hugely.
Talked with someone in the industry today about the housing market. Seems from an insider that people are getting really nervous that this bubble is about to blow. With credit exhaustion, Ontario “measures” set to be announced, it’s looking like a scary road ahead. Stories of people living off their credit cards to cover daily expenses because their mortgage payment eats up an enormous amounts of take home, it seems like there may be no more room in the balloon.
Home Capital? An outlier? Wait until I get off the floor because I’ve been laughing so hard. People in the business of lending money out have been being paid on commission. You turn down an application for a loan and you will be out the door looking for a job. Everybody gets a cut. They don’t want you taking away a slice of their cut. This may be because of the court decision that the RE people are responsible for people ducking capital gains taxes. I expect that there are a lot of documents being shredded, emails being erased, phone calls being deleted. What agent wants to get stuck with a 600,000 dollar bill? Now that they’ve tossed the dude, they can pile the blame on him. Everyone else will be lily white. Expect to hear a lot of I was just doing what I was told to do. There’ll be lots of blame to go around.
Great column as usual Garth! I would be interested in your thoughts / speculation on the “rumors” that the pending Ontario budget will contain initiatives to address the Housing market – i.e.: foreign buyer tax, speculator tax, second home tax etc.
Mortgage fraud was identified even in January and continues to rise and nothing is being done by any housing agency or Government. This should be regulated entirely by the Government.
http://www.theglobeandmail.com/real-estate/mortgage-fraud-rising-in-canadas-hottest-housing-market/article33570435/
Garth, I’ve always liked the saying “if you have to use extremes to support your argument, you have a weak argument”.
It was public knowledge that there was funny business going on at HGC all the way from 2015. You could have pulled out back then and instead invested in the big 5 which are well run and don’t have the same issues. Also, diversification is still vital, especially if you’re a DIY portfolio builder.
So you recommend an ETF comprised of 100’s of companies we know nothing about including the dogs & the riff raff? Think I’ll stick to my handful of businesses that pay and increase their dividends and continue to fund my retirement.
Garth, remember that guy that moved into TO a few years back and assembled a team to short the housing market?
Whatever happened to him? toasted perhaps?
One hopes the father in the picture didnt have an apple on his head……..
The chart of HCG says it all. It’s going into the single digits. That huge descending triangle pattern is going to break very soon…
rogue agents, it’s all rogue agents. the housing market is fine. nothing to see here. move along. ha!
agents, in a field where you are encourage to use 5x leverage or more, get a debt you’ll use entire lifetime to pay back, that is less regulated than investing 500$ for your retirement, and less transparent than organized mafia, have all the incentive in the world to lore you into a deal to fatten their wallets.
Home Capital is caught in the spotlight, but other financial institutions are ‘clearing their rosters’ before the OSC arrives. Some high profile ‘retirements’ have already been announced; place bets accordingly.
I wonder if Marc Cohodes is walking around with his chest all puffed out “I TOLD YOU SO!” right now… also, I wonder if he put money where his mouth is and really bet against HCG awhile back when he went on a media blitz telling everyone about it
Just listened to your interview on Howe Street, Garth. Reefer madness doesn’t become you. #lightenup….
Marc Cohodes has been shorting Home Capital for a couple of year now. When he smells something bad he is on it like a dog on a bone.
Who the hell would buy a risky stock like Home Capital in the first place? It is not exactly a blue chip, plus we all know this boom will eventually end. Citing this one risky stock as a reason not to own individual stocks is silly.
Meanwhile, CMHC’s decision not to offer mortgage insurance for homes above $1 million – in a market where the average is $1.5 million – means buyers are forced to have 20% down payments
————–
Would not a house costing $1.5million need
$500 000 down then $1 million mortgage?
So 33 1/3% down?
As for DIY portfolio-builders, if you need a fresh example of why owning individual stocks is gambling, not investing, here ya go. Home Capital’s share values detached from reality about the same time houses did, and now we know there are enough irregularities within the company to cost Martin Reid his head and have the regulators kicking in the doors. You’re far better off with a broad-based ETF owning an index than trying to score with a handful of companies you really know nothing about.
And what does this say about the Canadian housing market?
Maybe nothing. Perhaps these are just careless, greedy dudes. Or maybe they’re harbingers.
===
Where are the pro Canadian sub-prime shorters, who don’t get this information after the fact, from the news?
Do professional investors even care, or using ETFs eliminates any real research, or real responsibility – with simply auto-piloting indexes?
Do professional ETF investors even try to identify the “post-harbingers”, or they just go with the flow, only amateur DIY dudes care?
What makes the difference between a “professional ETF” investor and a “DIY ETF investor”?
“About 40,000 research reports are produced every week by the world’s top 15 global investment banks, of which less than 1 percent are actually read by investors.”
http://www.zerohedge.com/news/2017-03-28/equity-research-faces-major-disruption-study-finds-less-1-reports-are-actually-read
And in Napa Ca there is a chicken farmer who made a short stock bet he is gonna collect big on……..
Same dude who has been bashing the federal and provincial Libs here in Vandelusional for allowing foreign money launderers to clean their cash with impunity.
Pretty sad situation all around, compliant politicians in the back pocket of the FIRE sectors.
One can only hope reversion to the mean happens regardless of any intervention by said politicians trying to squeeze the last bit of tax revenue out of this gasbag.
I remember buying puts on outfits like these… Always with the turnaround…
Mark Cohodes has been right about HCG for a long time now.
“If Ontario makes good for a foreign buyer’s tax or a speculator levy in next month’s budget, there’ll be more grief at head office.” Garth
But Foreign buyers are an insignificant part of the market. Minuscule. Just like Martians.
I’m sure the housing market will ignore any foreign buyers tax. Right ? ;)
So? they made millions. The CEO made millions. He probably gets a very nice package to leave. He’ll take the summer off and be back in a CEO chair by the fall. All good.
I was just talking about this directly to RBC on the weekend.
It in funny how “home owners” can’t see how much risk they are taking on right now. We laughed. In the investment world, you wouldn’t leverage up to 95% unless you really, really knew what you were doing.
“Home owners” might as well be speculators at 20% down. They just don’t know it or know the risk level of their “investment”.
That, is the greatest fool of all.
Don’t be a fool and follow those off the financial debt cliff. There won’t be debt forgiveness just a life in debt.
Almost 2 years ago we sold a small bungalow for $225,000, the new owners just listed the house for $289,000 and sold it for $340,000.00 and this is in Peterborough. Wish I had a crystal ball.
#151 Vancouver Dudes on 03.28.17 at 7:00 pm
That is an ‘assignment’ sale, not ‘consignment.’ It is perfectly legal, but the proceeds will be taxed as regular income at the seller’s marginal rate. — Garth
YOU MEAN A 100 GRAND FOR STANDING IN LINE FOR A FEW HOURS WOULD BE TAXABLE AT MY MARGINAL RATE????
OH I GUESS I WOULDN’T TAKE IT THEN……LOL
Does somebody knows about a short-seller on this company ?
His name is Marc Cohodes.
You can follow him on twitter or google search Marc Cohodes on canada real estate.
This guy has been calling this for about 2 years now.
You & Him should do a blog together and become friends !! IT WOULD BE BEAUTIFUL
Listings have just started to flood the market… it took 22 years ( inflation adjusted) for the house prices to recover after the 1989 crash…
Thanks for all you do Garth. Some of us are listening ……..
others – not so much-!
Re – urban containment policy – supply and demand…
http://www.pressreader.com/canada/the-globe-and-mail-ottawaquebec-edition/20170328/281681139711718
Is Home Capital related to any of the “Home” GICs I can purchase (HomeEquity, Home Trust)?
Serious request Garth: some of us use GICs as at least part of the FI portion of that 40 (30, 20…) % of the balanced portfolio. These mortgage companies give some of the better rates available. A reasoned post about judicious GIC use and considerations would be helpful.
… but, but, but… here’s a MoneySense article of a dude who has a whopping 91K in his TFSA just by following Warren Buffet’s example of ‘value picking’ stocks… if only it was that easy…
http://www.msn.com/en-ca/money/savingandinvesting/when-investing-copy-what-works/ar-BByY8qk?li=AAgh0dA
I hope they’re harbingers. We need a Lehmann Brothers event to bring sanity back to the housing market. Governments and banks have proven they don’t have the spine to pop the bubble.
#15 Jonathan on 03.28.17 at 6:57 pm
I wonder if Marc Cohodes is walking around with his chest all puffed out “I TOLD YOU SO!” right now… also, I wonder if he put money where his mouth is and really bet against HCG awhile back when he went on a media blitz telling everyone about it
***
http://www.bnn.ca/video/short-seller-marc-cohodes-on-ousting-of-home-capital-ceo~1087695
That sly grin at the beginning of the interview says it all.
~ breathe deep
I also wonder about some of the Credit Unions which have expanded greatly around southern Ontario.
It’s great if you got a NINJA mortgage out of them, but no CDIC if you have deposits with them. They self insure each other (?) through DICO in Ontario.
Given that most mortgages in Canada must be renewed after 5 years (despite the 25 year amortization schedules) it would be interesting to see some analysis on what would happen if a homeowner was unable to find a new lender at the time of renewal. For instance if:
a) a large alternative mortgage lender like Home Capital failed, leaving it’s mortgage clients unable to renew with the defunct lender and being forced to find another firm willing to loan. Otherwise they would presumably be forced to make the balloon payment owing on the mortgage, and almost certainly be unable to do so
b) the fair market value of the housing unit falls below the value of the mortgage outstanding at time of renewal. In this instance it would seem the bank may still be willing to extend the loan if incomes were strong enough to support the loan. However, if the bank no longer holds an economic stake in the loan (ie it packaged off and sold the paper) they may lack the incentive to renew the loan. The bank may even be legally precluded from renewing the loan if the loan to value ratio would exceed 80% which is federally required to need insurance. To qualify for insurance however, clients must pass the more onerous income stress test imposed on insured mortgages which many may not qualify for.
I know I have asked several real estate agents and mortgage lenders in the past about whether a loan automatically renews at the 5 year anniversary, and every one believed this to be the case with no risk of it ever being denied unless income changed. I think this is an area that many are unfamiliar with (including industry professionals providing buyers advice) that could be a large problem should prices decline.
http://vancouversun.com/news/local-news/house-buyer-beware-landmark-b-c-court-ruling-will-shake-real-estate-industry
FINALLY
‘Landmark B.C. decision – stark warning to real estate agents, notaries and lawyers who fail to ensure that sellers of properties are truly tax residents of Canada.’
‘Many buyers and their agents are not being diligent in making sure the seller is a physical or tax resident of Canada’……….
The complex ruling published this month…strikes at the heart of a gaping hole in Canadian tax, immigration and property-transfer law, say the immigration lawyers.’
I am working diligently on my cardboard model of Justin to send to the House of Commons and have been perseverating over all the fine details because I want it to be just perfect but I can not for the life of me replicate that expression after he sits down. Now I have been searching all over the internets for comparative representation to no avail. Can anyone provide me with a description so I can enter it into the Google. Thanks for the help.
#25 -=jwk=- on 03.28.17 at 7:15 pm
“….He’ll take the summer off and be back in a CEO chair by the fall…..
________________________________
Au contraire, his resume and talents could probably land him a more lucrative job offer in the U.S., where the President of the Alternative Facts of America continues to push for more financial deregulation, much to the delight of the CEO’s Goldman Sachs, JP Morgan, etc. the very institutions who helped blow the brains out of the financial world in 2008, wiping out trillion$ in middle class equity.
http://fortune.com/2017/02/06/jamie-dimon-lloyd-blankfein-goldman-sachs-jpmorgan/
As Garth has been pointing out for some time, there are a lot of signs and portents.
I have updated my Household Debt chart (with plot overlays of GDP, Foreign Direct Investment and Balance of Trade):
http://www.chpc.biz/household-debt.html
The household and mortgage debt plots get uglier every month. Ugly if the covenants don’t have solid “take it to the bank” earnings projections.
Loan officers don’t fret when market values are trending up; so it’s all good. On the reverse trend, credit drys up and becomes very expensive as anyone who has lived through a credit cycle or two knows.
#3 Victoria Real Estate Update on 03.28.17 at 6:40 pm
DEMAND TANKS YEAR-OVER-YEAR ACROSS GREATER VICTORIA
FEBRUARY DETACHED SALES DOWN 25%
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
RIGHT VREU.
AND WHAT THE THE PRICE DO IN THE SAME TIME PERIOD…….?
TRY UPPA UPPA UPPA AND SO ON ANS SO ON…….
TRY ANOTHER HOBBY HONEY.
#9 Ed on 03.28.17 at 6:49 pm
So you recommend an ETF comprised of 100’s of companies we know nothing about including the dogs & the riff raff?
***
Depends on the fund. Scott Fearon and Carlo Cannell have done a couple of excellent talks about failed companies, and they describe indexes like the S&P as carefully tended gardens: a stock will be pulled out if there is even a whiff of trouble.
The shady CEO case studies here are golden:
https://youtu.be/Cn-evDDmA8M
https://youtu.be/bvW9P4FWlvA
~ breathe deep
NINJA Loans in Toronto? That’s outrageous like Poloz wanting us to work for free under a 50-cent Loonie.
After being forced to take Soma pills under Poloz’s Secret Psychiatric Facility under Downsview Park (or Parc Downsview for you Frenchies in Quebec), I’ve come to realize that breastfeeding random toddlers and babies without their consent should be a human right.
Why? I was told that Ms. McLaren was enforcing her duty as a mother to feed a baby in need, and that I was a pervert to think that she undressed in a sexual way in front of Chong’s baby son during a drunken night at a rave party in his residence.
Wait a minute here: Didn’t Eminem’;s Guilty Conseience song start off as “Meet Stan 21-years-old. After meeting a young girl at a Rave Party, things start getting hot and heavy in an upstairs bedroom”.
Eminem: Now listen to me when you’re kissing her cheek, smearing lipstick…Now all you gotta do is nibble on this little *****es earlobe.”
Dr Dre: “Yo! This girls’ only fifteen years old!”
————-
Okay, my medication is forcing me to agree that women in Toronto like Ms.McLaren should have the right to breastfeed your child in the nude while you work away to pay a mortgage on “Premium” housing in world-class Toronto.
ETF’s deserve high praise as a good financial product but have some baggage and drawbacks at first examination are not seen but are still embedded in the product.
CEO’s at the big five banks all receive financial and “equity or share or option remuneration as is common at Magna or at Walmart or at Home Depot or Fedex or Microsoft.
We need to keep an open mind due to the fact that “risk” exists in all financial products to some degree in all markets.
Lean too far in one direction and the boat tips over…same in financial markets.
Just following up on Garth’s post regarding Home Capital to put even more context into the article. The company has a footprint in Canada’s hottest housing markets, including cities in British Columbia, Alberta and Ontario.
Several people may come across as “bears” but their posted links demonstrate the fragility of this “bull” market. There is little value in warning people about a housing bubble but great value for certain people in pushing the mantra of ever increasing home prices. We may not be the United States, but we are sure doing our best impersonation.
Marc Cohodes just made another bundle.
http://www.theglobeandmail.com/real-estate/the-market/californian-short-seller-targets-home-capital-group-canadian-real-estate/article25715455/
“While he won’t disclose the extent of his short position against Home Capital, Mr. Cohodes has certainly been rewarded in the ensuing months as the company’s share price waned on concerns over falling oil prices.”
http://www.msn.com/en-ca/money/topstories/home-capital-shares-dive-after-company-terminates-ceo/ar-BByYzzx
http://www.theglobeandmail.com/report-on-business/home-capital-brokers-alleged-fraud-bigger-than-estimated/article27110594/
“A group of 45 brokers suspended by Home Capital Group Inc. for alleged mortgage fraud generated nearly $2-billion worth of outstanding mortgages for the lender, twice as much as executives originally estimated, the company revealed Wednesday.”
#4 pop,
I know what you’re waiting for Pop. But it ain’t coming. You’re never going to get an opportunity in your life to see real estate quadruple in ten years. You missed the lottery. I think people have to start to come to grips with this rather than waiting for the merry go round to return.
#27 Franco on 03.28.17 at 7:19 pm
Almost 2 years ago we sold a small bungalow for $225,000, the new owners just listed the house for $289,000 and sold it for $340,000.00 and this is in Peterborough. Wish I had a crystal ball.
….
What I suspect is going on, people in Toronto that have retired are cashing in and moving to the outskirts driving up prices there.
flop you asked about one in bby – springdale – 1.63
not too bad i’d say.
dumpy houses in the burbs for 1.6m – prices have gone where?
#30 – Just where are “listings flooding the market”?
#27 Franco on 03.28.17 at 7:19 pm
Almost 2 years ago we sold a small bungalow for $225,000, the new owners just listed the house for $289,000 and sold it for $340,000.00 and this is in Peterborough. Wish I had a crystal ball.
===
Peterpatch is nutz eh? I was away from 2003 ~ 2014 and came back here stunned at the valuations. I know some of the buyers are smart GTAers who have cashed out while others are locals caught up in FOMO.
My question is: how are the locals buying? There aren’t too many highly paid jobs in Peterborough anymore
https://qz.com/932813/employee-burnout-is-becoming-a-huge-problem-in-the-american-workforce/
Overworked and probably under paid.
Mortgages are the fraud.
example A)
if the vendor does a vtb he is forgoing actual money on closing
If someone does a vtb, there is a slight risk (new owner trashes the place, doesn’t pay, squats etc)
example B)
Bank has no money, creates it out of nothing because you want a mortgage, no risk
it’s worse folks:
the credit worthiness of the borrower is actually irrelevant in example B
and in example B the collateral goes to the bank who came into the deal with 0
bdwy sktrn on 03.28.17 at 8:20 pm
flop you asked about one in bby – springdale – 1.63
not too bad i’d say.
dumpy houses in the burbs for 1.6m – prices have gone where?
//////////////////////////////////
Hey Broadway,I’ll tell you where they’ve gone ….south!
These guys paid in 1.71 in December 2015, so they didn’t even buy in 2016 and still got burned ,just for the simple fact that they overpaid by a large margin.
If your number holds true they lost 80k plus expenses.
So to answer your question,there is nothing wrong with getting 1.6 million for your house just as long as you didn’t pay 1.7 for it…
M42BC
5398 Springdale Court, Burnaby
Nov 10:$1,849,900
Mar 4: $1,699,900
Change: – 150000.00 -8%
https://www.zolo.ca/index.php?sarea=5398%20Springdale%20Court,%20Burnaby&ptype_house=1&max_price=1300000&min_price=800000&filter=1
https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAzVlNCTg==
@WUL Thanks for mentioning the tax situation in Alberta yesterday.
https://tinyurl.com/lhpvw6b
Maybe you could help translate the following
Voidable Events
(1) The insurance coverage in respect of a Housing Loan may be declared void by CMHC at its option if:
(a) CMHC is satisfied, on reasonable grounds, that it has been obtained by fraud or fraudulent misrepresentation, or any criminal act, which has occurred with the knowledge, participation or actions of the Approved Lender or its employees, officers, directors or Lender Correspondents;
Does that mean if the broker knows the documentation is fake CMHC doesn’t have to pay?
https://tinyurl.com/motyfaa
When affordability is worse than in New York City, ‘creative financing’ is to be expected. After all, mortgage brokers and real estate agents need to get paid, right?
For those who keep mentioning Canadian’s obsession with debt, lets just accept that debt in the current environment is irrelevant.
Canada’s economic fortunes are improving. Jobs are plentiful. Debt, arguably outsized, is easily serviced. Easily. And will continue to be easy to service.
http://mobile.reuters.com/article/us-canada-cenbank-idUSKBN16Z1SX
You think this is good, wait until they get to the banks books.
You’ve been hearing in the news, sell or get fired at the banks. http://www.cbc.ca/player/play/891609667744
think this just applies to bank accounts and overdraft? Nah, mortgages are huge revenue growth.
Do whatever you can to get a deal they will say, but if FSCO comes down, then they just point the finger at the individual and blame them.
Missed payments and foreclosure rates are extremely low? Well duh, who would want to get foreclosed on and miss payments when their house is the only thing keeping them afloat.
With collateral liens, the bank will just keep giving you money even if you don’t qualify, house or ATM machine, what’s the difference.
Banks always point the blame onto brokers blaming the private mortgage market, but that market only exists because everyone wants a piece of 20% annual returns with no money down.
“The Big Short”
Best movie!
Coming to Canada?
“No!” Says everyone who owns
“Yes!” Says those who don’t
Garth,
What would happen to Mortgage Backed Securities (MBS) that are secured buy these fraud mortgages?
Vancouver Dudes #42
The price may be going “uppa” but the reason is not a hot market. For sale signs used to be like lollipops c. April. Now – crickets. No one can put their house on for fear of not getting back in. The Victoria market is fully dysfunctional. Look up “harbinger”.
PS Cohodes thinks the totals being reported are less than half the reality.
Poloz is a tool. Apparently the GTA economy is hot enough to justify these house price increases but not enough to justify rates higher than .5%, which is driving up the debt. Now we have 2 cities that are considered the most expensive in the world, but we gotta get our exports up!
WTF is going on in this country…
http://www.cbc.ca/news/canada/toronto/stephen-poloz-toronto-housing-1.4044206
Some people seek the truth, others bury their heads in the sand. Been saying this for years, those that believe that we have high lending standards here and are different than the USA have firmly buried their heads.
We have subprime lending, rampant fraud and idiots at all levels of the real estate pyramid looking for a buck. When you pay commission for loans, it is a moral hazard.
Home Capital is the first shoe, followed by the other class B lenders, followed by the private mtg syndicates, the credit unions then our rock solid banks.
Fraudulent underwriting only gets exposed when home prices begin to fall. Those who have obtained their mtg through fraud are able to hang on as long as they have opportunities to constantly refinance. Some may have sold, taking the equity and buying multiple other properties.
When the dust settles every expert and their mother will have an opinion, the truth is for those seeking truth all the answers have been in front of our eyes for years.
Stay liquid
Math
#27 Franco
Smokie is correct, TO money heading to the wilderness.
Here in The Niagara Peninsula, houses are selling at peak prices too…mine bought for $162K 3 years ago has been attracting agents weekly offering $300K guaranteed.
Lots of demand, no stock.
The sad and crazy part is ask people what their net income is, divide it buy the equity in their home and show them home many years it would take to replicate that. Did that with a friend recently, i know he has shaky finances and for him it would be 9 years.
Why does he not sell? “Where are we going to go, what do you expect me to do go back to renting”
Reason 10,232 why we have a 1% and everyone else is wondering how they got there.
Math
This has been happening for years in Vancouver and it’s not just shady outfits doing NINJA like loans.
I remember a rep from a very prominent Vancouver area credit union said to me “Well with your income you can’t afford a condo in Vancouver, so we’ll just say you made some ‘bonus income’ and that will get you into the market”
To me that was straight up mortgage fraud, but I just left and didn’t say anything.
In retrospect the joke is on me, I still can’t afford a condo in Vancouver because now that I have savings the prices have gone up. Maybe I should have gone for it, but at least I can sleep at night knowing I’m on the right side of the law…for whatever that’s worth….certainly not worth as much as a piece of real estate in Vancouver!
#57 Leo
Your just not funny anymore…. Troll elsewhere.
Thanks,
Blog readers.
This is just one of many to come- mortgage fraud has become and industry in it self in the GTA.
I have said before- this will end bad, CMHC is a mortgage INSURANCE company- any fraud on the application and when it comes time to pay to bad so sad.
CRA sees your inflated income on mortgage documents vs your T4A, pay up the difference in tax in your claimed income vs mortgage– its coming just a matter of time. Admit you falsified income, CMHC pulls insurance and you lose financing or just settle the bill and all is good.
From the looks of it, the Feds are going to go after the housing market in a low key- we are just following rules narrative . CRA and OSC are all govt regulated bodies.
The problem with this ponzi-ops i mean RE market is that if you take away one avenue, it all falls down.
Foreign buyer tax = 5-10% of market, mortgage fraud realistically is 10-12% of market, new mortgage regulations- another 10% and so on and so on
#55 Still employed in AB:
That chart on the taxes in the prov’s on $75K family income presents a stark picture. Thanks.
I’ll need some time to work through the CMHC insurance policy and get back. Interesting though as a contract of insurance is one of utmost good faith and a misrepresentation touching on risk can lead to a denial of the claim. But remember that here the insured is the lender, not the borrower. Who is making the misrepresentation about the credit worthiness might be the nub of the issue.
Lemme look at it. $650/hour. What is your address?
The most epic post from yesterday and no one made connection.
Sad. Genaration snow flake. Smart enough to follow , but not smart enough to question what they follow.. teachers is all I’m saying.
#50 Smoking Man on 03.27.17 at 8:59 pm
An infants tee shirt, wrong color, never used, for sale.
Let the bids begin.
The movie Special Correspondence.
Brilliant. Writen by Ricky Graves or something like that.
3 stars on netflicks. Bull.
I give it a 5+
The province will do little if anything to slow the housing market, after all, they’re making billions from it.
Boy Wonder and the Liberals allow China to take over Canadian high tech company:
http://www.theglobeandmail.com/news/politics/liberals-reverse-course-on-chinese-deal/article34441975/
Boy Wonder and the Liberals = “Canada Last”
Victoria realestate thanks for another enlightening update. The sales have declined in Victoria because there is litetally nothing for sale. New Houses going up everywhere, building cranes cover downtown, old houses being torn down and replaced all over? Do you even live here?
What does Poloz actually do for his $600k/year?
Read a bunch of economic reports, then once every couple of months go before the cameras and say “We don’t believe raising interest rates at this time is prudent”.
Sheesh. Time to downsize or outsource this guy’s job – maybe his job could be replaced with a robo-advisor type of program that makes the same non-decision.
I’ve had a lot of emails from worried former colleges, Stoj what’s up. You ok.
My response. I’ve made a choice. I want to be a writer. Better that hunter s thompson and hemimingway.
Only way to do it, desend further into the unknown world of insanity and all the things that make you forget real life.
I might be making a mistake. I don’t care. You animals on GF inspired me to take this fork in the road.
It’s your fault. I thank you.
Even if I hit a cement wall. What a ride.
Buy low sell high – right?
RATM
There are pockets of bankers at the big Banks committing similar fraud. I met a banker last month who boasted he was the top sales guy at his branch. He went on to tell me how he has helped many people qualify for large mortgages by writing a convincing case for the back end credit review folks. Some of his hot tips included teaching me how to falsify income through a corporation, or using a friend’s corporation with an employment letter and just 2 months of ‘salary deposits’. Lots of subprime lending in Canada today.
That is a great interview with marc cohodes on Bnn.
He is fired up! Cohodes has some cojones.
#74 Stevie
Stevie,
Have you ever thought about why there are no houses being listed in Victoria during the height of the house-listing season? Does that not seem strange to you? Ask yourself why this might be.
Do you understand the difference between a perspective based upon qualitative observation versus a perspective based upon quantitative observation?
Find some numbers, develop your own conclusions.
In hindsight, I wish I had bought a second property a few years ago and sold now and cashed in. But, I kept reading this blog and waiting for the bubble to burst. It still hasn’t. When oh when will it happen?
A friend of mine , stated that there is limited land to build on in Canada and that is why there is a shortage of housing and high prices. When I tell her that Canada is bigger in land mass than the USA , and one tenth of the population and that prices are so much cheaper in many places in the states, she still states that it is all about available land.
So many people are convinced that prices will continue to go up. Even to this day.
Many American investors had been looking for a way to Short the Canadian Realestate market , ie Home Capital, after the experiences they had with their own. The Big Short.
If had shorted Home Capital I would be selling right now before OSC delists the stock.
John B – regarding renewals
Renewals are new legal contracts. A renewal does not automatically happen, it is initiated by the lender.
If an insured loan comes up for renewal, the lender must offer a renewal at a market rate otherwise the lender loses the insurance coverage. However, a market rate could vary – could be 4%, 6%, etc.
If a conventional (not insured) loan comes up for renewal, there is no requirement for any lender to offer the renewal. Never. It is a new legal contract. The kicker is that the bank act doesn’t allow lenders to lend on more than 80% loan to value. So, in a downturn, anybody with a high LTV that is conventional faces some serious risk. They may face higher than market rates (unable to switch lenders) or in extreme scenarios bring cheques to the bank.
With regards to the latter, I suspect in a market downturn osfi will provide the banks with exemptions on renewals in order to maintain financial stability for borrowers who continue to be able to make payments.
Correction.
I would be covering my Short right NOW.
What does Poloz actually do for his $600k/year?
Read a bunch of economic reports, then once every couple of months go before the cameras and say “We don’t believe raising interest rates at this time is prudent”.
Sheesh. Time to downsize or outsource this guy’s job – maybe his job could be replaced with a robo-advisor type of program that makes the same non-decision.
Share your comment:
Jobs like Poloz are made up. He is part of the good old boys clubs that controls Canada. Even if they boot him he would get another fake job like tim hudak who became CEO of RE industry. My cousin is part of the club not in big leagues but lets just say he became VP in a company in an industry he has no knowledge . Im sure once the CONs get back in power he will be back. Im so jealous. If the masses only knew that certain positions are already reserved for the elite and even though you maybe smarter or more knowledgeable you will always have a ceiling so people like tim hudak can become CEO.
Globalisam will only work when we can all read each other’s minds.
Easy, but when you factor in the teacher. Puts you light years behind.
Why is it my job to save humans from them selves.
Looking over the collective aggrement ..it’s not there.
Garth….as a trader….you have to research constantly….I read every global paper, search media, and peruse every corporate issuance on a daily basis. Investing is work. It’s like the old saying….a thousand dollars is a savings account, a million dollars is a full time job. Having said that, the markets have been short a Home Capital for over two years. Institutional investors who ‘must own’ things got burned , individuals not….individuals either didn’t participate or cleaned up on their shorts. Personally I had sworn off the stock years ago…..neither long or short….zero interest……way more opportunities to focus on elsewhere. Home Capital was toxic and everybody knew. Pension funds etc set different criteria for investing.
But….since you don’t trade ….let me tell you the secret to success in my business…..you accept that every once in a while you make a bad call….even on the best judgement…..and the secret is…..you only have to be right more often than you’re wrong.
I gave you an example of a portfolio I set up for a novice with $28500. Yesterday …6 stocks were up….one strangely down….for no apparent reason…..other than “the home capital effect” where all reins and real estate related issues were sold off….baby with the bathwTer type of thing. The group did however manage to squeak out a $200 day even with a $120 loss on 850 shares of one issue…..so….it’s good.
I did call the kid to remind him though that in the month since he went in……he’s received 5 dividend payments. So…..let’s not bad mouth stock picking…..let’s all try to up our game as investors and remember….this is all and only about making money…..not saving money.
“As for DIY portfolio-builders, if you need a fresh example of why owning individual stocks is gambling, not investing, here ya go. Home Capital’s share values detached from reality about the same time houses did, and now we know there are enough irregularities within the company to cost Martin Reid his head and have the regulators kicking in the doors. ”
..I disagree. 2008 tought us about faked financial statemnets in a conspiracy shared by regulators, credit rating agencies and banks. the LIBOR crisis a year or two later shows that EVERYBODY DOES IT. Is an industry culture not only few bad apples. What,..you think taht only VW lied about emissions ? Toyota, Reanault, Chrysler….all do the same . So… individual stocks ARE the way to go. Eyeball what the main action is…relate it to DEBT…identify the actors. HIT’EM HARD !
..if not… portfolios will bring 5-7%, a pathetic # considering that the real inflation is more like 4%.
..i other words… see where the main debt is…then leverage against it. And wait.
Figuy #83
Thanks for the input. Certainly don’t think enough uninsured borrowers are aware of the renewal risk. Also for those that have their loans through a non-regulated lender (~20% of Canadian mortgages), the risk is extremely high in a downturn given that some of these firms/entities have leverage ratios of 60-1 (First National being the largest) making them very susceptible to failure. Should one go down I don’t believe there is any firm that is required to step in and renew loans. So even consumers with good credits who are able to meet their obligations may find themselves in trouble if their lender fails.
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#86 Smoking Man
Smokey. Globalism is the “Final Solution” of the attack on human rights taking place worldwide.
Of course, I’m just kidding, Smoke.
But yes, please save us.
#1
Freedom First
Master of Freedomonics
A bit of fear mongering certainly might get some attention
“This was not enough to keep the company’s stock from being spanked badly on Tuesday, shedding more than 9% of its value in a single session, taking it back to 2010 levels. Home Capital has been an investment star for years now, soaring from around a buck a share to a high of $55 three years ago, before being pummeled back down to the $25 range now. There could be more blood coming.”
Remember back about three months ago now, when I told y’all to short Home Capital and Genworth?
“As for DIY portfolio-builders, if you need a fresh example of why owning individual stocks is gambling, not investing, here ya go.”
I totally disagree with you Garth. I told everyone on here months ago that HCC was junk. Would never touch a stock like that.
Buying individual stocks is gambling if you don’t do your investigation. It is perfectly safe if you are vetting your chosen companies before you buy them. And that doesn’t mean looking at charts and plotting prospective future upward swings. It means purchasing (or at least checking out) the company’s products, running their metrics, talking to upper management (it’s easy, call them, they call back), doing a full investigation before you buy in.
I own many great companies, which provide me with very reliable monthly income streams. I do not agree at all that this sort of ownership (purchasing shares) is gambling. That is just not correct.
Buying individual stocks in companies you have no insider knowledge of “is perfectly safe”? You just made my day. I’m framing that one. — Garth
While I encourage those who can afford a home to afford the most expensive home they can afford (no more than 30% of disposable income) I ALWAYS encourage an equal ammount of investment in a WELL BALNACED growth portfolio. Why be overweighted in one sector? The answer I get from most: “I understand real estate” which translates to “I dont understand stocks” which further translates to “I am lazy”
There are so many financial models (Index funds: VOO) and low fee mutual funds (tangerine for example: 1% MER) that have incredibly safe returns in the long run.
Stupidity IMHO.
Canadian banks would be bankrupt in a free and open market without CMHC and some real regulations. To think banks take away business from real advisers like you Garth.
http://www.cbc.ca/beta/news/canada/british-columbia/bank-s-deceptive-titles-put-investments-at-risk-1.4044702
Bidding starts at $1.2M for Barbie Doll house
https://www.thestar.com/opinion/editorial_cartoon/2017/03/29/theo-moudakis-barbie-house-price.html
The Canadian RE market does not need the free for all financing industry when it has the full weight of government qui facilitate access to credit.
And that:
« if you need a fresh example of why owning individual stocks is gambling, not investing, here ya go.»
Is a load of c…p. Sure you can’t gamble on the stock markets, with single stocks or ETF, but you don’t have to.
Get your tissues out folks. The average price in Vancouver is increasing despite that foreigner tax. Anyone hoping for a correction or a crash will have to keep waiting — the best case scenario at this point is if prices flat line but with a lack of supply and a huge demand and a govt keeping interest rates excessively low that’s very unlikely to happen as well.
But of course it’s different this time –
http://www.cbc.ca/news/canada/toronto/home-prices-real-estate-market-bubble-crash-1.4043803
Finger on the pulse:
My local bargain shops have increasing numbers of higher-end vehicles such as shiny SUVs, Jeeps, Mercedes, Acura…..parked outside, all lined up like the front of an exclusive boutique.
At the turn of the millennium, you never saw that. Well dressed and coiffed people now swarm around the discounted fruit and veg at supermarkets……
The middle class is hollowed out, scraping the bottom to make it to the next paycheck.
Canadians, who used to be stellar savers and underpinned a solid and robust economy, have become their own liability by way of a re industry allowed to become completely out of control.
Realtards are, for the most part, bold-face LIARS and government holds NO ONE in that rotten industry accountable, no one.
As for lenders with their come-hither advertising, bright shiny multi-coloured shopping bags, 5 to an arm, same deal.
The entire premise of idiotic rate suppression to help boost manufacturing and exports smells completely putrid to me.
What smells much better, exposed to sunlight and fresh air, is the fact that home sales produce tumorous commissions, juicy land transfer taxes, hardware and home improvement spends with yummy HST streams, 1% of evaluation (bloody bogus) average municipal taxes per year, high hydro and insurance payments.
People, I have learned, are generally really stupid. They can calculate, strategize, optimize, philosophize and blather on ’till rapture. But their thinking is easily clouded by emotion- especially when it comes to the old soporific notion of bragging and keeping up with the proverbial Joneses. Many of them make the rules by which we live.
Maybe it’s not exclusively congenital dumbness, so much as a desire to crawl out of the smallness that we all are and will remain. No amount of re or cash will ever change that.
None of us will live forever- and trying to accumulate
tons o’ cash is a game many aren’t in interested and/or don’t enjoy.
If we end up going down the same road as the U.S., our currently lauded, precious, but inaccurately-labelled middle class will form a very solid basis for a new Canada: a huge demographic of backward-looking, lost and angry people who toasted their futures by squandering savings that could have provided a very comfortable retirement.
You can thank all levels of government for being the stellar enablers that they were and still are.
One thing I have also learned from this fiscal and social disaster of fiscal manipulation is NOT to trust ANY government for people’s well being.
“The dominant forecasting theme for 2016 was the
economy’s adjustment to lower oil prices. Our models
had shown us that this would seriously weaken the
economy in 2015–16 and would significantly delay our
return to 2 per cent inflation. Two interest rate cuts in
2015, coupled with fiscal stimulus measures, stabilized
the situation and facilitated the economy’s adjustment
process. There is mounting evidence that the resource
sector returned to positive growth around the end
of 2016. As a result of this return to growth and the
increasing strength of Canada’s service sector, our
models are now forecasting above-trend economic
growth for 2017–18, which will bring inflation back to
target sustainably.
“The second major theme outlined a year ago was that
of diverging global policies. Our belief was that the
relative effects of lower oil prices would buttress growth in oil-importing economies, like Europe, Japan and the United States, while slowing growth in Canada. This, in turn, would lead to a divergence in monetary policies, especially between those of the United States and Canada. This theme, too, has begun to play out.
“The third major theme was finding the appropriate mix
of monetary and fiscal policies. The Bank’s models
and supporting research clearly demonstrated that the
choice of policy mix could have significant implications
for financial stability. Given that the forces acting on
market-clearing real interest rates—low population
growth, low trend economic growth and a surplus of
global savings over investment—would persist for a
very long time, continuing to place undue emphasis on
monetary policy could lead to rising household indebtedness and risks to the financial system. This situation could be improved by putting more reliance on fiscal and structural policies and less on monetary policy, a dialogue that has gone global.
“And then there is the fourth theme for 2016, the central role played in the economy by business confidence, or “animal spirits.” The experience of the global financial crisis and the subsequent global recession and halting recovery has left surviving business leaders bruised and wary. Adding to this cautious mindset, the plethora of geopolitical developments that have taken place—Syria, US–Russia relations, sporadic terrorism, the Brexit vote, the uncertain outlook for international trade policy in the wake of the US election, to name a few—creates a recipe for lacklustre investment spending intentions, not just in Canada, but around the world….”
http://www.bankofcanada.ca/wp-content/uploads/2017/03/annualreport2016.pdf
Is Toronto’s housing market on the cusp of a late-80s style bubble?
http://www.cbc.ca/news/canada/toronto/home-prices-real-estate-market-bubble-crash-1.4043803
Toronto’s current real estate boom shares one thing in common with the red-hot housing market in the late 1980s, recalls real estate veteran Karen Millar.
“Prices were escalating and everybody was worrying how were they going to afford it, how were their kids going to afford it,” said Millar, now a senior real estate specialist with Royal LePage Signature Realty.
She also recalls selling houses once the bubble burst. “There was no champagne,” said Millar in an interview with CBC Toronto. “It was sad,”
@#76 Smoking Man
“I want to be a writer. Better that hunter s thompson and hemimingway….”
*******************************************
Careful what you wish for. They were both alcoholics that eventually blew their brains out.
Fraud is rampant.
CHMC insurance limit? Parents simply take line of credit on their 1.5 mil home and there ya go, 0.7 mil down-payment, 0.9 mil CHMC mortgage for 1.6 mil house.
Sandcastle, house of cards, fraud.
People on 12 $/h buying condos for 250 k?
Excuse me. Fire Poloz. investigate CHMC.
Driven by CHMC and BOC.
BTW interest rates in Canada can not go up. Ever. Or at least in the next 10 years.
Government will be bankrupt through CHMC or banks through HELOC.
Everything left here as economy besides commodities is housing and services related to it.
So prepare accordingly.
Funny wet dream on bringing quality labour force for low pay in an extremely expensive place.
But this is what happens when you have bureaucrats who never worked in their life running this country, the economy, BOC.
Poloz will lie but will never raise rates. Media will lie and try to help him, now they are talking how BREXIT brings uncertainty to Canada, so expect no rate hike.
this s..thole is becoming smellier by the day.
#98 Herb on 03.29.17 at 7:40 am
That anal-ist should be investigated for fraud or incompetence.
SAD reality, it really shows how indeed CHMC is behind the bubble, working for the real estate cartel and the banks.
These people should be in jail.
http://www.cbc.ca/news/canada/toronto/home-prices-real-estate-market-bubble-crash-1.4043803
Looking at the intelligent face of the lady from CHMC on the picture I am now convinced that we have no bubble, even 5 mil. homes are normal in our market and economy./sarcasm off.
If people like that are assessing home values we are doomed. Big time. The fact that CHMC is acting as advocate for the banks and real estate industry is disturbing. There is no way this stuff is legal.
Who regulates CHMC?
As for the other lady, this is professional bullsh..tting
The bubbles in GTA and Vancouver are 3 times the bubbles in Miami at it’s peak. For now.
#19 meslippery
Meanwhile, CMHC’s decision not to offer mortgage insurance for homes above $1 million – in a market where the average is $1.5 million – means buyers are forced to have 20% down payments
————–
Would not a house costing $1.5million need
$500 000 down then $1 million mortgage?
So 33 1/3% down?
************************
CMHC will not insure for homes above $1 million but banks will still lend above that. With 20% down you don’t need insurance. So $1.5 million purchase, 20%down, $1.2 million mortgage.
@#131 A Reply to April 101
“Am I right, #101 crowdedelevator?”
*******************************************
Absolutely, 110% correct.
Speaking of April Showers. We’re getting more than our fair share on the wet coast in the past 48 hours….ugh.
“Maybe nothing. Perhaps these are just careless, greedy dudes. Or maybe they’re harbingers.”
I told you guys last week that weakness in the Canadian sub-prime market would come from the shadow lending sector. Although HCG is an alt mortgage lender it is not technically part of the shadow lending market. This is because they became a deposit taking institution a few years ago (anyone remember Oaken Financial and their stellar GIC rates?). But HCG is involved in facilitating loans in the shadow banking market even if those loans don’t end up on their books. Keep digging, you’re getting closer.
#102 crowdedelevatorfartz on 03.29.17 at 8:16 am
It’s not like he doesn’t know that.
—-
@SM
From yesterday, tee shirt, Short story 6 words.
“Is mortgage fraud and lax lending rampant in Canada, or is this just a company caught with a mess of rogue agents?”
I would say the latter of the two. As to movement at the top, strictly for image purposes. Serves public companies well in appearance only…
#86 Smoking Man on 03.28.17 at 11:29 pm
Globalisam will only work when we can all read each other’s minds.
Easy, but when you factor in the teacher. Puts you light years behind.
Why is it my job to save humans from them selves.
Looking over the collective aggrement ..it’s not there.
…………………………………………………………………..
I have to ask you Smoking guy?
Did you love your parents?
Did you trust them?
Did you learn from them?
Where they always good to you and did they always try to lead by example?
If you answered yes then you had good teachers! Teachers come in many shapes and styles. Oh and no I’m not a teacher, just saying lay off the teacher bullshit you are always throwing into your daily upchuck. Perhaps you should move on in life and loose the serious abhorrence obsession you have with them. You say that you love everyone on this blog, gay, bi, trans, all races, all religions. Walk the talk then. If you have mental issues regarding teachers then go for help. It’s getting old.
This is a perfect example why if you put money in GIC’s always don’t put more than $100,000 CDIC amount covered to protect depositors.
No it’s not. — Garth
Have you thought about a career as a comedy writer?
It’s pretty good coin.
Staff Writer – 6 Week Guarantee $4,318/week
Staff Writer – 14 Week Guarantee $4,014/week
Staff Writer – 20 Week Guarantee $3,703/week
http://defamer.gawker.com/heres-what-your-favorite-television-writers-make-1485130956
CMHC’s decision not to offer mortgage insurance for homes above $1 million – in a market where the average is $1.5 million – means buyers are forced to have 20% down payments.
I still think that this is a good measure to benefit the people for who have domicile aspirations that are way above their income. At the very least it provides a gut check when it comes to forking out some serious cash for an investment that can literally go up in smoke if and when the market changes. I think another institutional check would be better to pull back the market value even further. However lenders wouldn’t go for it. They make money regardless. It’s fine for the old and retired that have their homes paid off. They can cash out at any time. Their homes have already appreciated it’s just a question of when they want to cash out.
So my friend calls me and tells me she is in a BT Television Business reports…
http://Www.bttoronto.ca/video/business-report-march-29-2017/http://Www.bttoronto.ca/video/business-report-march-29-2017/
BUT!!!! she hasn’t worked for that company that they are reporting on 5 years!!! Good think there is no Fake News in Canada!!!
Got to love the media…Pump, Pump, Pump!!!!!
[email protected]?
http://www.cbc.ca/news/business/bank-s-deceptive-titles-put-investments-at-risk-1.4044702
What’s in a vowel?
A common trick for misleading customers, according to Elford, is the banking industry’s use of the term “financial advisor” — spelled with an “o.”
He says “advisor” is an unregulated title that anyone can use, whereas the title “adviser” — spelled with an “e” — can only be used if the employee has a fiduciary responsibility to the client.
That is just silly. My business card says “Advisor” and I have a 100% fiduciary responsibility to my clients – which means I am legally bound to place their financial interests ahead of my own. I do this gladly. — Garth
I am looking for a first home (condo) in Etobicoke or Mississauga. Madness, there are multiple offers on even the smallest of units.
Ontario Finance Minister Charles Sousa: Individuals Buying 10, 40, 50 Homes!
“There are individuals that are going into subdivisions that are buying 10, 40, 50 homes – holding paper – and flipping it … and they’re crowding out families who are trying to buy,” the treasurer said.
https://www.thestar.com/news/queenspark/2017/03/28/sousa-says-ottawas-help-needed-to-cool-real-estate-market.html
Tick tock…
Why would anyone want to put their money at risk by putting more than the $100,000 CDIC limit?
If you are going to put more than $100,000 in GIC’s, deposits etc. in a federally regulated Canadian financial institution then you might as well put that extra money above the $100,000 in REIT’s, preferred shares, bonds, common shares, ETF’s, mutual funds etc.
This way you are getting a chance of risk and reward with your money.
Interesting article. They talk about “advisors” vs “advisers” further down.
http://www.cbc.ca/news/business/bank-s-deceptive-titles-put-investments-at-risk-1.4044702
“Buying individual stocks in companies you have no insider knowledge of “is perfectly safe”? You just made my day. I’m framing that one. — Garth”
Don’t agree with you. Not sure why you’d think that an ETF is a better choice. At any rate, I continue to hold my equities directly in stock and my bonds in ETFs and am not likely to change that. Publically traded companies are pretty transparent. Yeah I know that one of them blows up every so often, but really have a look at the fundamentals, what they are selling, their target market, conditions and the like and actually go buy their products or visit their operations. This is not rocket science. People lose money off the stock market because they don’t do their research, not because companies are impossible to value. People look at charts and deduce upward swings of stocks and don’t look at the company. All you have to do is research, and you’re fine….
One bad apple can ruin the bunch! We found the bad apple in Home Equity Group, I can bet that the bunch is rotten.
Hindsight is 20/20 I guess. In Ontario real estate has probably been the best investment you could have made, considering the preferential tax treatment (no tax).
I’m not too upset about it though. I graduated from my residency in summer 2011 with literally only a few hundred dollars to my name (& a beat up Toyota). I wasn’t really fully employed until early 2012. I guess i could have bought something in late-2013, but it would have been a piece of crap in an area i wouldn’t want to live.
Young people these days are screwed. Best just to not participate in this game we’ve been sold by our elders: go to school, get job, get married, buy haus, have baby, save for retirement: buy staukes.
Hey NoName, how’s the funding page going so I can meet up with you guys in May?
Garth has talked about free sprinkles a couple of times but I am going to bring a bottle of what they are called in Australia.
Hundreds and Thousands.
I think that is pretty appropriate as that is how many times Joking Man has been caught talking porkies on this blog…
M42BC
https://en.m.wikipedia.org/wiki/Sprinkles
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#120 oncebitten on 03.29.17 at 11:30 am
Interesting article. They talk about “advisors” vs “advisers” further down.
http://www.cbc.ca/news/business/bank-s-deceptive-titles-put-investments-at-risk-1.4044702
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They think about their fees and profits, not yours. Any representation as them serving your interest is a sale pitch and I think a fraud if there is no disclosure on fiduciary duty.
A friend of mine, long term customer of a major financial institution was accused of money laundering when doing transfer of money from one account to another of the same institution only because their frigging flag on ‘compliance’ went on by some unknown reason.
The idiots at customer support told him that he is actually at fault.
Parasites shielded by corrupt politicians.
And we are on the hook for CHMC, not they/who issued the loans.
Drives me nuts.
Oh goody, VREU dropped in with dated diatribe about collapsing sales.
She must have some cognitive dissonance since prices have gone up 20% in Victoria and surrounding communities since she started with her ‘the correction is around the corner’ speech last year arising from the collapse in sales.
Well, I told VREU that she should watch the foreign ownership numbers because she relied on 2015 data – which said that only 0.68% of Victoria buyers were foreign. Guess what, foreign buyers have increased 7 fold in 2016 to 4.7% – and golly gee, prices went up 20% over that time.
Its not like there is a correlation or anything. Its not like people in Victoria just discovered low interest rates after they have been low for 9 years; its not like the economy is booming in a stagnant government town; its not like average incomes have increased as Victoria’s is still below many other major cities.
So why the increase VREU?
If VREU actually got out of her Mom’s basement, she would have seen the changed demographics in Victoria along with the spread of luxury vehicles in a blue collar town.
You need to look around VREU at trends AND look at the numbers – you are not doing a good job of either.
To understand what is really going on…
http://vancouver.24hrs.ca/2017/03/20/christy-clarks-house-of-cards-could-fall-as-housing-prices-foreign-ownership-rise-in-vancouver-victoria
#111 James on 03.29.17 at 9:53 am
Re teachers. Go on line youtube . Look at what is going on at university today. Complete madness.
There are a few I like Denis Rancout. Petterson my favorates from University of Toronto.
He’s taking a stand against collective retardation. He’s paying huge for it.
“nudging” humans to do the “right” thing did not seem to control the fudging.
http://www.slate.com/articles/health_and_science/new_scientist/2011/11/does_nudge_policy_work_a_critique_of_sunstein_and_thaler_.html
https://www.theguardian.com/theobserver/2015/sep/12/nudge-theory-mental-manipulation-wrong
http://the-future-economist.blogspot.ca/2013/03/nudge-theory-and-nanny-state-figure-1.html
https://www.ft.com/content/9d7d31a4-aea8-11e3-aaa6-00144feab7de
https://www.ft.com/content/9d7d31a4-aea8-11e3-aaa6-00144feab7de
#121 Ace Goodheart
Agree with you 100% Ace. Also agree with Garth that ETF’s are the best way for most people to go. However those things that make the ETF less risky can also reduce your profits. If you don’t like doing the work and feel you can sleep better at night, then certainly go with the ETF’s.
Also don’t agree that you need a seven figure portfolio to buy individual shares. You can start with as little as $50000. There are a set of basic rules to follow in building your portfolio, just like in paint by numbers. What the markets are going to do tomorrow or next week or what the charts say or who’s getting elected really doesn’t interest me. I have a set of rules I follow for buying a company. Does it work all the time for every company, no, but it works for the majority. It takes a life time to create wealth. If you want to gamble, buy lottery tickets. There’s always more than one way to get from point A to B. The amount of wealth you create is relative to each person but time and compounding is how you make money. Stay away from the latest get rich quick scheme.
#102 crowdedelevatorfartz on 03.29.17 at 8:16 am
@#76 Smoking Man
“I want to be a writer. Better that hunter s thompson and hemimingway….”
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Careful what you wish for. They were both alcoholics that eventually blew their brains out.
____________________________________________
Not quite sure he has ever read one of their books but he is working on the alcoholism and craziness.
#123 Millenial on 03.29.17 at 12:30 pm
Young people these days are screwed. Best just to not participate in this game we’ve been sold by our elders: go to school, get job, get married, buy haus, have baby, save for retirement: buy staukes.
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Well ,I guess Arnold Schwarzenegger could be counted as your elder.
If Arnie was living in Toronto right now he would say…
Get outta da haus right nooooowwwww….
M42BC
Fed’s Charles Evans says he supports one or two more rate hikes this year
http://www.theglobeandmail.com/report-on-business/economy/feds-charles-evans-says-he-supports-one-or-two-more-rate-hikes-this-year/article34469611/
#127 Capital Changes on 03.29.17 at 12:45 pm
You need to look around VREU at trends AND look at the numbers – you are not doing a good job of either.
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Exactly, and based on new data potentially change your outlook.
I’ve said there is no reason house prices will fall in the GTA in the near future. I’m changing this opinion depending on what the Ontario government includes in their next budget. They have the power to change things overnight.
It’s pretty simple. See new data and then re-examine beliefs.
#129 Smoking Man on 03.29.17 at 12:50 pm
#111 James on 03.29.17 at 9:53 am
Re teachers. Go on line youtube . Look at what is going on at university today. Complete madness.
There are a few I like Denis Rancout. Petterson my favorates from University of Toronto.
He’s taking a stand against collective retardation. He’s paying huge for it.
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Yep, they f..k and abuse the financial system and if you see that it is f….d and say it openly now it is you fault
as by default and by law it is: stable, prudent, conservative,…
And if you disagree you become a risk for the system so it is your fault.
At this point I am really looking for the little red button to clear the scum from the face of the earth, no matter the price.
Judgement day luckily is coming AI will take care of us.
RE: #131 Old Dog on 03.29.17 at 1:04 pm
“It takes a lifetime to create wealth”
Totally agree with this. This is one of my worries regarding an ETF ie perpetuity concerns. Some of the companies I own shares in are over 100 years old. ETFs are a rather recent occurrence. They are propagating like weeds in a badly tended garden. I know some of them are good, but there are so many and a lot of them seem kinda dodgy.
It does not take a lifetime to build an ETF. It takes a promotion or two and then you just go out and try to replicate an index. How long will these things be around?
At any rate, stock market investing is not gambling. I took offence to Garth calling it that. It isn’t. It is venture capitalism, putting your money behind good companies with solid numbers and products, that you have fully researched and understand.
It is very possible to use the markets as a casino. But it is a terrible idea. The information is all out there. If a person is buying a company, why would they not research it? Why rely on charts or graphs to “deduce” what the share price is likely to do, when you can learn this by investigating the company?
I see people on internet discussion forums talking about the charts and graphs of a company and deducing that the share price is going up. They I go look at the company and find out it’s in CCAA proceedings and is basically toast, in the process of divvying up its assets. These people then complain that the stock market is risky and they lost their money. I mean, really! Driving is risky if you never learned where the brake pedal is. This is just basic knowledge. People need to do their homework.
Canadian dollar heading to 62 cents US: Morneau economic advisor
http://www.bnn.ca/canadian-dollar-heading-to-62-cents-us-morneau-economic-advisor-1.709474
Pink Pollen falling in North Vancouver.
These guys paid 1.9m for this place in April 2016.
They have been fighting to get their money back since November,originally asking 2.2 ,but now have conceded that things aren’t looking too good and asking is now below what they paid for it at 1.89.
Time will tell…they might get away with just a bit of gunpowder residue on their clothing…
M42BC
955 Forest Hills Drive, North Vancouver.
https://www.zolo.ca/index.php?sarea=955%20Forest%20Hills%20Drive,%20North%20Vancouver&filter=1
https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAyODRCUQ==
Canada is nothing but a house of fraud.
http://www.bnn.ca/canadian-dollar-heading-to-62-cents-us-morneau-economic-advisor-1.709474
Loonie to drop to 62 cents over next 18 months:
One of Finance Minister Bill Morneau’s top economic advisers is warning of significant downside risk for the Canadian dollar. In an interview on BNN, Starfort Investment Holdings Chairman Ken Courtis said much stronger U.S. growth will spur Janet Yellen’s U.S. Federal Reserve to raise rates at a faster pace, sending the greenback surging and depressing the loonie’s value.
“My ultimate mid-term target for the Canadian dollar is 62 cents,” he said Tuesday. “We will see over the next 18 months, through to 2018, the Canadian dollar go well into the mid-60s and below.”
Courtis said the Bank of Canada would be reluctant to follow the Fed’s lead in raising rates despite an acceleration of growth, as overleveraged, house-poor Canadians keep Stephen Poloz from quickly hiking borrowing costs.
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That’s it folks,
The writing on the wall. You will pay for stupidity of politicians, bankers, government, real estate industry with YOUR MONEY.
I will pass, thank you.
So glad I left.
RoboAdvisor tm’s
seven of BlackRock’s 53 stock pickers are expected to step down from their funds…. Several of the money managers will stay on as advisers. At least 36 employees connected to the funds are leaving the firm.(nyt)
How much of the eft market does blackrock control?
http://riabiz.com/a/2015/9/2/why-blackrocks-purchase-of-futureadvisor-for-152-million-could-be-a-deal-of-destiny
What i heard is that HCG has 20% the size of BMO portfolio, that is not peanuts … and don;t forget EQB and other crooks related
5 billion in mortgage fraud, yeah that explain why Brampton is more expensive than Paris eh?
#131 Ace Goodheart
How long will these things be around?
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Not very long in some cases . I had one liquidated on me by Wisdomtree (www.wisdomtree.ca) a big smart beta US outfit.
Ticker GNAT it was my global commodity producer tranche,
Price dropped, they liquidated and I was left holding the bag (capital Loss). So much for buy and hold.
With the US and Europe resembling the Gerry Springer show on steroids it might be time for the emergency brake.
Sherry Cooper and CMHC on the CBC today say no crash coming. There you have it.
Guess who she works for? — Garth
http://torontolife.com/real-estate/houses/chase-wasnt-planning-buying-house/
The buyer: Wylie Burke, the 41-year-old director of the learning institute at Hincks-Dellcrest Centre, a children’s mental health facility in Toronto.
The story: Wylie had been living in a one-bedroom apartment in High Park for five years, paying $1,120 per month in rent, when she started to think about buying. She figured a condo would best suit her single-income budget, but her sister, who owns two investment properties, insisted that a house was a better purchase. As an experiment, Wylie agreed to a one-day search near the Bloorcourt area, where her family lives. Her plan was to look at five properties and later see what they sold for. She wasn’t going to make any offers, but, for the purpose of the experiment, she set a budget of $650,000. She’d need help with her mortgage payments, so a separate basement apartment was a must.
#132 Victor V on 03.29.17 at 2:11 pm
Canadian dollar heading to 62 cents US: Morneau economic advisor
“Courtis said the Bank of Canada would be reluctant to follow the Fed’s lead in raising rates despite an acceleration of growth, as overleveraged, house-poor Canadians keep Stephen Poloz from quickly hiking borrowing costs.”
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Exactly, exactly. Poloz is not as stupid as dogs here think, he knows exactly this is the way to postpone the inevitable, plus maintain low dollar ‘for exports’. Also this massive bubble and gov borrwing will be kept alive AT ALL COSTS. They started this and have loads things they can do to delay.
Now this is a new one, nothing and achieves the same result as dropping! The FED is doing them such a favour.
Garth seems to think rates will follow the FED ‘any day now’ as before, however I doubt it this time. Raising rates environment is a bogus scare, wake me once we’re at 3% gov lending and 5%+ bond.
Not in my lifetime…
Rates will follow the Fed inevitably. Not ‘any day now.’ But likely in 2018. — Garth
Buying stocks, mutual funds or ETFs is not venture capitalism; that’s an entirely different ball of wax. Do some research, but don’t get involved; it’s above your pay grade (and mine).
The stock price will have collapsed long before a company is in creditor protection.
#130 CJBob
Can you please enlighten us on the data that supports your claim that there is no reason for house prices to fall in the Gta?
Further to the expressions of confidence at #98, here is another log to add to the real estate fire: the employment structure supporting the GTA bubble.
In the Greater Toronto Hamilton Area, only 48.1 % of the employed in 2014 were in permanent, full time jobs with benefits. The remainder of the work force was permanent part-time (8.2%), temporary and contract (20.3%), and “other” – self-employed, employees with no benefits, with less than 30 hrs/wk or varying hours of work – (23.3%).
https://pepsouwt.files.wordpress.com/2015/05/precarity-penalty-summary_final-hires_trimmed.pdf (Figures from p. 4)
#124 For those about to flop… on 03.29.17 at 12:42 pm
Hey NoName, how’s the funding page going so I can meet up with you guys in May?
Garth has talked about free sprinkles a couple of times but I am going to bring a bottle of what they are called in Australia.
Hundreds and Thousands.
I think that is pretty appropriate as that is how many times Joking Man has been caught talking porkies on this blog…
M42BC
https://en.m.wikipedia.org/wiki/Sprinkles
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I was hoping someone will step up, and do go fund me page as i suggested, but that did not happened, so considering all that, best course for me now is to cancel my charity thru my payroll for reminder of the year, and start saving that amount, and hopefully that should be enough cover economy airfare for you and if Mrs Flop wants to tag along you are on a hook. Only thing for you is, to come over hand in receipts, and have paypal account ready.
As for SM talking porkies, he is just bored I guess… When he was rivit bucketer it was fun, training and explaining NEOM to new employees. But I’ll get better his Wyatt will keep him busy.
http://m.imgur.com/a/uakeO
Re: #131 Ace Goodheart on 03.29.17 at 2:08 pm
About your comment that went like: At any rate, stock market investing is not gambling.
Truth is when you grossly overpay for anything it’s actually worse than gambling. Gambling give you a level playing field minus the house take. Put another way gambling is 50/50 without the house take whereas the stock market today (presently) is like 95/5 with the 95 being the downside and 5 being the upside.
143 NoName.
I know you realize I was only joking as you said that’s what you were going to do.
Keep funding your charity I will be fine.
I don’t think it is a good idea that Mrs Flop and Joking Man meet as she is an an Education Assistant also known as Special Needs School Teacher.
She works with kids with all sorts of physical and mental disabilities,trying to help each child not get left behind by the education system.
On second thoughts she might be able to help Joking Man’s dog…
M42BC
#WednesdayMischief,Or… #Harbingers&CollateralDamage?…
[ColonialTimes] – House Beautiful: $1.1M renovation in Uplands
…“We redesigned everything — and my wife is the designer. The whole house is because of her,” he said. The total cost of the renovation was $1.1 million, and furniture and lighting were an additional $170,000….
Asked why they chose to come here rather than live a more lavish lifestyle in Dubai, Obeidat explained: “It is the best education in the world here, and safety for our children. We came here because we were worried about the geopolitical situation in the Middle East…
…“[albeit] things are depressed here and business is very slow in Victoria, but we were lucky to come when we did, and to invest in real estate on the Island and mainland.”
http://www.timescolonist.com/house-beautiful-1-1m-renovation-in-uplands-1.12616819
#122 Capital Changes – I don’t see what you are seeing foreign buyers wise. Certainly they increased in 2016 but I have not seen VREB publish anything in the last few months on the stats % of foreign buyer transactions. What I have heard from realtors in the CRD is that there are more out of town buyers (i.e. Canadians) than foreign buyers. They are not the only cause of the YoY gains, not at all.
DELETED
Same sh.. same M O.
Banksters.
Milk the sheeple.
Rinse and repeat.
Template
The big 5 banks aren’t far behind HC in giving mortgages to people who haven’t sufficient income to qualify.
Plus: this from CBC today:
“Banks misleading clients on mutual funds”.
http://www.cbc.ca/news/canada/banks-misleading-clients-on-mutual-funds-1.1415027
#147 – When the Whip Comes Down
#122 Capital Changes – I don’t see what you are seeing foreign buyers wise. Certainly they increased in 2016 but I have not seen VREB publish anything in the last few months on the stats % of foreign buyer transactions. What I have heard from realtors in the CRD is that there are more out of town buyers (i.e. Canadians) than foreign buyers. They are not the only cause of the YoY gains, not at all.
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VREU dismissed the impact of foreign buyers, sticking to the dated notion that there are none. I warned that we were just getting started with foreign buyers and the Vancouverization of Victoria and to watch what would happen in 2016 – and then we saw the jump in prices by 20%.
Prices are set at the margin. Remember 8% of US buyers went under causing a 32% decline nationally in prices.
If you don’t think an increase in the number of sales to foreign capital to 5% from less than 1% has a meaningful impact, you are mistaken…
Do you think that the 40-60% increase in Vancouver prices in the last 2.5 years is all from Canadians moving from other locales to Vancouver?
And when prices are supposedly falling by 20% following the implementation of the foreign buyers tax in Vancouver, there is link to foreign capital right?
Victoria’s price increases are a microcosm of Vancouver’s.
@ #65
Not to sound like a moron, but is there a “recommended number” that one should aim for? I own a place with a family member, and would be able to sell and walk away with about $70k each after all is said and done. This is less than what we make annually, and we have always looked at that property as an investment. But man, that money is tempting.
Any insight?
Who else buys and leaves homes empty? http://www.cbc.ca/beta/news/canada/toronto/will-taxing-toronto-s-65k-vacant-homes-help-affordability-mayor-john-tory-wants-to-know-1.4048197#commentwrapper
” You never know. Share your story, and you never know.” I am sure you heard about the ” lucky ” family that got their Oakville house for cheaper than the highest bid.
So now, all would be bidders will be writing essays along with their bids.
So sad.
Grovel, grovel.