Alberta Short Sales
- Thread starter vbasic
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QUOTE (vbasic @ May 27 2008, 02:02 PM) Does anyone have experience negotiating short sales in Alberta?
My information is that CMHC doesn`t allow banks to negotiate short sales because of insurance obligations. Is there someone "in the know" that could elaborate on this for me?
If it is a high ratio mortgage the insurance would cover any bank losses, so there is no need to negotiate. It is pretty uncommon you would find a first mortgage holder in Alberta that would even consider discounting the mortgage to sell it to you. Second mortgage holders however have no insurance (just high rates to compensate), so if the value of the property is pretty close to the balance of the first and second mortgage they may diso**** or sell the sale short.
How much, well it would depend on how much money they would lose if they don`t cut a deal. If the property is worth $350,000 and is financed to $350,000 and in disrepair they could stand to lose $20,000 plus. Is it worth it in that case, for $20k probably not, for $50k possibly, but then are you holding the property or flipping it? Either way you would have to do repairs if it is in rough shape and there wouldn;t be any profit left.
So did that answer your question? Most of the short sales info you find is US based, entirely different set of rules down there and with the depressed market there is plenty more opportunity there as well.
My information is that CMHC doesn`t allow banks to negotiate short sales because of insurance obligations. Is there someone "in the know" that could elaborate on this for me?
If it is a high ratio mortgage the insurance would cover any bank losses, so there is no need to negotiate. It is pretty uncommon you would find a first mortgage holder in Alberta that would even consider discounting the mortgage to sell it to you. Second mortgage holders however have no insurance (just high rates to compensate), so if the value of the property is pretty close to the balance of the first and second mortgage they may diso**** or sell the sale short.
How much, well it would depend on how much money they would lose if they don`t cut a deal. If the property is worth $350,000 and is financed to $350,000 and in disrepair they could stand to lose $20,000 plus. Is it worth it in that case, for $20k probably not, for $50k possibly, but then are you holding the property or flipping it? Either way you would have to do repairs if it is in rough shape and there wouldn;t be any profit left.
So did that answer your question? Most of the short sales info you find is US based, entirely different set of rules down there and with the depressed market there is plenty more opportunity there as well.
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QUOTE If it is a high ratio mortgage the insurance would cover any bank losses, so there is no need to negotiate. OK then - I also understand that when foreclosed properties make their way back to the bank, the bank can still attempt to sell it for market value...making whatever profit they can. Is this correct? If so, either way, banks have nothing to lose and everything to gain with foreclosures...?
QUOTE It is pretty uncommon you would find a first mortgage holder in Alberta that would even consider discounting the mortgage to sell it to you. I should know this but....are all lenders insured by CMHC? (ie. banks? credit unions? trust companies?)
QUOTE So did that answer your question? Most of the short sales info you find is US based, entirely different set of rules down there and with the depressed market there is plenty more opportunity there as well.Yes, I understand that the rules differ for many avenues of investing down there. Still, with foreclosures increasing in Canada as well, I`m just trying to brainstorm ways of helping people get out of their f/c problems...
thx again for your comments.
QUOTE It is pretty uncommon you would find a first mortgage holder in Alberta that would even consider discounting the mortgage to sell it to you. I should know this but....are all lenders insured by CMHC? (ie. banks? credit unions? trust companies?)
QUOTE So did that answer your question? Most of the short sales info you find is US based, entirely different set of rules down there and with the depressed market there is plenty more opportunity there as well.Yes, I understand that the rules differ for many avenues of investing down there. Still, with foreclosures increasing in Canada as well, I`m just trying to brainstorm ways of helping people get out of their f/c problems...
thx again for your comments.
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- 124
QUOTE (vbasic @ May 27 2008, 05:11 PM) OK then - I also understand that when foreclosed properties make their way back to the bank, the bank can still attempt to sell it for market value...making whatever profit they can. Is this correct? If so, either way, banks have nothing to lose and everything to gain with foreclosures...?
I should know this but....are all lenders insured by CMHC? (ie. banks? credit unions? trust companies?)
Yes, I understand that the rules differ for many avenues of investing down there. Still, with foreclosures increasing in Canada as well, I`m just trying to brainstorm ways of helping people get out of their f/c problems...
thx again for your comments.
With a foreclosure there is a chance they can lose some money if it is mortgaged for more than it can possibly sell for. Any mortgages above 80% now (75% previously) are considered high ratio and have to be insured by CMHC or one of the new insurers. If it is mortgaged to the hilt the insurance covers any loss. If it is mortgaged for less than 75% the lawyers fees, realtor costs and other fees eat up a lot of anything else. The homeowner will get the leftovers if there are any.
Each person and hence each foreclosure situation is different. Most get solved, very few go through the whole process. Most of the properties that go all the way through the courts and become foreclosure sales by the court are way to late for most investors to make money. You have to solve the problem before it gets that far.
Many of the foreclosure situations have plenty of time, lots of equity and just unfortunate situations in their lives. This gives them an easy situation to sell. People with very little time are the ones that need the most help and they can trade equity for time. These should be your target people to help.
I should know this but....are all lenders insured by CMHC? (ie. banks? credit unions? trust companies?)
Yes, I understand that the rules differ for many avenues of investing down there. Still, with foreclosures increasing in Canada as well, I`m just trying to brainstorm ways of helping people get out of their f/c problems...
thx again for your comments.
With a foreclosure there is a chance they can lose some money if it is mortgaged for more than it can possibly sell for. Any mortgages above 80% now (75% previously) are considered high ratio and have to be insured by CMHC or one of the new insurers. If it is mortgaged to the hilt the insurance covers any loss. If it is mortgaged for less than 75% the lawyers fees, realtor costs and other fees eat up a lot of anything else. The homeowner will get the leftovers if there are any.
Each person and hence each foreclosure situation is different. Most get solved, very few go through the whole process. Most of the properties that go all the way through the courts and become foreclosure sales by the court are way to late for most investors to make money. You have to solve the problem before it gets that far.
Many of the foreclosure situations have plenty of time, lots of equity and just unfortunate situations in their lives. This gives them an easy situation to sell. People with very little time are the ones that need the most help and they can trade equity for time. These should be your target people to help.
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- Feb 26, 2008
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QUOTE Many of the foreclosure situations have plenty of time, lots of equity and just unfortunate situations in their lives. This gives them an easy situation to sell. People with very little time are the ones that need the most help and they can trade equity for time. These should be your target people to help. Well ... what I thought would be an easy way to get my foot through the door is proving difficult (not impossible) to find "deals." In the mean time, I just find "problems" that I can`t help << pretty depressing!
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- 124
QUOTE (vbasic @ May 27 2008, 05:44 PM) Well ... what I thought would be an easy way to get my foot through the door is proving difficult (not impossible) to find "deals." In the mean time, I just find "problems" that I can`t help << pretty depressing!
Keep banging. You are one door closer to a deal everytime someone says no. Netowrk with other investors, find what they are looking for, or ask how they solve these problems and even partner with some of them for little or no profit on your side just to learn. The knowledge is the important aspect, to many people get caught up with losing profit when they could learna system or technique that pays it self back for years.
Basically learn to fish so you don;t have to depend on handouts 8`)
Keep banging. You are one door closer to a deal everytime someone says no. Netowrk with other investors, find what they are looking for, or ask how they solve these problems and even partner with some of them for little or no profit on your side just to learn. The knowledge is the important aspect, to many people get caught up with losing profit when they could learna system or technique that pays it self back for years.
Basically learn to fish so you don;t have to depend on handouts 8`)
- Joined
- Feb 26, 2008
- Messages
- 18
Yes, I know that persistance pays off and education makes the world go round.
I`m getting there - just having a temporoary setback. I`ll bounce back and keep chuggin`...
QUOTE You are one door closer to a deal everytime someone says no. Are you a closet motivational speaker..?
PS
handouts aren`t in my portfolio!
I`m getting there - just having a temporoary setback. I`ll bounce back and keep chuggin`...
QUOTE You are one door closer to a deal everytime someone says no. Are you a closet motivational speaker..?
PS
handouts aren`t in my portfolio!