Mortgages not being renewed....

[Berubeland]

I have a friend who bought a house in Ajax a few years ago. Yesterday he came over and was telling me about his woes.

He is self employed and got a mortgage at about 5%. He got a letter saying that his mortgage is not being renewed. The lender is from the States and they are no longer going to do business in Canada

One of his neighbors is also in the same boat. He`s been calling around and the best deal he can find so far is about 8%. He has about 25% equity.


http://www.canadianmortgagesinc.ca/2010/04...their-term.html

So if you have a self employed mortgage check if your lender is renewing their mortgages. Some people my well have to sell their homes because they cannot get alternative financing.

 

[Thomas Beyer]

No banks has an obligation to renew mortgages. Most banks in Canada renew automatically at the much higher rack rate (about 1.5% higher vs. new approved applications).

Assuming he has documented income with 3 years of tax filings a good mortgage broker will be able to find him a new mortgage.

Quite a few very capable mortgage brokers here on this forum .. contact a few of them !

Key question by any mortgage broker: Did he file his 2009 taxes end of April .. as any new mortgage will be based on 2 or 3 years of documented income ! if undocumented it will indeed be far more expensive !

 

[markl]

We are seeing a lot of this at the moment in the RTO world this could be an option for your friend to keep their house and repair their credit to be able to get A financing again.

If he needs to do 8% it may be worth it for him to do that and repair his credit up to a reasonable score and get in with an A lender.

If he needs to speak with some one about his options you can have him email me [email protected]

Regards,

 

[Berubeland]

It is really unfortunate due to his business activities he was sued for lots of dough and declared personal bankruptcy and was able to save his house. After negotiating that minefield he gets the notice that the mortgage company is not renewing because they are leaving the country. Apparently there are lots of people in his shoes I`m afraid. He also has records that he has made all his payments on time and in full but with a recent bankruptcy he`s getting really bad rates and is looking at paying more than $400 per month more.
My reason for posting here though was just to kind of let people know that these companies are not renewing their mortgages and for those that have multiple properties they may find it very difficult to find another lender due to the new CMHC rules on investment properties.


QUOTE (markl @ May 7 2010, 06:43 AM) We are seeing a lot of this at the moment in the RTO world this could be an option for your friend to keep their house and repair their credit to be able to get A financing again.

If he needs to do 8% it may be worth it for him to do that and repair his credit up to a reasonable score and get in with an A lender.

If he needs to speak with some one about his options you can have him email me [email protected]

Regards,

 

[Thomas Beyer]

QUOTE (Berubeland @ May 7 2010, 07:29 AM) It is really unfortunate due to his business activities he was sued for lots of dough and declared personal bankruptcy ... with a recent bankruptcy he`s getting really bad rates ...
yes that is unfortunate .. but put yourself into the bank`s shoes: what would you charge to such a client ?

 

[RobMacdonald]

Your client may still have options if he truly has 25% equity. There are still a couple of institutional `B` lenders in Canada that self insure deals up to 80 or 85% LTV.

The rates are higher and there may be a lender fee involved, but overall not too bad considering the risk involved. If he has no where to turn, this may be an option, even with a bankruptcy on record.

 

[Berubeland]

Thanks Rob,

He is dealing with a broker now but it looks like a scam so far to me. So far the broker has had him pay for an appraisal which cost him over $300. Now the broker wants another $700 to create employment record for his wife who is a dtay at home mom. That was today. I told him not to do it that he was likely being scammed. He`s getting desperate.

@Thomas He has shown that he is very good at paying his mortgage.

According to the appraisal which he asked for a copy of but could not get from the mortgage broker his house is worth 270,000 and he has about 200,000 owing on the mortgage. Thats about 35% equity.
I will email you directly Rob to find out about rates.

QUOTE (RobMacdonald @ May 7 2010, 09:45 AM) Your client may still have options if he truly has 25% equity. There are still a couple of institutional `B` lenders in Canada that self insure deals up to 80 or 85% LTV.

The rates are higher and there may be a lender fee involved, but overall not too bad considering the risk involved. If he has no where to turn, this may be an option, even with a bankruptcy on record.

 

[RobMacdonald]

QUOTE (Berubeland @ May 7 2010, 08:15 PM) Thanks Rob,

He is dealing with a broker now but it looks like a scam so far to me. So far the broker has had him pay for an appraisal which cost him over $300. Now the broker wants another $700 to create employment record for his wife who is a dtay at home mom. That was today. I told him not to do it that he was likely being scammed. He`s getting desperate.

@Thomas He has shown that he is very good at paying his mortgage.

According to the appraisal which he asked for a copy of but could not get from the mortgage broker his house is worth 270,000 and he has about 200,000 owing on the mortgage. Thats about 35% equity.
I will email you directly Rob to find out about rates.

That sounds not only like a scam, but most likely mortgage fraud. He may be able to use the appraisal with another letter. It`s normal to have to pay for the appraisal cost.

Send me an email and I can give you a list of information that would be required. The pricing goes by a matrix, so there`s a number of factors that are considered.

 

[MikeMcCrae]

Buying an employment letter doesn`t sound right to me. Find another Mortgage Broker!

Unfortunately this non renewing mortgage problem is a big deal and going to get bigger over the next year or so. When you hear talk of "Orphan Mortgages" this is what they are talking about. There are many lenders that were doing non traditional mortgages a few years ago and they are no longer writing those kinds of deals. So if the mortgage holder still has questionable credit or difficult to prove income situations, they may be in trouble through no fault of their own. For investors there may be opportunities with some of these homeowners.

 

[Berubeland]

I totally agreed with you Mike. I`m also kind of angry about the lack of notice they are giving these people who they know will have quite a time of getting new mortgages.

I blog at www.milliondollarjourney.com about real estate so I made up a post about which will run in the next little while. I`m totally amazed about the amount of companies involved.

Basically if you can`t be insured they don`t want you. The companies I have that are doing this so far are
Accredited Home Lenders
Xceed (they may be renewing "some" but not all)
Money Connect
HSBC Finance
GMAC (they may be renewing "some" through Resmor but not all)
GE Money

So if you`re an investor and you have mortgages with any of these companies be prepared. Any other companies anyone knows about?

 

[Nir]

QUOTE (Berubeland @ May 10 2010, 07:04 PM) I totally agreed with you Mike. I`m also kind of angry about the lack of notice they are giving these people who they know will have quite a time of getting new mortgages.

I blog at www.milliondollarjourney.com about real estate so I made up a post about which will run in the next little while. I`m totally amazed about the amount of companies involved.

Basically if you can`t be insured they don`t want you. The companies I have that are doing this so far are
Accredited Home Lenders
Xceed (they may be renewing "some" but not all)
Money Connect
HSBC Finance
GMAC (they may be renewing "some" through Resmor but not all)
GE Money

So if you`re an investor and you have mortgages with any of these companies be prepared. Any other companies anyone knows about?

Thanks, good to know that Berubeland! also, you got excellent feedback here - all from experts participating often in this forum`s discussions: Mike, Rob, Mike and Thomas.

 

[Nicola]

Berubeland,

You mention HSBC Finance is not renewing mortgages. Is this HSBC Bank itself, or an offshoot of HSBC?

Anyone know if HSBC is renewing? I have some mortgages coming up soon with them. When I contacted my HSBC guy a little while ago, he didn`t indicate that they wouldn`t renew, but told me to get back to him closer to the renewal date.

Thanks,
Nicola

 

[Berubeland]

To be entirely honest I`m not sure Nicola. I got the list from a mortgage broker who absolutely can`t be quoted; he could lose his job. No one is really talking about this. At least not in public.

Call them and ask them.

It also depends on the mortgage some companies will renew some but not others for instance Resmor is no longer financing rental properties. It depends on your equity and if your mortgage can be CMHC approved

 

[Nicola]

Thanks for the reply. I have a good feeling about getting renewed. (Though as a non-resident I can`t be CMHC approved.) Good LTV though. I`ll post here when I know for sure.

Nicola