Tuesday, June 13, 2017
Canadian non-standard mortgages: a state of play
The gossip is that the regulators in Canada are also putting some pressure on lenders to improve underwriting standards. There is similar gossip in Australia, however Australia has not had the collapse or near collapse of any lenders.
Canada Mortgage & Finance Group (CFMG) is a broker in the Greater Toronto Area (GTA). The CEO of CFMG (Ameera Ameerullah) writes a blog on LinkedIn which I have been reading for some time.
She has recently posted about the state of play for even slightly non-standard mortgages in the Greater Toronto Area.
Below (and without further comment but with her permission) I reprint her latest post.
CLIENTS ARE STUCK AND BROKERS SCRAMBLING - WHAT IS THE GOVERNMENT DOING?
Private lending rates increased and lending fees increased with LTV being decreased! Clients are stuck and brokers are scrambling to find options for their clients. Clients are placed in a very bad situation as they are in position of being sued since they cannot come up with the extra capital to close on alternative mortgages.
THE GOVERNMENT has caused tremendous issue for clients and the brokers community. We need Home trust back in the market. Presently no one is qualifying with the banks due to increased CMHC premium, lending restrictions and lenders requirement...it's killing clients not helping them!
Clients been saving for their down payment and closing cost but now they cannot close on their purchase due to down payment requirement and lending restrictions. Qualifying rate and amortization cut back on insured deals is causing greater concern. Most B lenders are affected with what's happening with Home Capital. Both the residential and commercial market is affected.
Private first residential mortgage in the GTA is now at 8.99 to 9.99% RATE - 65% LTV to 75% LTV. You'll obtain 80% if you're lucky and be prepared to pay higher rate and fees. Fees are 3 to 4% on a first now on private - This is INSANE. In fact many private lenders are out of capital. Options are minimum! These changes only affects clients and everyone having a tough time to close. Brokers are scrambling now to find alternative option for their clients since Home Trust is not funding and many other lenders who depended on Home trust money are stuck as well. How can a broker get by when they have to place their clients in an expensive private mortgage? There's no room for us to charge a fee so pretty much we are all affected. Only the big banks are benefiting from the Government change and yet they themselves are loosing business as no one can fit their qualifying requirements. Banks are pressuring their BDM to originate business - how can they when the Government ridiculous change affects the entire mortgage industry? Originating business is easy but closing deals have become horrid and clients pocket is feeling it.
The Government really need to make some immediate change as they have in the past year because with this trend home buyers are being placed in more debt as cost of borrowing on private capital is expensive. These changes are hurting clients and will hurt the economy. AWFUL STATE THE INDUSTRY IS IN. If one doesn't have about $1600 - they cannot live in a decent one bedroom apartment even by renting. Clients that purchased from builders and are set to close are having a difficult time to close in allocating extra funds.
Brokers should start to voice their opinion as this is our industry and if you don't speak up then we are all doomed with our clients!
Saturday, June 10, 2017
Bob Carr and the possible Chinese spies
Some of the story was obvious - for instance how Chinese students are coopted to drown out rallies by Falun Gong or other opponents of the CCP. A typical story involves a CCP figure visiting Australia, a bunch of human rights rallies and hundreds of Chinese students bussed to the rally with the intention of overwhelming regime opponents.
A Chinese student involved in organising these rallies was interviewed. She made it clear that the embassy helped. Moreover it was clear there was social pressure (or worse) on students to conform - and that non-conformity had a negative effect on the family back home.
But the more interesting part of the story was how these sudden billionaire Chinese businessman (including businessmen who hung out with spies) were giving large donations to Australian institutions and thus getting close to politicians. (Universities were recipients as well as political parties...)
And that some of these businessmen - liked hanging out with politicians (and sometimes paid their legal expenses). And then after having received a benefit the said politician expressed views on the South China Sea contrary to the Australian Government).
This largess crossed party lines. Both sides of politicians had ex-politicians on what were some very generous consulting gigs.
One of these businessmen gave money to the Australian Chinese Relations Institute - an organisation headed by Bob Carr - a former Premier of my home State (New South Wales) and a former Foreign Minister of Australia.
The implication was that Bob Carr (and his institute) was in some sense compromised.
I have always liked Bob Carr. He was the New South Wales Environment Minister when I was in my twenties - and I thought he was great. I still do.
So when invited to attend a talk sponsored by ACRI I jumped at the chance. Ignoring the usual advice that it is not a good idea to meet your heroes (especially if they are politicians) I rocked up full of excitement.
Here is the flyer...
When I got there I got a fabulously naïve talk about how various Chinese businessmen making huge waves in Australia were independent businessmen and not in any way arms of the Chinese government. (This includes people who were trying to buy ports near military bases in Northern Australia.)
The naiveté was amazing. Some of these newly minted billionaires career went roughly as follows:
a). Follow dad into the Peoples' Liberation Army (where he is a senior general)
b). Retire in your twenties
c). Start an import/export business. Make a quick 15 million.
d). Invest that in a huge land business. Turn that into a quick billion.
e). At the age of 35 turn up in another country and throw half that money round buying strategically important assets.
But these businessmen were in no way affiliated with the CCP.
Whatever: I left thinking I was born on a Monday - but not last Monday.
(But I was well satisfied with the drinks and canapés...)
Anyway Bob Carr is in The Australian (Murdoch's national newspaper in Australia) dissing the whole Four Corners story. You can read his defence. It didn't go very near how his own organisation might or might not be compromised.
Go on. Read it.
I think he would be better leaving things alone.
But as he hasn't I thought I might just put the document circulated that night up for all to read. Maybe the China experts here can tell me whether this is merely naïve (which would be my normal guess) or directly paid for by the CCP.
Here is the link.
As Bob Carr has chosen Murdoch's network to defend his benefactors maybe I should just end with the most famous News Corp slogan: I report, you decide.
I should note that I am in no way opposed to Chinese billionaires (even if they are CCP linked) investing their loot in Australia. In fact I would encourage it - and can probably suggest some fine ways of investing it.
I just think a ninety minute seminar suggesting a string of Chinese billionaires don't have powerful ties to the CCP is - well quaint at best...
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