CMHC to help cash-strapped owners

Looks like Ottawa sees some mortgage problems coming down the pipe even in these times of record low interest rates:

As the recession deepens, Canada’s big banks and its federal mortgage insurer are moving to head off a rise in defaults by homeowners.

Ottawa is launching a campaign to urge the cash-strapped to approach their banks for mortgage relief, as the banks adopt more flexible practices aimed at preventing borrowers from falling behind on payments. The measures by the banks and the Canada Mortgage and Housing Corp., the federal agency that guarantees mortgages, signal growing concern about increasing levels of household debt.

With house prices dropping, job losses rising and the economy not yet showing signs of recovery, both the government and lenders are pushing consumers to be proactive if they think they might have problems paying their debts.

Unfortunately we don’t seem to have many publicly available stats for mortgage debt in Canada, but I wonder how many ‘cash-strapped’ owners went in for the Government approved (but recently canceled) zero down 40 year CMHC mortgages to keep from being ‘priced out forever’?

The full article is at the Globe and Mail. Hat-tip to Observer for the link!

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scullboy
11 years ago

Hey blueskies,

C'mon over here and let me introduce you to my little friends, the Shun sisters. No matter how bad things get, people will always pay for a cook. That alone will see me through this economic situation. We'll see how many IT people, marketers, real estate gurus and overextended landlords will be able to say the same thing.

Sucker.

darkwindows
darkwindows
11 years ago

RennieWhereRU?:

market value is way way down from here. C'mon… a 2 bedrm concrete coffin for 1/2 mill in Coquitlam Bwahahahahahahahahahahahahah x 2. You'd really have to be stupid x 10

RennieWhereRU?
RennieWhereRU?
11 years ago

Anyone know that Mac Bulk are flogging off Cora in Coquitlam? Saw the sign off No. 1 today. All that is happening here is that the developer is passing on their savings to the public, these units are priced well below market value!

patriotz
11 years ago

islander:

I stand by my point: perma-bulls want everyone to believe that all the time is “a good time to buy real estate.” The perma-bears want everyone to believe “you’d be nuts to buy real estate right now.”

Hey Islander, do you ever use the preview button to look at your post before you submit it?

"Perma" stands for permanent which means "all the time". Not "right now". For everyone. Bulls and bears.

I couldn't make stuff like that up.

observer
observer
11 years ago

The point was that the above exercise to convert my dad’s profit to real dollars (in this case, I set it to 1997 dollars) was a useless exercise. The information didn’t offer any value. I’m proving Dave’s point: “What is the purpose of correcting nominal dollars from the perspective of an individual homeowner?” He said: “Who cares?” First off, apologies if this was covered in a previous post. A couple of hours off this blog and I am so far behind. My answer to your post above is that the utility of converting to real dollars is to allow comparisons of values and profits made at different points in time in terms of purchasing power. For instance, you might like to know if the $1 profit you made in 1900 was good compared to the $1 profit you made yesterday.… Read more »

realestatesplatter
realestatesplatter
11 years ago

From Garths blog today. Reality catching up with Vancouvers elite as it has with average Vancouverites long priced out of the market. Canadas most unaffordable city settles in for a long downturn. Global Tv's real estate story today was about the growth in the number of 'average' people showing up at homeless shelters for the first time in thier life. I'll bet a lot of people wished they could curl up in thier parents basement. "A few blocks away, the condos are so thick they blot out the sun. But looking up into the maze there are scores of units staring blankly back without curtains or occupants. Everyone here is so aware of the collapse of the giant $500-million Ritz project, and now the desperation sales of unsold units in half-built buildings. Turned out the floor manager in the hotel… Read more »

gasbag
gasbag
11 years ago

Mish hits the nail on the head

Banks are far more interested in reinflating the price of $500,000 homes now fallen to $300,000 than taking care of urban blight. However, reinflating home prices cannot work because home prices needs to fall to levels that are affordable.

Homes in Flint and other such areas, have indeed fallen to their true value (less than zero). No one wants them at any price. Moreover there's little incentive for anyone to do anything about this. Thus the discussion involves "shutting down portions of Flint, officially abandoning them and cutting off police and fire service."

Our throw-away society has effectively reached a new level of efficiency: the throw-away city.

Did you just think 'Whalley' ? , so did I.

http://globaleconomicanalysis.blogspot.com/2009/0

gasbag
gasbag
11 years ago

New York is a smart city, it makes Vancouver look like smudge in a public toilet by comparison. New York is in trouble and people have been in denial, until now.

"Economic dirty bomb goes off in New York

By Tom Engelhardt

http://www.atimes.com/atimes/Global_Economy/KC26D

Theres a new catch phrase created here for BC – Before the Collapse. We'll see it soon enough.

recessionwatch
recessionwatch
11 years ago

Forest & Marine , BC's largest financier of forestry and marine related industries suddenly filed for bankruptcy today. This is the main source of financing and payroll for basic industry in BC. The payroll of thousands of workers at 40 large BC industrial companies and groups is immediatley affected as they are OUT OF CASH and cannot make debt payments or payroll. This will affect the workers ability to make mortgage paymnets and all other debt issues, not to mention food on the table. At the same time it is estimated that a majority of forestry workers currently laid off are running out of EI benefits. There is nothing but forced sales and then welfare ahead for many as there has been no announcement from any level of government to provide further assistance. I guess it's too early to tell… Read more »

ella
ella
11 years ago

hmm, I'm having formatting problems. Let's try that last bit again:

If anything a modern depression will look like Japan in the 90s.

Well, Paul Krugman and I think you might be right.

Given what happened to the Japanese Real Estate market in the ’90s, I’m surprised to see you acknowledge that. But you are a wriggly fish, and love to flip and love to flop, don’t you?

(You don't mind if I snap at you twice, right 🙂 )

ella
ella
11 years ago

(line broke strangely: BC savings rate was – (negative) 8% running up to this)

ella
ella
11 years ago

"If we enter a depression, it will have little resemblence to the one in the 30’s. So many things have changed since then that comparisons are simply wild guesses." That's not entirely true. There are some specific similarities. For example, bankers hadn't made this much in earning (since 1929), and that has to do with the amount of risk they were allowed to take on. Loose credit allowed for massive Real Estate bubbles across the US, including Florida in the 20s. We've got the return of Hoovervilles, now called shantytowns sprining up (see front cover of new York Times). And then there is this, from NPR: Alex Blumberg: I talked to a guy who has something to say to people who want to pin this whole thing on banks. I talked to David Beim at Columbia Business School. He's in… Read more »

grindingtoahalt
grindingtoahalt
11 years ago

More on the Japan – Depression comments from Newsweek Risk of a Japan-Like Scenario The real worry is that the U.S. economy could do even worse. The parallels between the U.S. today and Japan at the beginning of the 1990s are too clear for comfort. In both cases, heavy capital losses resulting from property loans constrained the banking system. In Japan, that led to a decade of stagnation, with growth averaging 0.8% from 1992 through 2002. Home prices remain 25% below their peak, and the Nikkei stock index is still trading at one-third its level of 20 years ago. Although there are differences, the risk of the U.S. falling into a Japan-like scenario is frighteningly real. The U.S. reliance on foreign capital adds more risk. America's current account deficit reached a record of 6.4% of GDP in third-quarter 2006, but… Read more »

grindingtoahalt
grindingtoahalt
11 years ago

Dave: #199 Dave , so, when all these people who are going onto EI now ( around the world as well as CDA) and industry is still deteriorating ( as stated by the budget office this am) where will they hide them so as to avoid using the term Depression? This is a very differant situation from Japan in the 90's . In the 90's Japan had an in-country specific event and was able to pour money into bad banks to shore up a weakened industrial base while keeping the yen down for export growth. That is not the case today where irregardless how much yen they print they cannot create market share. Like here, Japans unemployment is skyrocketing. When the social safety net dries up look for a rapid deterioration in 'news quality'. You can be correct if the… Read more »

ella
ella
11 years ago

"However, given the circumstances you would need a crystal ball to determine what future lies ahead." Looking at world events right now: we've got China trying to shift its relationship with the US; the existing military and financial superpower is insolvent and we're facing a global downturn. All those factors lead me to believe that in some way or another, we are more likely to go through a period of volatility and violence. If a soothsayer told me we would go through WW3 I wouldn't find it implausible (except that I don't believe in soothsayers). However… There is nothing I can do about it. And, unless a more specific, clear threat emerges, there is nothing I will do about it. Ie, I will keep my investment strategy, keep saving and when the time is right, I intend to buy a… Read more »

techdeath
techdeath
11 years ago

Huge layoffs still ripping through the economy. Good news from local bullshit media. Ozzie Jurock has a new 'how to ' book out. IBM to cut 5,000 jobs in U.S.March 25, 2009 4:51 PM ET advertisement Article tools E-mail this article Print-friendly version Discuss this articleStocks mentioned in this articleInternational Business Machines Corp (IBM) Stock Quote, Chart, News, Add to WatchlistSun Microsystems Inc (JAVA) Stock Quote, Chart, News, Add to WatchlistRelated newsBusiness HighlightsWall Street gives up some ground after huge gainsHospira, Carnival, Walt Disney are big moversGold prices fall on move out of safe-haven assetsOil rallies to near $54 a barrel All Thomson Reuters newsNEW YORK (Reuters) – IBM will cut about 5,000 jobs in the United States, adding to similarly large cuts in the past few months, sources with knowledge of the matter told Reuters on Wednesday. The job… Read more »

Dave
11 years ago

grindingtoahalt:

The odds of a depression scenario have dropped considerly from the perception 6 months ago.

If we enter a depression, it will have little resemblence to the one in the 30's. So many things have changed since then that comparisons are simply wild guesses. If anything a modern depression will look like Japan in the 90s.

grindingtoahalt
grindingtoahalt
11 years ago

Depression is a word the sticks in every politicians craw even when the facts are staring them in the face. Why this recession is so bad First things first: Even though it may seem obvious to most that this is the worst downturn since the Great Depression, the economy has experienced other serious recessions in the past, particularly in the mid-1970s and early 1980s. But this recession dwarfs those two for several reasons. In terms of length, the longest post-Depression economic decline was 16 months, which occurred in both the 1973-75 and 1981-82 recessions. This recession began in December 2007, which means that it will enter its 17th month next Wednesday. The current recession is also more widespread than any other since the Depression. The Federal Reserve's readings show that 86% of industries have cut back production since November, the… Read more »

ella
ella
11 years ago

"Ella, you’re the one engaging in semantics now, not I."

No, I'm just speaking English.You commended perma-bulls for their foresight. By your definition a perma-bull could not have foresight. It's a completely pointless argument.

But you only came on here to insult people anyway, not for a real discussion.

realpaul
realpaul
11 years ago

Local newspapers are not adjusting themselves to the reality of economic opinion. It appears that optimism is a local phenomena but as news from elsewhere bores in Vancouver will increasingly become mired in the fact that we have entered a serious recession. Personally , I think we have three factors pushing the "don't worry be happy news stream" in the local rags. One is advertising from the developers desperate to bail, second is the provincial election as advertised by the cash rich Liberals, third, Olympic sponsors contractually bound to advertise the 'good news'. These three factors will go down one by one in succession and will result in a longer, delayed and more serious recession that most people realise. "Seven in 10 Canadians believe the economy is getting weaker, which is one of the highest levels since Environics started tracking… Read more »

I told you so
I told you so
11 years ago

realpaul: I think the opinions on that article are kind of extreme. Firstable, the average american cant understand what just happened to them and they probably never will unless they go through 12 years of proper schooling. Second, Israel and the arab countries, as well as India and Pakistan, have been in conflict for hundreds of years. Their conflicts mostly affect their region but have not real influence in the western world. Yes there will be inflation, protests and a wider gap between rich and poor like the US has never seen before. But it has happened before in other countries which have recuperated from it and that are doing fine now. Look at Argentina, Chile, Brasil, etc. IMHO what this world conflict will bring is redistribution of wealth among the world which from my point of view would be… Read more »

hardtimes
hardtimes
11 years ago

Big Brother is here. Thinking about travel to the US? Something to consider. Immigrant detention system ensnares American citizens Our view: Process leaves detainees in cruel netherworld, cries out for reform. Hector Veloz, 37, is a U.S. citizen. His father is a decorated Vietnam War veteran. Yet for more than a year, until last summer, Veloz experienced what can only be described as a Kafkaesque nightmare. He was swept up into the U.S. immigration detention system and held in a prison in Arizona, far from his California home, as officials tried to deport him. A unique case? Unfortunately not. The bursting-at-the-seams U.S. immigration detention system is all too often an arbitrary and cruel netherworld where normal U.S. justice standards don't apply. Immigration officials detained about 378,000 people last year, at least three times the number detained a decade ago. On… Read more »

islander
islander
11 years ago

Ella, you're the one engaging in semantics now, not I. I stand by my point: perma-bulls want everyone to believe that all the time is "a good time to buy real estate." The perma-bears want everyone to believe "you'd be nuts to buy real estate right now." Yes, there are current bears who are cautious right now. But there are perma-bears on this site you will permanently reside in their parents' basement. Patriotz can't even recognize inflation risk, even when he/she's been exposed by Raven. But the perma-bears don't want to engage Raven (or Dave). Easier to hand out a minus than to debate. My point is illustrated by how the scoring gets dished out by the readers of these comments: Confirm your bearish world view: +30 Argue something less than a bearish world view: relentlessly minus until the comment… Read more »

Raven
Raven
11 years ago

"Looks like “Raving” has been outed, nice one TA. She’s screaming like a lunatic, too funny. Whadda fooooooooooooooooool…LOLOLOLOLOLOLOL"

Outed by TA? LMAO. Nope, try again.

shitsinthefan
shitsinthefan
11 years ago

Reality bites the bulls

Home price drop sharpest in Calgary: report

OTTAWA — Canadian home prices continued to slide in January, falling at an annual pace of 2.4% and continuing a retreat in value that started in February 2008, the Teranet-National Bank composite house price index shows.

Price declines were sharpest in Calgary, down 8.2% year-over-year, while Vancouver was off 4.2% per cent.

"This reading extends and deepens the home-price disinflation that began last February. It confirms that in early 2009, after more than five years of seller's market conditions, Canadian housing as a whole was a buyer's market," the report said. "January was also the fifth straight month in which the composite index was down from the month before, extending the first run of consecutive monthly declines since March 2007."