How to Petition Parliament from http://www.inkymark.com/site/node/36

“The petition must contain a request, called a “prayer”, for Parliament to take some action (or refrain from taking some action) to remedy a grievance.”

It needs 25 signatures, and can be sent to any MP, not just your own. However, MP’s are not required to present the petition, so one might be best served to find one sympathetic to the cause.

“Members of the public who wish to petition the House of Commons on a matter of public interest are advised to first submit a draft petition (without signatures) to a Member of Parliament to see whether it is correctly worded and whether the Member would agree to present it.”

Current score: 0 (to vote for this comment, please visit the site)

http://ca.news.yahoo.com/s/reu....._mortgages

Current score: 0 (to vote for this comment, please visit the site)

http://www.cmhc-schl.gc.ca/en/.....nglish.pdf

http://www.cmhc-schl.gc.ca/en/.....nglish.pdf

Current score: 0 (to vote for this comment, please visit the site)

Typically, the official line from banks is that as long as you can still make payments there should be no problem.

That’s true here, because if the mortgage is insured (virtually all bubble purchases AFAIK) the taxpayers are holding the bag and the bank doesn’t care if the property is underwater.

The big problem is not going to be willingness of the banks to renew, but the ability (and willingness) of the homedebtor to handle the huge increase in payments once interest rates return to normal, as they inevitably will.

The mortgage securitization and insurance regime during the US bubble was completely different from what we have here, although it looks more like it now due to the federal takeover of Fannie/Freddie and the exit of private capital from the mortgage market.

Current score: 0 (to vote for this comment, please visit the site)

It’s true!

And it’s more credible than you think. Somebody on this site just last week (or was it the week before) posted a link to a MLS listing for a $2.5M west side house for sale that was currently rented at $1800/month. There’s plenty of west side ‘millionaire homes’ that are rented for between $1500 and $2000 per month.

Current score: 4 (to vote for this comment, please visit the site)

Current score: 4 (to vote for this comment, please visit the site)

Current score: 0 (to vote for this comment, please visit the site)

“Just keep making up stories to make yourself feel better bear. It’s ok that you’re a loser. Not everyone can be a winner by definition. ”

Now that’s what I call: ‘In Denial’!

My landlord had a $2M mortgage on a $2.5M west side house that I rent for $1500/Month. Do the math.

Current score: 5 (to vote for this comment, please visit the site)

http://www.calculatedriskblog......ed+Risk%29

and mish Underwater, Securitized, and Screwed by the “Pass the Trash” Strategy

about the things that happening in the us (where we have a real world example in recent memory as a reference point). It seems securitization causes problems for refinancing underwater mortgages.

Current score: 2 (to vote for this comment, please visit the site)

http://www.vancouversun.com/bu.....story.html

Current score: 2 (to vote for this comment, please visit the site)

Arguing for the armour case in a new report for the Federal Reserve Bank of Cleveland, University of Western Ontario economist James MacGee says the main reason Canada’s housing market hasn’t gone bust is because of much sounder lending practices. An explosion of subprime and high-risk mortgages, rather than merely low interest rates, was the primary reason that U.S. prices boomed and then collapsed, according to Prof. MacGee.

WRONG. All housing busts, everywhere, have the same root cause – prices out of proportion with rents and incomes. There may be different reasons for this in different places, but how prices got to be too high is irrelevant. What matters is that they are too high.

And lending for more than the fundamental value of a property – the value based on rental income – is unsound and high risk no matter what label you give it. Lending in Vancouver is every bit as unsound as in the bubbliest markets in the US.

Current score: 7 (to vote for this comment, please visit the site)

Current score: 5 (to vote for this comment, please visit the site)

Patriotz good post but Krugman didn’t just call the bubble he was an advocate of it.

Does that sentence make any logical sense at all?

Doesn’t it follow both from reason and from evidence that those who wanted a housing bubble and had the power to enable one (Bush, Greenspan, Bernanke, et al) would deny that one existed, and attack those who claimed there was one?

Ben S. Bernanke does not think the national housing boom is a bubble that is about to burst, he indicated to Congress last week, just a few days before President Bush nominated him to become the next chairman of the Federal Reserve.

Bernanke: There’s No Housing Bubble to Go Bust (2005)

How come nobody was claiming in 2005 that Krugman had previously advocated the bubble? Think that one over.

Could you do a bit better please. And try including some citations.

Current score: 2 (to vote for this comment, please visit the site)

What do people react to first, the good news on the latest rise in values or the fact that the cost of everything else is also going up so fast that the increase is meaningless?

http://www.bloomberg.com/apps/.....mWH3QNomt0

Why do you accept that food costs are doubling every year but feel snug as a bug when real estate values are going up 10 to 15%?

I can’t help but conclude that the CDN population has been adversley affected by a ‘stupid drug’ put into the water supply. Otherwise none of this makes any sense.

Current score: 0 (to vote for this comment, please visit the site)

However, letters DO matter, even more than opinion polls.

Current score: 5 (to vote for this comment, please visit the site)

Peter Julian MP,

I have some concerns over the governments willingness and in some cases its outright encouragement to put its citizens further into a hole many will never dig their way out of.

After several years of unprecedented “appreciation” in real estate, housing is unaffordable to to the vast majority of the population in much of Canada. In the major centers of British Columbia, only the very upper level income earning families can afford to own a home and have a decent quality of life as well. For some reason, a large swath of the population, including most in government, see this as a badge of honor and have taken drastic steps to defend the high prices and keep them from falling to an affordable level. Increasing amortizations to 40 years (now 35), decreasing down payments to 0% (now 5%) and giving tax credits has propped up a bubble that would have imploded without government manipulation years ago. High prices may be a boon for those who bought low and sell high, but over a longer period of time they only benefit the banks. This is because as original (pre-bubble) owners sell off due to retirement or death, a larger and larger portion of the population continues on these never ending mortgages eating up a greater and greater percentage of the aggregate populations income.

I am sure the banks are more than happy to lend any amount into this environment as the CMHC (A crown corporation) has basically removed all risk from the banks by insuring these mortgages, which are subprime by definition in this artificially low interest rate environment. This is because the borrower is qualified based on a very low rate and would be unable to afford the mortgage on a rate increase. This is known at the time of issuance but done anyway.

For example:

A family making $60k a year could qualify today for $352k mortgage and with 5% down a $370k house. After 5 years they have paid $1390 per month and the remaining loan is $322k, but interest rates are now 7% (still historically low). The new payment is $2100, and they cannot afford this. What happens?

I would like answers to the following five questions:
Why is my government supporting the central bank keeping rates artificially low and encouraging Canadians to go further and further into debt for basic necessities (shelter) when by all historical standards it is drastically overpriced and headed for a crash like all other areas in the world? It is not different here, because math is universal. It doesn’t matter how strong the banks are, its the people who have to pay.
Why is my government allowing a crown corporation to transfer the risks of imprudent lending from the lender to the taxpayer? If CMHC was not insuring these mortgages, the banks would not make them due to the risks. Even with their own economists predicting 20% drops in prices, they continued lending in earnest at 5% down. Does this seem like a prudent thing to do? Only if the government has your back.
Will my government consider not allowing qualification based on a interest rate snapshot and instead use either an average, rolling average of at the very least a forward looking long term rate estimate?
Will my government consider increasing the down payment requirements on low down payment mortgages, to ensure potential homeowners have proven their ability to save over a period of time and at least appear responsible?
Does my government truly believe that high housing prices are good for the long term fiscal health of Canadians, and if so why? Have they considered that a greater and greater percentage of their citizens hard earned dollars being siphoned into the coffers of bank investors may be bad for long term economic health?
I understand that we are in a recession, and it is well deserved as we lived beyond our means for far to long. Encouraging more debt is not the answer. Please bring these questions up in the house and get some answers. This is the most important question for a generation of Canadians as it is the difference between debt slavery and a semblance of life balance.

Sincerely,

Name Removed
Burnaby

Current score: 5 (to vote for this comment, please visit the site)

Current score: -2 (to vote for this comment, please visit the site)

I think CMHC could still operate as insurance company but it would need to be broken up into smaller pieces (so not too big to fail) and operate on the understanding that it could fail. That would force banks and bond holders to price in the risk and be more prudent in lending. The government would should also regulate these mortgage insurance companies so they are well capitalized and supervised closely. More complicated yes, but that is the price of allowing people to buy with little down payment and longer amortizations.

Your predicted outcome is simpler and better in my view. But there is big gap between that and how things operate now so it would have to wait until catastrophe forced change upon us. I also think that it would be politically difficult to restrict home buying to 10/25, even though that would be exactly the right thing to do. Ironically, people who can’t afford homes at current prices might complain, even they would stand to benefit the most in the long run after prices fell to healthy levels.

Essentially, imposing such a restriction is taxing people who got rich doing nothing and putting it back into the economy in the form of cheaper housing. So instead of directing a large proportion of our capital raising to feed the RE ponzi scheme, it could instead be used to to actually create and encourage useful businesses that benefit and create value for the economy. On the other hand, it would mean fewer mortgage slaves, though mortgage slaves are only useful if they don’t default, which they probably will once rates rise.

Although I was always skeptical about the saying that our RE would start to decline after the olympics, several factors are now amazingly converging to this folklore prediction. Firstly, the winding down of MBS purchase programs and possibility of higher mortgage rates in the spring. Shadow inventory holding out until the olympics are over, waiting to be unleashed (workers and visitors leave, no longer needing housing here). The risk of a second dip, causing interest rates to stay low but all other economic factors to figure negatively into RE.

Current score: 3 (to vote for this comment, please visit the site)

Current score: 0 (to vote for this comment, please visit the site)

Current score: 0 (to vote for this comment, please visit the site)

Higher interest rates, more household debt raises fears for households

Current score: 0 (to vote for this comment, please visit the site)

That’s a pretty weak indictment. Also note that that column was written in August 2002, with the rate at 1.75%. Three months later they dropped it to 1.25%, then in June 2003 it went to 1% and stayed there for a year. This part of the policy was clearly insane, and seemed to be a play by Greenspan to get Bush reelected.

http://www.newyorkfed.org/mark.....drate.html

Current score: 0 (to vote for this comment, please visit the site)

Current score: -1 (to vote for this comment, please visit the site)

Just keep making up stories to make yourself feel better bear. It’s ok that you’re a loser. Not everyone can be a winner by definition.

Current score: -14 (to vote for this comment, please visit the site)

Current score: 0 (to vote for this comment, please visit the site)