New CMHC rules challenge investors

Looks like the change to CMHC rules on qualifying for investment mortgages are having an effect:

The major issue concerns mortgages on CMHC-insured properties with four complete units or less, which went from being calculated using an 80% offset model to a 50% add-back one. As reported in this paper, the offset model meant that up to 80% of the expected rental income is used to offset the cost of the mortgage. With the add-back model, half of the expected gross rental income will be added to an investor’s income, but the entire mortgage is added to expenses.

In other words, it wreaks havoc on an investor’s debt-service ratio, as was the case with full-time Toronto investor and consultant Cindy Wennerstrom, who is currently shopping for her eighth property but is “stuck, mortgage-wise,” she says.

“When banks take off 50% of the rent and apply that to your expenses, there is usually a deficit. That is subtracted from your actual income,” she says.

And with Ms. Wennerstrom’s other properties each producing a cash flow of $800 to $1,100 per month, there still isn’t enough to bring her to the desired debt-service ratio of 40%.

“That means 40% of your gross monthly income has to service your monthly debts,” says Barrie, Ont., broker Adam Bazuk. “That makes it very difficult to qualify investors unless they also have an enormous personal income.”

But not to worry! Private insurers are stepping in to fill this need without putting the taxpayer directly at risk. Check out the full article in The Vancouver Sun. Thanks to patentlywaiting for the link, story submissions can be dropped here: http://vancouvercondo.info/submit

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Mzungu in the Mist
Mzungu in the Mist
9 years ago

#136 Buddy, all of your stories demonstrate that you traveled with the comfort and safety of vehicles and a group. And thanks for referencing events that happened a year before your trip (eg. Rhodesia) – it does nothing to articulate your experiences. It is like me saying I had a fist fight in Cabo, but the year before the cartels were gunning people down. Despite your reference of a "modern culture," you are sorely mistaken. Things have not really changed since the 80s, with the exception of the major cities. Of course, I still don't think they had bomb checkers at the major hotels in Nairobi back then:) As a security consultant traveling by myself, I have been chased out of the DRC by gunfire from rebels with only the shirt on my back; I have partied with South African… Read more »

Dan in Calgary
Dan in Calgary
9 years ago

#132, Here is my problem with current policy:

In Canada minorities receive special treatment, except when white.

It bothers me too, but I don't know if it really happens or not. I think it does, but I don't know.

Dan in Calgary
Dan in Calgary
9 years ago

To continue briefly with an interrupted phrase,

"My travels ended in Nairobi. Other overlands of my group travelled north through the Sudan."

I wanted to add that a female friend of mind was forced to visit (in her nightwear) the bedroom of the local Sudanese official who had a false conception of what European women were all about. Nothing happened in the end, but it was very unpleasant for Jackie. That is what overlanding was about when I did it!!

Dan in Calgary
Dan in Calgary
9 years ago

@anonymous #131, "Ummm…that is called an organized safari, something quite trendy now amongst your age group. You only get a smattering of “organized” contact with the locals." You know not whereof you speak. Overlanding was common enough in 1982, but it was nothing like you might imagine it to be. Nothing was "organized". Perhaps you're thinking of safaris in East Africa, with the minivans surrounding the pride of lions and the Masaai posing with wazungu for $US10? Let me relate a few experiences of what overlanding was like in those days. Thus, for example, we met other overlanders in Bangui who had lost all of their possessions when the ferry carrying them and their truck sank as it travelled from Bangui to Zongo. We ended up travelling to Bangassou to cross the river and from their through central Zaire. (Nobody… Read more »

First in Time
First in Time
9 years ago

"I don’t know what makes people think that being here first gives them exclusive rights to the place. If you can’t compete with immigrants grow a pair or accept defeat, but don’t whine." Maybe because certain Canadians created the foundation of the country that has become a magnet for immigrants, and they created the very social system which is such an attractant. From the rule of law and order secured from the early days of the RCMP to tens of thousands lives given during two world wars; to the health care system carefully negotiated amongst the provinces; to the political system that grants respect to each voter; to a social welfare state that looks out for the needs of its citizens; to an international reputation of an honest broker earned through countless peace operations; and on and on… Look very… Read more »

Anonymous
Anonymous
9 years ago

@Dan in Calgary:

Here is my problem with current policy:

In Canada minorities receive special treatment, except when white.

Anonymous
Anonymous
9 years ago

"I’ve traveled extensively in Africa (by truck, overland from Algeria on the north to Nigeria [more or less center], and from there to the east African coast)"

Ummm…that is called an organized safari, something quite trendy now amongst your age group. You only get a smattering of "organized" contact with the locals.

Try doing some real backpacking in Africa before you comment on the tribalism. You will find that racism is alive and well – Africans hate Asians, and they hate East Indians even more.

Dan in Calgary
Dan in Calgary
9 years ago

@anonymous #129, I'm not a school board trustee, and I definitely don't hate myself for being white. I feel no shame for my Scottish and Irish heritage, but rather only admiration for what my ancestors accomplished. I don't want to be anything but white, and I don't idolize other cultures. The "white shame" thing is very 1960s; I grew up in the 1960s. It's not a new concept to me. I'm well aware that other cultures have contempt for white peoples, and that they have contempt for other ethnic groups. Mandarin-speakers sometimes have contempt for Cantonese-speakers. I know from personal experience a contemptuous phrase used by people of the Dene nation (northern Canada) to refer to white people. I've traveled extensively in Africa (by truck, overland from Algeria on the north to Nigeria [more or less center], and from there… Read more »

Anonymous
Anonymous
9 years ago

@ Dan in Calgary

You make valid points and it all seems rosy, your comments have the swagger of a school board trustee.

Problem is that racism will ALWAYS exist between different cultures. I think its wrong and do not condone it, but you have the typical white shame stain on your collar because as much as you would like to be diverse you probably only have had limited exposure to people of different culture/race.

I grew up very closely with Asians and Indians as friends and their first generation parents/grandparents etc…definitely do not like white people and have just as many words for us as we do for them. Its just a fact of life, deal with it and don't hate yourself for being white.

patriotz
9 years ago

@Dan in Calgary:

Somehow he thought Canadians were universally decent people, because Bethune was Canadian.

Actually Bethune was an asshole. He treated his friends and women badly. He was devoted to Mao's cause because like Mao he was a Stalinist.

Of course I'm not blaming ordinary Chinese for holding him up as an icon, that's what they've been taught.

Dan in Calgary
Dan in Calgary
9 years ago

NO-LYMPCIS, regarding your five comments: 1. I call them as I see them. You need new glasses .. a new viewpoint on life. 2. I agree, many Asians are very nice, sure the damn quietest neighbours. I'm glad you find this to be true. But you need to stop seeing "Asians" … it kind of suggests you see the world as "white" and "non-white", or "western" and "everyone else". There is much more cultural diversity in Asia than you might imagine. 3. When was the last time you looked at a Child’s class photo? My wife used to teach at a Vancouver school that was once the bastion of white Anglo-Saxon society, but became dominated numerically by Chinese. By and large, her Chinese students excelled academically (and in certain extracurricular sports and arts) and were honest, well-mannered and respectful. A… Read more »

Anonymous
Anonymous
9 years ago

@Anonymous:

Do some research jackass. The income earned from foreign country is taxed in Canada. They pay their dues.

Newcomer
Newcomer
9 years ago

I don't know what makes people think that being here first gives them exclusive rights to the place. If you can't compete with immigrants grow a pair or accept defeat, but don't whine.

NO - LYMPICS
NO - LYMPICS
9 years ago

121 Dan in Calgary

I call them as I see them.

I agree, many Asians are very nice, sure the damn quietest neighbours.

When was the last time you looked at a Child's class photo?

I think the immigration policy is way out of whack.

It's not illegal for Caucasians to have kids is it ?

NO - LYMPICS
NO - LYMPICS
9 years ago

/dev/null Says:

@NO – LYMPICS: Post #60 peg boy and #62 burning down somebody’s house.

Well peg boy was an implication of how our system caters to vested interests. The other party sounded like a pyromaniac who lives in a cave, fire wasn't my suggestion.

BTW: Which Vision Councillor are you?

realpaul
realpaul
9 years ago

#110 MA, to be under CRA scrutiny in Canada is one thing…….but not claiming income is a national sport in country's like China.. where income tax accounting is non existent and the rest of the system is entirely corrupt. CRA can not monitor anything in China……there are no reciprocal treaties. If you were talking about UK or Sweden…it would be another story because they have similar taxation infrastructure but China ( and lets be fair corruption is absolute in the third world…or even Greece as we've found out recently) has no such infrastructure and what there is resembles an anarchy of eighteenth century proportions.

Dan in Calgary
Dan in Calgary
9 years ago

NO-LYMPICS, Then the Chinese will use their economic clout to infiltrate the countries economy and effectively turn the country into a Chinese colony. Democracy and human rights is the last thing China wants. Through my avocation, I have recently become acquainted with several Chinese immigrants. What strikes me most about them is their sincerity, humility, industry and courage. What makes me sad is their honest bewilderment concerning how corrupt and greedy many in our culture are. One of them (exceptionally well educated and experienced in industry) told me he came to Canada (instead of the U.S.) because of Norman Bethune, the Canadian doctor who was immortalized in Chinese culture by Chairman Mao. Somehow he thought Canadians were universally decent people, because Bethune was Canadian. Don't be cynical of the Chinese. — Definitions: 1. Gullible – believe anything. 2. Skeptical –… Read more »

Anonymous
Anonymous
9 years ago

@mad Albanian:

Or you can get a Canadian company to sponsor you on a work visa, and apply for PR. The options you listed (points system or entrepreneur) aren't the only ones available.

/dev/null
/dev/null
9 years ago

@NO – LYMPICS: Post #60 peg boy and #62 burning down somebody's house. I'm usually content to lurk and skim over most of the crap that gets slung around here looking for the few posters with something worthwhile to say, but the first comment is odious, the other is a felony and both are below even your low standards.

Dan in Calgary
Dan in Calgary
9 years ago

@realpaul, "Has anyone been following the newest fisaco in the foreclosure markets in the US".

A woman whose blog name was Tanta (now deceased) was an insightful, well-credentialed in mortgages, and highly-respected contributor to the Calculated Risk blog and made a number of scholarly posts that warned of what is now beginning to unfold in U.S. foreclosures and related mortgage issues.

She warned of the consequences of what might be described as systemic sloppiness in proper documentation at many levels in the mortgage and mortgage-bundling process. But it would appear her warnings were unheeded. For anyone that's knowledgeable about the legal niceties of mortgages and wants to know just how bad things are, I encourage you check out Calculated Risk's archives.

Vansanity
Vansanity
9 years ago

@jesse: I hope so Jesse!

Anonymous
Anonymous
9 years ago

@mad Albanian:

All minority hah,

West side and use your poor eye and count how many multi-million houses are owned by Chinese from China.

NO - LYMPICS
NO - LYMPICS
9 years ago

108 scullboy Says:

So THAT’S what Rennie meant when she said “park Bentley in the rear…”

==============

You mean…..he's a Gerbiller…like Richard Gier ?

Pack that trail mix !

NO - LYMPICS
NO - LYMPICS
9 years ago

113 /dev/null Says:

@Goodtimes: NO-LYMPICs already had a good chuckle over child rape and arson in this one thread.

========

Huh ?

You must be confusing me with Anoymous

/dev/null
/dev/null
9 years ago

@Goodtimes: NO-LYMPICs already had a good chuckle over child rape and arson in this one thread. Whether his comment was racist or not, you can't really be surprised…