Friday, March 26, 2010

CMHC denies a mortgage - Super star agent! and more...

CMHC Denies a Mortgage

The builders of London at Heritage Station condos are suing buyers who won't or can't complete due to a drop in condo values. In one case a buyer with 5% down had financing denied by CMHC and now needs to come up with $84,000 more to close. From the Calgary Herald.

In 2007, Dany Cote put down $20,000 on a condo at London at Heritage Station. He also signed a presale contract to buy the property for $420,000.

Cote was pre-approved for the money and Canada Mortgage and Housing Corporation (CMHC) agreed to insure the loan.

But in the two-and-a-half years Cote had to wait for the condo to be built, the economy and the real estate market tumbled.

According to a recent appraisal, Cote's condo is only worth $335,000 and the CMHC will only insure a loan of up to $313,000.

"Typically, when a property is approved for CMHC insurance, CMHC does tend to honour that agreement during that period. However, there are times when an application is reassessed," says Richard Cho, a spokesperson for CMHC.

...
On Tuesday, the builder sued Cote for breach of contract seeking both the $20,000 deposit and the difference between the presale contract price and the condo's current market value.
I feel bad for this guy because there is no way he can live up to his end of the agreement while the developers are trying to extract as much money as legally possible from him regardless. But I'm mostly surprised that CMHC denied a mortgage.

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Super Star Agent


From The Edmonton Sun:

Real estate spiking upward

The “tipping point” in Edmonton real estate prices may just have arrived.

A friend in the home inspection business says multiple offers within days of listing are suddenly happening.

Re/Max’s Terry Paranych, just named the fourth-most-successful Re/Max realtor in the world at the company’s annual convention, says he’s coming off his most successful February sales in 18 years.

The Edmonton Real Estate "turnaround" happened last summer after the financial crisis and appears to have eased considerably. This report is anecdotal evidence from a super star agent and does not reflect recent market trends. Here is what the same reporter wrote in August 2007 (see previous post):

Even with huge slowdowns, at least half those projects will happen. The bitumen upgraders in Strathcona and Sturgeon counties are just starting. Nine proposed upgraders are listed on that website.
....
House prices will go nowhere but up.
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And More...


on Mike(Authentic). see previous post.

We have a slew of oil stocks, purchased in March 2009 (the low of the market) that have made very little returns. We made the same in a high interest savings account without risk vs the market (to date).
March 24, 2010

I just can’t seem to “get into” the market even reading Money Road. I want to as I feel like “I’m missing out” with just collecting a very secure 0.8% bank account interest that I could be collecting 3-5% easily. Preferred shares, corp bonds, safe stuff. But it feels like the risk the market will go down again isn’t worth the rewards.
Feb 22, 2010

I’m all in 1yr GICs Cash, no RE, no gold and no stocks. Just waiting on the sidelines in a safe, very liquidable position.
March 19, 2009

4 comments:

squidly77 said...

heres an update to whats happening in the alberta oil patch

shell scotford is near completion
starting in may 9,000 direct jobs will begin to disappear...i have no idea how many indirect jobs will be effected but a good rule of thumb is 3 indirect jobs lost for each direct job lost

keephills at wabamun will begin layoffs in aug with approx 5,000 to be laid off

there are no future upgraders planned for the edmonton area or even in alberta in the immediate future as there is a need to fill the keystone pipeline with approx 1.3 million barrels daily of raw unprocessed bitumen which will upgraded stateside (thanks eddy)

theres a few rumours rumbling concerning the redwater upgrader but its no more than that
its basically kool-aid to pacify the local citizens

in 2007 i did warn that none of those nine upgraders would be built

ft mac and north
husky sunrise is a go same with kearl lake and a few other small ones

suncor voyageur, on hold for the rest of this year and probably next year and longer

cnrl, kool-aid, same with nexen

these jobs are mine, extraction and froth only as the raw bitumen is simply mixed with diluent to thin it down for its trip down south where it will be upgraded

shell along with cnrl have built air strips that have the capacity to land 747 jets

all future projects north of ft mac will utilize labour from outside of alberta, i really do not understand the governments reasons for allowing this practice

i am writing this from ft amc and believe me there are copious amounts of new unoccupied condos up here, the stores are mostly empty, trafiic has been reduced back to 1998 levels and the people are not happy

squidly77 said...

i should add that jackpine mine which is the upstream section of shell scotford has already laid off approx 3,000 people with another 3,000 to go, this wont be felt here in alberta as most of the workers were from quebec the maritimes and the phillipines

on the upside there are approx 5,500 currently working on both plants tying the new plants into the existing plants

that should last till june

if you have a question on further plants just ask

Mike (authentic) said...

Seriously grow up. What the fuck is your damage?

Radley77 said...

One of the things about the mortgage arrears I noticed is that if you extrapolate at the current 6 month monthly increases in the number of mortgages, and the 6 month monthly increases in the number of mortgage arreras that in 10 years (e.g. January 2020) mortgage arrears would still only rise to 2.35%. This is still less than the current rate of mortgage arrears in the US, over a 10 year period. If one considers that rises in mortgage arrears have typically correlated well with recessions and jumps in unemployment, then even this extrapolation may be justifiably a worst case scenario.

One guess for the possible drop in mortgage arrears, is that banks have cranked up the rate of bankruptcies. The entire judicial system was accustomed to a low rate of foreclosures, and likely has had to make hiring adjustments to handle the higher volume of foreclosures. This may also explain why listings are higher than they were last year on a seasonally adjusted basis.

Just some food for thought...