Mortgages Are Not a Right

There’s a growing trend to complain at the stricter requirements financial institutions are requiring for new mortgages. USA Today has a whole article filled with people who feel that getting a mortgage is too hard, too long, and too difficult. Everybody claims their mortgage risk would be non-existent.

It seems so long ago, but even qualified loans (those to individuals that should be completely safe) had delinquency rates (at the extreme) of 40% in 2007 for people who put down 5% on the mortgage. The delinquency rates for people who put down 30% or more was still a staggering 2.4% that year.

Just to clarify, even qualified loans where the new owners were putting down a third of the mortgage themselves resulted in 1 in 42 loans being delinquent. That’s huge. For those putting down 10% that number jumps to one in 4.2 being delinquent loans.

Because of failed loans, banks are still looking to repossess 800,000 homes in 2011.

No mortgage is without risk to the lender, and they have all the right they need to run you through a grinder of forms and checks to ensure you’re a good risk. As it is possible to get loans in the US with as little as 3.5% down, it might be time for that minimum to be raised. All numbers show that the less a purchaser puts down, the higher the rate of delinquency. Hence, if you’re putting very little down, the tougher the fiscal review.

If you are really wanting to finance a home, it is substantially easier to get a mortgage the more you put down on the property. Saving more before purchase, or buying a cheaper residence, will both go a long way in securing a loan with less hassle.

Bella Vista Calgary Interview

On Wednesday 29 June 2011, I was interviewed for CBC Television on a developer’s ability to walk away from buildings that are made with significant structural deficiencies. The story aired at 5PM and 6PM, and was good at expressing the anger being caused by a system that is failing owners.

While it didn’t make the sound bite, I lay the blame fully with the developer. They may indicate the building was passed by the city inspectors, but the inspectors are a lot like police attempting to catch speeders. Overall they help reduce the overall error rate, but they cannot catch everything, and there are developers that will still, wilfully, “drive 225 in a 50 zone” and not be caught. For developers to say “I wasn’t caught by the inspectors, so I hold no blame” is completely without base.

Here is the link to one of the CBC cuts, starting at the 6:55 mark is the condominium segment.

Here’s an article from the Calgary Herald which covers the issue well.