Back after a hectic summer, and after spending parts of weeks in 2 U.S. markets and learning more about the U.S. real estate market, I am extremely thankful for what we have. You may have heard about recent comments relating to a housing bubble in Canada, but many experts do not agree. With talk of this it allows me to reflect on my recent conversations with US citizens, many of whom have been affected. With home equity being wiped out and negative equity positions, many Americans are faced with challenging decisions. A short sale stays on your record for 2 years and a foreclosure 5 years in the US. With those decisions in front of you, many are forced to make tough decisions. Could this happen in Canada? In this world anything is possible but how likely is it? Speculation was rampant in the US during the height of the boom, there was an assumption that housing values would keep increasing even though people didn’t qualify.
Ahhhh, there’s a word of importance, qualify. The definition of qualify is: to be or make someone suitable . This is where the U.S. market suffered one of it’s mistakes. How could someone who doesn’t qualify to make payments on a mortgage actually get a mortgage. For those that took advantage of this situation, they were able to buy big homes and other toys while those who knew better sat back and were patient. Those are the Americans now in default and in most cases owing more than their homes are worth.
This is where I find the story turns to humorous. Take a look at this article written by the NY Times where a client applied for a mortgage with Wells Fargo, a lender that used to be in Canada! http://bucks.blogs.nytimes.com/2010/08/23/wells-fargos-odd-mortgage-essay-question/?scp=5&sq=TARA%20SIEGEL%20BERNARD&st=cse The poor couple was treated like 3rd rate citizens and asked to complete an essay in order to obtain a mortgage, even being requested to ask for their “family plans”. Based on the past indescretions of lenders they have swung the pendulum in the other direction to the point of hilarity. Please read this article and let me know what you think.
Back to work, I have an essay to prepare!