This from oneangryslav2 at vancouvercondo.info 18 Nov 2009 11:42 am -
“Please let us in on the secret. How is it that people can afford million dollar homes? I still don’t get it. I’m single and have a salary that is in the high five-figures, which puts me up in the top 20% of households in Vancouver, yet I can’t afford to purchase a SFH in East Vancouver.”
They’re called “stated income” loans, that’s where the banker hands you a slip of paper and says, “Do you want to put down any income from other sources?” and you say, “Yes, actually, Janitor is just my day job, I actually am doing extremely well on stocks and I made 250k total last year.” The banker with a very solemn face, looks you in the eye and says, “That’s great, let’s file this and get you into your new home!”
Drachen, thanks for the comment.
Do you have any idea of how prevalent such loans would be in Vancouver? It has been claimed that, even though CMHC is backing low-deposit mortgages, the banks/lenders are still doing their own due diligence. Do we have any evidence that “stated-income” loans are happening here?
The problem in this case really is CHMC, they rely on what the banks tell them about the loan and then assume all responsibilities.
So why would the banker NOT “goose” the loan application? He gets the money (from CHMC) and a commission.
A few years back a guy I knew did exactly the same thing to get a car, the guy in the dealership was just too happy to help him fill out the forms “correctly”.
As for affording? Not in Vancouver, not as “buying to live in” and much less as an investment (read rental) property. I have gone over the math a few times in the last few years and I couldn’t make back in rent what it would cost me to buy and maintain a condo in this town, I didn’t even bother looking at houses.