These responses came to a vreaa request at RE Talks (22 Dec 2009 10:32 am) for stories about Pre-2000 owners who have borrowed more against their holdings as prices rose.-
Danigirl 22Dec 2009 12:36 pm – “I knew one person (closely) who increased his mortage every time he re-mortgaged, for at least 2 go-arounds I am aware of. I believe he even broke the mortgage once in 2005 or 6 under the guise of “getting a better rate” and “just happened to consolidate” some debts into the mortgage at the same time. My best guess, he was going backwards close to 20K a year for at least 5 years, and figured that’d all be fine because he bought his house 20 years ago and, it covered the debt. On paper it did, but, he was mining his equity out far, far faster than it was re-growing.”
underdog 22 Dec 2009 12:54 pm – “I have a neighbour whose rental in Surrey was discovered being used for a grow-op about 18 months ago. They went to the ‘RE-atm’ to do repairs, but only spent half the money on fixing up the house. Since the husband was laid off from the construction industry, the rest was used to ‘supplement’ income. Talking with the tenant, the house was ‘assessed’ again 7 months ago and another equity withdrawal was made, ostensively to do more repairs on the garage/deck. The repairs they did were laughable (not hard to see why the husband is still out of work if his trade is construction) and everything done on the cheap. The tenant says the landlord was going on about how times are ‘tough’ with the husband out of work. Three weeks ago the tenant was advised they wanted to set up another assessment for another ‘withdrawal’ on equity. Landlord is hoping home values (withdrawal limits) have gone up. My understanding is they bought the place for $200,000 and comparable homes in the area are now selling for $475,000. Tenant says landlord seems to think bank should be appraising at $500,000 – $520,000, so I suspect they have maxed the home atm to the $475,000 amount – at the very least. Tenant also commented that landlord was convinced that rates would not be going up for a very long time. I’m willing to bet they are the equivalent of a 0/35 borrower right now.”
canadian 22 Dec 2009 2:44 pm - “I know this family, bought a mega-mansion and a rancher since husband is in mortgage industry and seems to making a huge moolah. Moved to mega mansion and rented both rancher and their old house. Come on, who sells real estate in lower mainland? It only goes up! They saw me as some kinda alien with 3 horns and 1 eye when I spoke my mind out about why I am not buying. Just a year ago – the hubby had a constipated look on his face – as everything was not going as per his plans. Now it seems that the valve down there has been opened good by Carney-Flaherty-CMHC trio, so he is back to his standard rumblings about how [price drops] would never happen here. He gave me that “35% drop? are you crazy” look. “
