Jayco49 at VREAA 17 May 2011 11:15am – “I know a girl first hand and I obviously don’t know precise numbers, but pretty darn close…She owns a 2 bedroom condo in Surrey (35 year mortgage and can’t sell for less than 380k to break even). The current renter only covers roughly 75% of her carrying costs for the place…she subsidizes the rest and she technically doesn’t have strata clearance to have renters and can’t currently get that clearance. Also, last summer she bought a new house in Surrey with carriage house over garage (35 year mortgage). She faked a car loan (worked in the car sales business for shady car dealer) to borrow 50k to come up with the down payment for Surrey home ($498,000 was purchase price) and never used that money to buy a car. She has a car payment (on top of her faked car payment), a motorcycle payment, has borrowed 10k from old employer to cover mortgage payments a few times and just got an home equity loan for 20k to pay off credit card (10k plus) and finish a kitchen downstairs so she can suite the basement…problem is she has less than 5k left on loan and hasn’t even started kitchen install..she’s now afraid she’s out of money to finish the job. She rents out carriage house, and has two roomates helping her with mortgage. She is sinking deeper and deeper in debt and it’s only a matter for time before her access to credit dries up and looses it all, but here’s the kicker…she is currently working for 38k a year plus commissions which bring her to 50k max if she’s lucky AND she was looking for friends who might be interested in going in with her on buying a 3rd house!!! She’s so f*****d and doesn’t even recognize it yet. I don’t understand how someone can borrow so much while earning so little…she’s close to 900k in debt and thinks she is getting rich!!”
For update, see here.
It’s called fraud… Just wait until the finance company tries to repo a car which doesn’t exist…
Yeah, they’re not going to be too happy with that one.
It’s more common than you think.
Good thing Canada doesn’t have sub-prime lending problem.
it’s fun to watch the light bulb go on for your thinking friends when you suggest the similarities between sub-prime loans in the states and 0/40 mortgages in canada.
i converted a close friend who is a well paid professional and is less than pleased that his hard earned decent income is just keeping him in the same basement he was in while he went to school. the next week the G&M article got released and he thinks i’m a goddamn genius.. the moar you know..
“Yeah, they’re not going to be too happy with that one”
What, you mean they actually didn’t third-party verify the purchase? Culpability must extend to the lender — they should know and thus accept the risks of streamlining back office duties. Lenders have done the maths and determined it’s cheaper to accept the fallout of fraud than doing proper due diligence to prevent it.
My recommendation is not to feel too much empathy for the “angry” lender.
Agreed. They should do their due diligence. Sadly, the brokers have been paid their commissions already and the lender, if it’s a bank, has nothing to lose anyway. Taxpayers will pay the bill.
PS: The borrower in this case is still a fraudster.
lol and the broker has already bought his new 335i and an 8 ball
“the lender, if it’s a bank, has nothing to lose anyway”
If it’s not an insured loan they do have some potential loss, mostly from the holding costs to when a property is liquidated, that cannot be fully recouped. How do we know? BMO is suing a ring of mortgage fraudsters who figured out how to, among illegal things, game computer-automated appraisal algorithms (which BTW is not illegal). It appears the loss provisions budgeted into that process optimization were underestimated a tad. If BMO could have recouped its obligation through the normal foreclosure process there would be little reason to sue. In fact it may have been going on for dog’s years and only recently did BMO actually incur a fungible loss.
True. But in a broader sense, they still have nothing to lose. There is always the lender of last resort or the option of an emergency bailout.
Sadly, for someone in her position (low income and not much assets)….taking the big risk actually is the correct action.
She’s got nothing to lose anyways….
I think because she forged papers / lied that would be considered fraud and get her in trouble. Also even if one makes very little money going bankrupt is not a good for you as it has very negative consequences and really should not be done.
What negative consequences? Trying to live in Vancouver on a sub-professional salary has some very negative consequences.
I’m agreeing with 604serf, she doesn’t have that much to lose.
(That’s based on the brief description. If she’s hit with fraud, that’s different, but I’m not sure she would be.)
“it’s only a matter for time before her access to credit dries up”
and that’s why she’s “looking for friends who might be interested in going in with her on buying a 3rd house”
heresay (d): unverified, unofficial information gained or acquired from another and not part of one’s direct knowledge.
EVERYTHING here is ‘unverified, and unofficial’, including my opinions and your opinions.
Get over it; it’s the nature of the ‘net, it’s the nature of anecdote.
Is it perfect? No.
Is it still useful; does it contain some truth? Probably.
If you’re looking for certainty, this ain’t the place to find it.
he finds certainty in the safety of his dogma
Hey, I have something for the BestPlaceOnEarthers and for the HAMsters:
Was chatting to an A with HM (unfortunately not a HA with M… though that may be a good thing after all since I am no longer single) and she told me that her HAM friend came here, bought the usual SFH, stayed for a year with her child before selling up and moving back to China. The reason?
Wait for it…
She cannot stand a place where “for almost half year raining.”
???? This was not. supposed. to. happen. It must be a malfunction. Bulls who are experiencing trouble breathing and chest pains repeat the following mantra until you feel better: “HAM loves Vancouver. All HAM wants to live here. This is the best place on earth. Everyone wants to live here.” etc. etc. ad nauseam.
don’t forget,
this is the same place where “for almost half year work pay tax”
they don’t like that, either
i say, bring on the rain and the snow, the high interest and higher taxes
f em all
we should rename BC to “the best place on earth.. if you ski”
Well we cannot fault her for getting it right: Vancouver rains for almost half the year (but not more than half the year according to meteorological data). I expect abject boredom is also high on her list of complaints. Vancouver’s smattering of A malls typically close at 7, where as a comparison they’re often open to midnight back in A. Speaking from experience, the evening life (from 6-midnight) in A is superior to Vancouver’s for 10 months of the year.
i lived above a KTV for a while
i have a serious aversion to mando-pop now. and those awful ballads.. as contrived as nickleback.
Add to the falling rain ‘Falling prices’, and we’ll see how unattractive Vancouver RE suddenly becomes to many players.
It’s funny (or not), but I know several people (clients, family and friends) who are all in the same position: very shortly, the credit is about to dry up. A relative of mine recently admitted that due to her husband’s reckless condo buying, all their credit cards are maxed out, their line of credit has a couple thousand left, they’re thinking of cashing in their RRSPs etc. But the fact is, I’m hearing these stories from several people all at the same time-credit’s running out and they don’t have many options. I seriously think that there is going to be a huge spike in bankruptcies in the coming 2 years. People have run out of credit. The party is (just about) over. Two years ago, people were practically partying in the streets because we had “avoided the recession”-and to celebrate they ran out and bought a bunch of stuff (with cheap credit). Now everyone is crying into their beers (in some cases, literally). This will be sad.
With QE2 drawing to a close, it looks like it is more than just individuals who may be running out of easy money.
Lots of talk on the wires of risk asset peaks in the summer or already having peaked out.
Marc Faber said we’ll see QE18, so don’t worry
I’d loan you some money vreaa, but you won’t like my rates. My credit is easy, my rates are harsh
what’s that quote, life is a tragedy to all but the thinking few, for whom it’s a comedy?
in re: to credit drying up – due to being persona non grata and not qualifying for any benefits after being laid off, i racked my credit after i drained my savings – i should have gone hat in hand to the family before i used the cheap credit.
sure enough, i’ve been spottily employed since and have missed or been late on a payment here and there, NSF’d my account on scheduled withdrawls a couple of times – all this after going in and speaking with my bank manager (i suppose the average east van bank manager is not going to be sympathetic to a late 20s white guy – after all, we’re all crack heads, right?)
anyways, credit for me dried up about a year ago, after that last ditch effort to stay employed in richmond by keeping my car on the road by passing aircare with a new $600 exhaust that had to be purchased on my visa – this is before i broke two teeth eating a burrito from Red Burrito (no joke, burned chicken) and need 5k in dental work – i knew it was a matter of time before the true credit-whores started to wobble.
vancouver, you are truly the best place on earth (as long as you aren’t trying to make an honest living)
When I read about these people maxed out, at the end of the rope, I ask “why don’t they unload one or more of the properties?”
The answer I come to is that they would have to sell at a loss. So if the the market is still so great, going up 10% a year, why are so many of these units already money losers?
http://www.bbc.co.uk/news/business-13451057
they didn’t get the memo
linkedin is the new Vancouver RE/Nortel/Bre-X/Tulip mania
But the general mood is still optimistic: The rain finally stopped. And Canucks are doing great! And the mortgage rate is only 2.1%
Sadly – I know more than a few people that sneer at me and tell me I am an idiot to rent – while they are two mortgages deep in some leaky piece of crap, PLUS -they have car leases, and credit cards maxed.
They think they are rich.
I think they are in for a force majeur and they will be wiped out – and yet, from them it’s = “I’m alright Jack”.
Vancouver’s all about image… People in my office keep asking me why I don’t buy a new car… I tell them it works fine (other than occasional issues), but really I feel like saying “Why should I? To impress shallow people like you?”
i rock a beautiful classic honda and am constantly the receiver of terrible looks, even though i love the car and it’s been reliable over the years.
but it might not be because of my 2k grocery getter and more to do with the fact that i’m driving the speed limit..
intentionally – great fun – it’s passive aggressive road rage.
Even worse, I don’t own a car and I don’t want one. Being european myself, I’m used to take public transit. I chose to live in downtown (and pay a premium rental unit), use public transit everyday, and rent a nice car when I need to.
It makes total financial sense to do so, and I always find funny to look at people’s reaction here when I tell them so. It looks like I have a bad disease
I agree that Vancouver is a lot about image, BS and “shallowness”…
Just laugh and say, “only those stupid Yanks would sink investable money into a rapidly depreciating asset, right??”
Then enjoy their faces.
@El Magnifico – I’m a member of the Car Co-op, and if you’re just an occasional driver, it’s a great deal & good service, and unlike Zipcar, you can get pickups/vans/and some of their more specialty cars all for the same $. Anyway, it’s a recommend.
Hey Rusty…it’s 100% true. My ex-girlfriend is one of the renters in the Surrey home…nothing is exaggerated. What’s scary about this story is how easy it was for her to borrow so much!
I take your statement at your word jayco49. But this is not the norm as a lot of posters here would wish.
everyone, everyone
RUSTY HAS SPOKEN
Rusty -> Nobody is suggesting that it is ‘the norm’. It only has to represent a very small percentage of owners for it to have a big effect, once the market turns.
Prices are set at the margin.
What percentage of all properties have to come onto the market at the same time for the market to outright crash? 3%? 4%? 6%?
What percentage of properties in Vancouver at present are in ‘weak hands’?
I thought I might requote poster “AG Sage” over at vancouvercondo.info. This is not an anecdote but fits well with the (good) comments here.
“These I didn’t buy whiners boggle my mind.
Come on, you saved $1500 a month in rent over buying, another $1000 easily in upkeep, toss in a few hundred more on taxes and insurance and furniture. After 5 years of saving that instead of buying you are now sitting on $175,000 in cash, easily.
Oh, you didn’t save 175k instead? Then you couldn’t afford the house.”
Word.
Hm. Caught me in a sour mood. Too much work pressure.
(And as soon as this glass of wine is gone, I’m back to it. Can’t exactly say no to money at this time.)
70% ownership rates in Canada? How does that factor owners who own multiple properties? Is there a statistic out there that lists total number of housing units? We could look at non-rental housing units/resident housholds (discounting non-resident owners) to develop a much more telling figure. Or something like that…
I suppose I sound like a dick but I’m so glad I did the responsible thing and left Vancouver. Since I left I’ve paid off almost $20K in loans, my financial situation is stabilizing and my career has taken off. I just had an interview for a senior consultant position last week, and next week I’m doing another for a senior project manager position. Each person’s experiences in each city are different, but my choice to leave vancouver has paid off handsomely.
Canada has subprime
http://www.canadianmortgageprofessional.com/news/subprime-competition-heats-up-among-lenders/106731
http://www.canadianmortgageprofessional.com/news/breaking-news/high-flying-stock-market-sends-business-to-brokers/106734
As the years went by we drifted apart…
seattlebubble (or lack thereof): http://seattlebubble.com/blog/2011/05/19/whats-the-bright-spot-in-todays-market/
“there’s a shift in sentiment away from viewing home ownership as an investment and to seeing it as a consumption good.”
“first-time home buyers … are able to buy homes at a much better price than was possible during the boom”
It’s not like she was going to make any money saving up and buying balanced mutual funds.
Being not-rich isn’t an option nowdays.
sure it is, it’s just an unhealthy, lonely and miserable one that shortens your lifespan significantly and destroys your ability to enjoy your existence.
Heh.
The thing is, growing up my parents really didn’t have much money. We were not rich by anyone’s standard, but we weren’t in any sort of pain. We didn’t live in a slum. We could get the basics with little money. Today, a friend looking for shared accomodation reports that at $800 the rooms start to get less scary.
It seems like there’s so much stuff that everyone just needs now. And that includes me for most things. I mean, I look at the shit I baught and wonder, why did I think I needed this?
I think I hang around VREAA to make sure I don’t slip one day and accidently buy a condo. Condos are really the ultimate in useless money pit people just have to buy.
Taking big swings with the debt bat. If she were in a third world country that’s one bad flu away from death if she misses. But in BC it’s play time? Sorry if I disagree this is some sort of class-based tragedy.
our civilization keeps and sustains people that really for all intents and purposes would be long gone due to their own stupidity.