“These numbers are easy when you are writing on paper, but they are not easy when you have to pay from your pocket.”

Anecdote excerpted from ‘Customer fee to pay out mortgage doubles’, cbc.ca, 22 Mar 2011 [hat-tip vancouvercondo.info] –
“A Vancouver man is speaking out about how Scotiabank charged him $25,000 to pay out his mortgage early — nine months after telling him the fee would be half that much.”
“Mohsen Movahed is an engineer who moved to Canada from Iran in 2006 and landed a job at BC Hydro. The following year, he and his wife bought a condo in North Vancouver with a mortgage of well over $400,000. Then they had a second child, his wife stopped working and he said the payments became unaffordable.”
“My income seems not enough. We have a baby,” said Movahed. “So I thought, I have to do something. Let’s contact the bank and see what I should do.”

[see article for full details regarding the mortgage penalty – in Nov 2010 when he sold his home, he was told the penalty for extracting himself from the fixed-term mortgage would be $34K]
“These numbers are easy when you are writing on the paper, but they are not easy when you have [to] pay from your pocket,” he said “I am financially in trouble. I just want to sell the property.”
“I can’t forget that day,” said Movahed. “Thirty four thousand dollar penalty! One of the guys at the bank said it was the biggest penalty he’d seen for that size of mortgage.”

[As he got closer to the end of the mortgage term, the penalty got bigger!]
“When he spoke to us in July, we would have used the four-year rate because he had about 45 months left on his mortgage. At the end of the year, he had 39 months left, so we apply the three year [lower] posted rate to the calculation,” said Scotiabank spokesperson Ann DeRabbie in an email.
“The three-year rate is lower than the four year rate, so the interest rate differential and the corresponding charge is higher.”

Movahed said he came out of it with less than a quarter of his original down payment. He said he now works at a second job — delivering pizzas — to make up for the money his family lost.
“I just want to let Scotiabank knows that how much that $25,000 is worth to me. I had to deliver pizza to the people — get dollar by dollar — to try to recover that,” said Movahed. “I was really hurt.”

We have seen relatively few of these types of stories thus far, because rising prices have tended to bail people out. Once prices start dropping, these tales of misfortune will become commonplace.
“These numbers are easy when you are writing on paper, but they are not easy when you have to pay from your pocket.”
Exactly, very well put. You can say the same thing about local prices. Impossible for the vast majority of buyers to actually consider earning and saving the purchase price. -vreaa

25 responses to ““These numbers are easy when you are writing on paper, but they are not easy when you have to pay from your pocket.”

  1. From my point of view banks are a huge source of instability in the economic system.

    We really need to get the utility side of banking payments, and money transfers to be totally independent of lending and investing by banks. The banks are already charging so many fees for transactional deposits, bill pay … etc it relay is a shame how the system is currently setup.

    Banks should not be allowed to lend, new lending only institutions should be created those institutions can sell bonds to the public and re-lend the money to make a profit, at least that way one can get better returns from holding cash than you can right now.

    • And how will banks pay interest on that cash you’re expecting to be getting returns on?

      • Here is a more accurate picture of what i am proposing.

        Utility Banking: You can deposit cash with them as much as you want, but they will pay you no interest and will charge you a fee for having an account with them, what you will get will be a debit card, and the ability to transfer money to other people, receive bills electronically, and pay them electronically. On Demand access to cash is the name of the game here no issue with utility bank offering trying to pretend that my money is instantly accessible and them lending out … etc the only form of losses utility banking would experience is fraud an robbery by thieves.

        Now if I want to get a return of my money. I could Google or use yellow pages and find Sweet Home Mortgage Inc. is selling bonds with a return of 4% for 3 years bond and the money will be loaned to Sweet Home Mortgage Inc. customers taking out mortgages. Sweet Home Mortgage Inc. can charge borrowers 5% on the 3 year loan generating enough returns to pay their costs of operating. Of course many mortgage lenders charge you fees to close the transaction anyway, so they can still charge the borrower a few hundred bucks to open the mortgage account. to recover some costs. The difference is that I am buying bonds, no need for the government to offer an implicit guarantee to Sweet Home Mortgage Inc. if they go bust I get a hair cut on my bond or loose my bond. These lenders should work the same way Venture Funds Work, raise a fund o certain amount $ and then invest it then raise another fund $ and invest it … etc Point is that tax payers should have zero risk and zero rewards in this scheme.

        Same thing if the credit card company needs money they can sell short term bonds to the general public.

        Since In this setup payments are very fast to push through the system I should be able to buy and sell these bonds from my Utilitiy bank

        If you wan to invest your money

      • posted too early.

        Since In this setup payments are very fast to push through the system I should be able to buy and sell these bonds from my Utility bank’s website the same way I can buy and sell stocks.

        Checkout out http://www.communitylend.com/ I think this way of separating banking from investing can really make for a much more robust system. The only looserers in this setup i describe are bankers who believe they are doing gods work, top banking execs who think their skill is earning the bank giant profits when they are just taking on excessive risk with my money.

  2. vreaa, you have touched on one amazing part of this bubble – people no longer seem to have any idea of what owing “one million dollars” to the bank means, in the sense of how long it would take to save that money through occupational income even assuming no interest had to be paid on it

    the amounts people are prepared to borrow are astonishing

    • Agree, this is a remarkable effect. The phenomena became apparent as early as 2003; people got blasé about the numbers then and it has steadily worsened since. Speculative/gambler mindset has become ingrained. Need 500K? Obviously you can’t work and save to get that… Borrow and speculate!

  3. Ornamental Tepee Usury

    well you don’t really owe 1 million to the bank!

    after all, real estate always goes up, donchya know

    how long, oh lord, how long?

    before the mighty shit-rain is upon us all

    • It’s already too late, TeePee…

      [WSJ] – Suspected Pollen Fall Stokes Radiation Jitters in Kanto


      [GlobalResearch] – Yellow Rain Falls In Tokyo? Pollen Excuse Exact Same As Chernobyl Yellow Rain Lie


      • And here’s the soundtrack….

        Bob Dylan – A Hard Rain’s A-Gonna Fall


      • [Reuters] – Highly radioactive water leaks from Japanese nuclear plant

        “Highly radioactive water has leaked from a reactor at Japan’s crippled nuclear complex, the plant’s operator said on Monday, while environmental group Greenpeace said it had detected high levels of radiation outside an exclusion zone. Reflecting growing unease about efforts to control the six-reactor Fukushima Daiichi complex, plant operator Tokyo Electric Power Co (TEPCO) had appealed to French companies for help, the Kyodo news agency said.”


      • [Bloomberg] – Hazardous Radiation Detected Outside Damaged Japanese Reactor

        “There’s not much good news right now…” – Gennady Pshakin, former IAEA official based in Obninsk, the site of Russia’s first nuclear power plant… Water in an underground trench outside the No. 2 reactor had levels exceeding 1 sievert an hour, a spokesman for plant operator Tokyo Electric Power Co. told reporters in the capital today. Thirty minutes of exposure to that dose would trigger nausea and four hours might lead to death within two months, according to the U.S. Environmental Protection Agency. ”


      • We used to like semi-downwind from Chernobyl, and we got the yellow puddles too. Back then, they said it was pollen too (it was also spring). Funny, never seen those before, never seen them since. Always been wondering how much radiation we were all exposed to that day.

      • [WeatherOnline] – Potential dispersion of the radioactive cloud over The Northern Hemisphere


        [SanFranStateUni] – ANIMATION: Jet Stream Analyses – Northern Hemisphere


      • [Reuters] – Japan finds plutonium at stricken nuclear plant

        “Plant operator Tokyo Electric Power Co (TEPCO) said the radioactive material, which is used in nuclear bombs, was traced in soil at five locations at the complex… but stressed the traces of plutonium 238, 239 and 240 were ‘not dangerous’… [note from Nemesis – next is my ‘favourite’ quote from the ‘DamageControl’ spin doctors]: TEPCO said it was unclear where the plutonium was from”…


        Must have been the PlutoniumFairy (vs. the spent MOX bundles stored in Reactor 3/which as you may all recall, went ‘KaBLOOWIE!’).

      • Spotted this on the weekend… and couldn’t resist sharing here/now… 😉


      • Ok. It is now, officially [albeit TEPCO President Masataka Shimizu has yet deigned to personally inform Katagi at large of this new ‘trifle’], GODZILLA time [and I swear, you just can’t ‘write this shit’ – TeePee, remind me sometime to tell you what Harrison said to George on the set of StarWars].

        [UK Guardian] – Japan nuclear plant gets help from US robots – Obama administration sends shipment of robots to help regain control over stricken Fukushima nuclear plant

        “Doubts over the future of Tepco, the largest power company in Asia, has coincided with anger towards its president, Masataka Shimizu, who has not been seen in public for several days… “Our preparedness was not sufficient,” government spokesman Yukio Edano said. He said that when the current crisis was over they would examine the accident closely and thoroughly review safety standards… In addition to the robots, which will be accompanied by trainers to instruct Japanese workers in their operation, the department of energy earlier sent nearly 40 people and almost 8 tonnes of equipment, including devices that measure radiation from aircraft. Lyons said US flights were only going within 2.5 miles of the plant, because of the elevated radiation levels.”…


        and it gets ‘better’….

        [UK Guardian] – Japan may have lost race to save nuclear reactor – Fukushima meltdown fears rise after radioactive core melts through vessel – but ‘no danger of Chernobyl-style catastrophe’

        “The radioactive core in a reactor at the crippled Fukushima nuclear power plant appears to have melted through the bottom of its containment vessel and on to a concrete floor, experts say, raising fears of a major release of radiation at the site.”…


        Put’s a whole new ‘spin’ on HotAsianMoney, don’t it?…

      • In view of the preceding, some useful references for VREAA’s audience:

        [WikiPedia] – Dose Examples


        [RadiologyInfo.Org] – Naturally-occurring “background” radiation exposure


      • In view of the preceding, the following references are provided for those who, unlike ‘Nemesis’, haven’t benefited from a comprehensive programme at NBCD School or otherwise enjoyed the hospitality of Aldermaston/AWE:

        [WikiPedia] – Dose Examples


      • [RadiologyInfo.Org] – Naturally-occurring “background” radiation exposure


      • Flogging a Dead Horse

        when i saw the hydrogen explosions rock the buildings at Fukushima I knew right then this was entropy in action and no stopping it.

        i really enjoy Adam Curtis’ documentaries and this is a great clip from an episode called “A for Atom” from the series “Pandora’s Box” – all about technocratic dreams becoming human nightmares. the end quote is fantastic – “we must protect technology from humanity.”

        why.. on earth.. did anyone think it was a smart idea to build a nuclear reactor on the shoreline? if these things are so safe why not build them in the middle of tokyo? put your money where your mouth is, GE..

        how many more black swans can we handle?

      • and this one…

        [RadiologyInfo.Org] – Naturally-occurring “background” radiation exposure


      • “why.. on earth.. did anyone think it was a smart idea to build a nuclear reactor on the shoreline?”…

        Because, FloggingDeadHorseTeePeeRestaurants, deep down and ‘caeteris paribus’ – homo sapiens’ genome hasn’t evolved much past this…


        PS – other useful, baseline, radiological reference….

        [RadiologyInfo.Org] – Naturally-occurring “background” radiation exposure


    • “why.. on earth.. did anyone think it was a smart idea to build a nuclear reactor on the shoreline?”…

      Because, FloggingDeadHorseTeePeeRestaurants, deep down and ‘caeteris paribus’ – homo sapiens’ genome hasn’t evolved much past this…


  4. “Now I am become Death, the destroyer of worlds.” – J. Robert Oppenheimer..


    PS – Been there. Spooky, but the trinitites are pretty.

  5. Yes, you heard/saw it first here @ VREAA. Fukushima GODZILLA sighting confirmed….


    And today’s last, and just in time for ‘TombSweepingHoliday’!… a little Zen from China…

    [ChinaDaily] – Public asked to report [earthquake] omens

    “SHANGHAI – The government of East China’s Jiangsu province is encouraging residents to report abnormal natural phenomena or abnormal animal behavior, either of which may be an omen signaling that an earthquake is imminent, according to a draft rule issued by the government. “…


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