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BC Public Inquiry into Money laundering

BC Public Inquiry into Money laundering

Old May 31st 2019, 5:26 pm
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Default Re: BC Public Inquiry into Money laundering

Originally Posted by dbd33
What about the people who, when the price falls, are no longer eligible for the mortgage they have?
Eligibility for a mortgage is never reassessed, you are eligible at the start and that's it. ….. Or you saying that negative equity will mean you cannot move? That is true for a small percentage of people, but only those who bought near the top of the market, perhaps overstretching themselves, but that wouldn't likely apply to anyone who has owned their home for long before the market peaked, say 8-10 years, especially because during those 1- years they will also have been paying down the principal on their mortgage.
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Old May 31st 2019, 5:42 pm
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Default Re: BC Public Inquiry into Money laundering

Originally Posted by Pulaski
Eligibility for a mortgage is never reassessed, you are eligible at the start and that's it. ….. Or you saying that negative equity will mean you cannot move?
I believe it's reassessed at renewal. I'm saying that negative equity would lead to people walking away, as they do in Alberta when the boom-bust cycle is in a bust phase. I'm suggesting that the impact of removing the proceeds of crime from the market would affect many people, through the house price collapse, and, for that reason, it's neither desirable nor likely to happen. House prices have to fall by something like two thirds before reflecting the purchasing power of workers in Vancouver, it's not a minor correction.
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Old May 31st 2019, 5:54 pm
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Default Re: BC Public Inquiry into Money laundering

Originally Posted by dbd33
I believe it's reassessed at renewal. …
What do you mean by "renewal"? The ability of borrowers to afford mortgages in the UK and US is assessed at the start, and unless you stop paying there is never any sort of "reassessment", you just keep paying until the whole balance is paid off. It is different in Canada? Can you be foreclosed on even if you keep making payments but wouldn't qualify if it was a new mortgage?

... I'm suggesting that the impact of removing the proceeds of crime from the market would affect many people, through the house price collapse, and, for that reason, it's neither desirable nor likely to happen. …...
And I'm disagreeing. There would be some losers and a some short term pain, but many more winners, especially if it returned property prices to more affordable levels. And therefore I think it is likely.
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Old May 31st 2019, 6:06 pm
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Default Re: BC Public Inquiry into Money laundering

Originally Posted by Pulaski
What do you mean by "renewal"? The ability of borrowers to afford mortgages in the UK and US is assessed at the start, and unless you stop paying there is never any sort of "reassessment", you just keep paying until the whole balance is paid off. It is different in Canada? Can you be foreclosed on even if you keep making payments but wouldn't qualify if it was a new mortgage? .
The mortgage amortization period is decades but the term of the mortgage is years. Each time the term expires the holder has to trek back to the bank with proof of income (at least I did). I assume, but do not know, that the bank could refuse to renew.

Originally Posted by Pulaski
And I'm disagreeing. There would be some losers and a some short term pain, but many more winners, especially if it returned property prices to more affordable levels. And therefore I think it is likely.
Well, we shall have to wait and see.
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Old May 31st 2019, 6:14 pm
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Default Re: BC Public Inquiry into Money laundering

Originally Posted by dbd33
The mortgage amortization period is decades but the term of the mortgage is years. Each time the term expires the holder has to trek back to the bank with proof of income (at least I did). I assume, but do not know, that the bank could refuse to renew. ....
So different from "mortgages" in the US and UK. What you have described is like a secured bank loan in the US - the loan is renewed every five years, though the amortization may be 10-30 years, but the review is pretty cursory AFACT, so things would have to be pretty bad for a rollover into a new five year term to not be rubber stamped.
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Old May 31st 2019, 7:56 pm
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Default Re: BC Public Inquiry into Money laundering

Originally Posted by dbd33
My view is that the Vancouver economy is based on money laundering, eliminate it and house prices will fall across the board, those who have borrowed heavily to buy houses, or flats, will be in deep trouble. One might argue that a new wave of house purchasers will benefit but it's the existing householders who vote.
Not the case according to this article: https://biv.com/article/2019/05/money-launderers-latest-bogeyman-blame

The money launderers are an even more elusive target, primarily because it is not against the law in B.C., at least not yet, to pay cash for something.

The recent government-ordered report on money laundering in B.C. real estate was vague to the point of nonsense. It could be worth $800 million. It could be $5 billion. Whatever, who knows? The report also stated that Manitoba and Saskatchewan have more money laundering in real estate than B.C., which gives an idea of how much faith we should put in its findings.

Now the provincial government has ordered an expensive Commission of Inquiry into Money Laundering in B.C., which won’t report back until May 2021.

Last edited by CanadaJimmy; May 31st 2019 at 8:05 pm.
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Old May 31st 2019, 8:23 pm
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Default Re: BC Public Inquiry into Money laundering

Originally Posted by dbd33
I believe it's reassessed at renewal. I'm saying that negative equity would lead to people walking away, as they do in Alberta when the boom-bust cycle is in a bust phase. I'm suggesting that the impact of removing the proceeds of crime from the market would affect many people, through the house price collapse, and, for that reason, it's neither desirable nor likely to happen. House prices have to fall by something like two thirds before reflecting the purchasing power of workers in Vancouver, it's not a minor correction.
When Trudeau senior was the leader of this country and implemented the NEP, I heard of some that gave their keys back as a result of the downtown, but to suggest that this happened/s regularly in Alberta is not correct.
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Old May 31st 2019, 8:25 pm
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Default Re: BC Public Inquiry into Money laundering

Originally Posted by dbd33
The mortgage amortization period is decades but the term of the mortgage is years. Each time the term expires the holder has to trek back to the bank with proof of income (at least I did). I assume, but do not know, that the bank could refuse to renew.
I have never heard of this happening in Alberta, so maybe it is an Ontario thing.
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Old Jun 1st 2019, 1:00 am
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Default Re: BC Public Inquiry into Money laundering

Originally Posted by CanadaJimmy
Well, it's an opinion. Not, in my view, a well argued opinion but it's from a Canadian paper. If BC residents, residents of a low wage economy, pushed the price of houses into the stratosphere; where did they get the money?
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Old Jun 1st 2019, 1:02 am
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Default Re: BC Public Inquiry into Money laundering

Originally Posted by Almost Canadian
I have never heard of this happening in Alberta, so maybe it is an Ontario thing.
Maybe, It's common, perhaps even usual, here to move the mortgage between carriers at each renewal. Obviously that requires documentation.
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Old Jun 2nd 2019, 2:24 pm
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Default Re: BC Public Inquiry into Money laundering

Originally Posted by dbd33
Maybe, It's common, perhaps even usual, here to move the mortgage between carriers at each renewal. Obviously that requires documentation.
OK. I accept that as that would be required here too, although I wouldn't call that a renewal. I would call that a new mortgage.
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Old Jun 2nd 2019, 2:36 pm
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Default Re: BC Public Inquiry into Money laundering

According to Wikipedia: "The most common mortgage in Canada is the five-year fixed-rate closed mortgage, as opposed to the U.S. where the most common type is the 30-year fixed-rate open mortgage. ...."

​​I haven't (yet) found out exactly how Canadian mortgages work, especially after the first five years, but I guess that for most people it is just allowed to rollover into a new five year term at a new fixed rate at the same bank.
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Old Jun 3rd 2019, 12:29 am
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Default Re: BC Public Inquiry into Money laundering

Originally Posted by Pulaski

​​I haven't (yet) found out exactly how Canadian mortgages work, especially after the first five years, but I guess that for most people it is just allowed to rollover into a new five year term at a new fixed rate at the same bank.
If the mortgagee does nothing, that's what happens. I assume that people who are in regular paid employment need do nothing at all. I had to trudge into the bank and demonstrate that I was the same risk as before. Other options are to switch to a variable rate, over a term that can be chosen, or to move to another institution at a different fixed rate; banks compete and will offer an incentive to switch though it's usually no more valuable than a MAGA hat Variable rate mortgages typically come with the option to switch to a fixed rate mid-term and, I suppose, are a good bet for people who pay attention. There's also the VTB mortgage whereby the person selling a house agrees to take payments in installments at a rate better than an investment pays and less than the bank charges; at one point I paid a VTB mortgage at 18%.
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Old Jun 3rd 2019, 11:29 pm
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Default Re: BC Public Inquiry into Money laundering

Originally Posted by Pulaski
According to Wikipedia: "The most common mortgage in Canada is the five-year fixed-rate closed mortgage, as opposed to the U.S. where the most common type is the 30-year fixed-rate open mortgage. ...."

​​I haven't (yet) found out exactly how Canadian mortgages work, especially after the first five years, but I guess that for most people it is just allowed to rollover into a new five year term at a new fixed rate at the same bank.
Typically, 3 months or so before the renewal date, your bank will contact you to come in and discuss options. What you elect to do is up to you. Some, such as Dbd33, shop around to see if they can get an even better deal from another lender. The issue with this is that one has to requalify again. Generally, staying with the same lender doesn't require a new requalification, even if one is switching from a variable rate, to a fixed rate, or vice versa. Invariably, the amortization period is 25 years with any number of renewals occurring during those years. Typically, if one does nothing to renew, you are placed onto a one year fixed rate at a rate that can be double or more your current rate.
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