She Never Missed A Mortgage Payment & Still Might Lose Her House!

She Never Missed A Mortgage Payment & Still Might Lose Her House!  How can that happen in Canada you ask? Well, it could happen to as many as 30,000 homeowners in Canada over the next 3 years.Many Canadians are being abandoned by some alternate lenders that have stopped lending to customers,who, because of poor credit scores, lower-paying jobs or minimal equity in their house or condo and couldn't obtain financing from some of our traditional lenders such as our Big 5 banks etc.

Senior goverment officials and executives of these alternate lenders agree that those who have dutifully paid their mortgage bills are being unfairly stranded!

These 'orphaned mortgages' are held by customers with impeccable payment histories. But they can't be renewed because the credit crunch has shut off the funding network of non-bank lenders. The alternate lenders say they cannot renew the 'orphaned mortgages' because the once thriving securitzation market that attracted investors to these risky and lucrative mortgages collapsed in the wake of the U.S. subprime mortgage crisis.

This can all be traced back to about 5 years ago when an assortment of "non-conforming" or subprime mortgage lenders launched operations in the housing and lending heyday.

Because many of those companies were not federally regulated, unlike a bank, they aren't required to insure mortgages when the down payment is less than 20% of the value of the home. Also, unlike banks, they loaned to people with no money down! The house or condo owner obviously paid a higher interest rate and paid extra fees to obtain those mortgages.

So now, with the alternate lenders closing up shop or as some are doing, hiding their head or their other brain in the sand, homeowners who paid their mortgages on time cannot renew.

As a real estate broker and owner it saddens me to see this occurring and it will increase over the next 3 years. Already I have been asked to list houses & condos because these honest hardworking people cannot renew their mortgages. If they do not list they face foreclosure or power of sale.

If you have an alternate lenders' mortgage, start planning now. Perhaps a second income, more savings or cleaning up your credit history may prevent you from losing your home. At least, talk to an expert with your interests in mind for the correct advice.