TIME TO PAY THE PIPER

by Darrin DeRoches December 10 -16, 2009

Three years ago you bought a home with no money down. You have paid all of your payments on time, and your renewal is coming due. You start to think you can renew at a lower rate save a little money and move forward. It usually works that way but your mortgage company has stopped lending money or they have left the mortgage business for good, so instead of getting a renewal notice, thousands of homeowners are starting to receive foreclosure notices. Foreclosures are a dirty way of ending a mortgage agreement. They are basically kicking you out of your home and taking possession of the property. You get nothing, nadda – squat! Remember you made all your payments and the company has made a lot of money, but now they are kicking you out. Sounds unbelievable, but believe it! The companies who are doing this are now asking the government to step in with $1 billion to help bail out the homeowners. They have decided to get out of the mortgage business and want the government to bail them out. The homeowners have not defaulted on the payments; the companies have made millions in creating these sub prime mortgages, but they are looking to foreclose on the homeowners and make even more money – so let’s bail them out. The government did not even insure these properties, but everyone is now looking to them to bail them out. So who do you blame? The mortgage company, the homeowner, the mortgage broker, the government, who? All of them. The mortgage company lent the money at double the rate, up to 104 per cent of the value, made thousands and thousand of dollars and is now trying to foreclose and squeeze what is left out of the property. The homeowner paid all of their payments, but they did not put any money down, they have no equity in their property and they signed an agreement to pay a mortgage which is valued higher than the property. The mortgage broker allowed the owner to do a terrible deal, and no ifs, ands or buts, they screwed their clients. They should have signed a shorter deal to get in the home save a downpayment and refinance into a proper mortgage or had a five year deal which would allow for some equity to be built up so they can refinance the property. The brokers screwed their clients. The government is the governing body who allowed these transaction to take place. They were aware of these sub prime mortgages and they could have made changes and laws to disallow these bad deals. The government should have never allowed the “no money down mortgage” and they should give a renewal mortgage to allow the homeowner a chance to build equity in their home and continue making the banks money; if they screw up, then “power of sale” the property and let the homeowner walk away with something. The homeowner has paid for three years and proved they deserve to own a home, so give them a chance to build equity and remove any risk! Investing $1 billion to continue these mortgages will make the government money and more important save these homeowners’ homes! V [DARRIN DEROCHES] Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca.