Mortgage broker Ron Butler goes off on the concept of “blanket appraisals” in the Canadian mortgage market. Basically, they’re a form of fraud that allows lenders to pretend that mortgages on their balance sheets are worth much more than they actually are.
“…I bought it for a million… My lender says it’s only worth 820 and I don’t know what to do. Oh, don’t worry. Don’t worry. We have this… uh, developer loan bank. Yeah. No, no, we can get it done. Don’t worry…”
Gee. You dont suppose something like this might have been going on with Ontario & Quebec farmland over the past few decades, eh?
Blanket MTG is a mortgage that is secured by several properties, have had them when I owned rentals.
And banks can not legally lend more than can be secured, and only about 75% at that.
Jeet Patel Singh Gill may try bullschitting the banks, and that is a whole different ball of wax.
I bet it was blanket appraisals that did in the Hudson’s Bay Company.
When the appraisal comes in well below the sale price, be concerned.
Guy selling you this now heavily-overpriced condo says, I can find someone who will loan you money so you can pay me off and get me out of this dog of a project, and then you can worry about the fact that you owe this new lender far more than the condo is worth later!
Problem is, the other choice is, walk away from a substantial 20% deposit.
I would suggest to the seller that everyone share – that the price drops in a way to share the pain of stupidity between buyer and builder.
But the builder has his own loans to satisfy . . . .
Ouch.
People are walking away from the deposits, or at least trying to, given the numbers of listings that I’ve seen in the last few weeks.
The only problem is that the listings are still a couple hundred thousand too high.