Photos from Brian Brady- America's VA Home Loan Broker
Shamu jumps for the sky © Brian Brady More from the world famous killer whale show at Sea World San DiegoLocated in: San Diego, CA
Yesterday, I wrote about the possibility of a Canadian mortgage crisis akin to the American mortgage crisis. It would have been less controversial to side with the CBC decision to cancel its renewal of "Hockey Night In Canada" theme song. To my brothers and sisters in The Great North: It was a warning, not a criticism.
I'm not alone in my warning. Here are some articles offering caution:
The Canada Mortgage and Housing Corporation (CMHC) warns of slowed housing starts:
"Strong economic fundamentals such as continuing high employment levels, rising incomes and low mortgage rates will provide a solid foundation for healthy housing markets this year," said Bob Dugan, Chief Economist for CMHC. "Most of the pent-up demand that built up during the 1990s has now been fulfilled and residential construction activity will gradually move in line with Canadian demographic fundamentals. These factors will continue to exert downward pressure on housing starts, which will decline to 199,900 units in 2009."
Michael Shapcott at the Wellesley Institute notes the housing affordability problem in Canada:
The housing affordability gap the difference between actual incomes and the incomes required to afford a private rental unit is growing. And, as the affordability gap grows, renter households have less money to pay for other necessities such as energy, food, medicine, transportation and clothing.
Mark Argentino from the Mississauga Real Estate Blog, reported that the CMHC expects demand for housing to put downward pressure on prices.
Garth Turner documents the decreased housing resale volume and excessive leverage carried by Canadian homeowners on Greater Fool.
HouseHuntVictoria pleads with the CMHC to boost reserves for impending foreclosures:
One fact remains undeniable: never before has the Canadian taxpayer been more exposed to private lending practices than it is today. And as the real estate market winds down and inevitably contracts from its unprecedented expansion, Canadian taxpayers may well end up "insuring" the bad lending practices of banks, private mortgage lenders, the speculative buying activities of would-be real estate investors and the poor insurance decisions of CMHC who agreed to back them.
Does any of this sound like America in 2005? This is a warning Canadian investors not a prophecy. If you're heavily invested in Canadian real estate, it may make sense to diversify and take advantage of the currency disparity by investing in an already decreased asset.
Many San Diego homeowners are facing the prospect of foreclosure. That doesn't have to happen if you have plenty of equity in your home. Rising food and fuel prices, combined with a tightening credit environment left San Diego homeowners with few options when trouble came knocking at their door. The implosion of most sub-prime lenders pulled the rug out from under those folks who suffered "life events".
The three D's: death, disability, and divorce are the major contributors to foreclosure. While the press reports that foreclosures in San Diego are rising because of ARM adjustments, we know that the three D's are far more severe to a famiiy's financial well-being than a higher mortgage payment.
Help is available to San Diego homeowners with a substantial equity position. The "new sup-prime mortgages" aren't new; they've been available in California for decades; private mortgage lenders. Private mortgage lenders are wealthy individuals or pension funds that understand San Diego real estate. They realize that housing prices won't free-fall forever. Most private mortgage lenders are willing to lend up to 70% of your home's value...
REGARDLESS OF YOUR CREDIT HISTORY
Have you received a Notice of Default on your property? If you can demonstrate an ability to repay a loan, we may be able to help you out of this temporary situation. Our private mortgage banking and brokerage specialists will analyze your property, review your finances, assess the risk of the extraordinary event thatput your loan into default and offer a financing solution to restore your good credit.
These loans aren't cheap money. The lender is taking on considerable risk in these loans and wants to be compensated for that risk. Rates of 12% are not uncommon. Fees of 2-4% of the loan amount are not uncommon. A good rule-of-thumb for the loan amount you'll need is:
This should be the loan amount you request from a private mortgage lender. If you divide the requested loan amount by the property value, and the number is less than .7, a private mortgage may be available for your San Diego County home. You should expect a mortgage payment of 1% of the new mortgage loan amount.
We've been arranging private money mortgages for San Diego home owners since 1984. Yo can contact me at (858)-777-9751 or apply online.
I'm bullish, long-term, on coastal California real estate- that's no secret. The underlying demographics are still positive for California; more people will be moving in than moving out, over the next 20 years. Aging baby boomers yearn for warm climes in retirement. While California has its share of problems, it is still the "promised land" for many Americans.
Southern California is getting hammered. Housing prices in San Diego County have dropped like a ball off a table. While tony communities like La Jolla and Rancho Santa Fe have held up, towns like Oceanside have experienced severe declines. Two "beach towns" we like, in San Diego County, are Oceanside and Imperial Beach. We're "value investors" and have been since our days on Wall Street. Benjamin Graham and Warren Buffett "speak" to us. We regard California beach towns as "blue chip" stocks. Today, thos "blue chips" are becoming affordable.
My daughter's theatrical debut, at The Star Theater, afforded me a Saturday afternoon in Oceanside. As I looked out the window of the Jitters Cafe (free wireless), I saw THIS sign.
I had to snap a picture of it!
While Hollywood HIlls offers a "tour of the stars' homes", Oceanside offers a tour of foreclosed homes. I don't begrudge the REALTOR a little creative marketing; in this market, a "foreclosure tour" is appealing to value investors.
Can a Canadian investor actually get a mortgage in America? The answer is yes. There are higher downpayment requirements and the documentation can be onerous. For Canadians who wish to buy an investment property, the downpayment requirement is usually 35%. Canadians who want a vacation home may need as little as 25% downpayment. Why so much higher than their American counterparts? Americans can buy property with no money down. The answer lies in the risk. Canadians share a common language, common holidays, and a very similar culture ( we both like hockey, basketball, football, and baseball). Canadians have the ability to "bolt" with little or no recourse in their home country. That added layer of risk is the reason for the higher down payment.
Canadian Investors Can Apply For an America Mortgage Here.
A compendium of articles about how Canadian investors need mortgages from U.S. Banks:
Canadians are looking to buy American real estate. The loonie is at parity with the dollar and American housing prices are down some 20% from 2005. That presents quite a bargain if a Canadian is looking for a vacation home in America. We've talked to over ten Canadians in the past week; most are interested in the Sun Belt (Arizona, California, Florida).
How does a Canadian get a mortgage for American properties?
Documentation American lenders look for when lending to Canadian citizens: click here for the documentation list
A compendium of articles about how Canadian investors need mortgages from U.S. Banks:
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