Robert Morrow

I received not only an email, but several phone calls inviting me to a press conference 20 miles from my home just to hear this:

"The Honourable Lisa Raitt, Minister of Natural Resources, announces the official launch of a new national advertising campaign for the Home Renovation Tax Credit (HRTC) on behalf of the Honourable Jean-Pierre Blackburn, Minister of National Revenue and Minister of State (Agriculture andAgri-Food)."

Are they serious?

Have we not got better things to spend tax payer money on than advertising a tax credit that everyone already knows about, not to mention sending "honourables" and their staff running around the province setting up press releases?

If you look up an home improvement project on anybody's website these days, you'll see links to the tax credit (mine included). Major retail chains are using it as sales incentive and are spending gazillions promoting it themselves. My wife and I just purchased flooring and I walked past at least 2 stations where the government pamphlets were stacked en masse. The retailer had his own too (which was better I might add).

If giving us a tax credit is going to cost this much money, no wonder it's only for $1,380. If they spent a little less on saturating the market with promotions, maybe it could have been a $2,000 credit. Now that would have been worth searching for.

I had seven showings to book at around 8pm at night. It took 30 minutes to accomplish because all the offices are closed and I'm dealing with very busy call-in centres. Out of the seven, four put me on hold; three were long distance and never answered; and four didn't understand which agent I was looking for.

The next day, of course, only 3 confirmations came in. I re-called to the now open office and asked for a 2nd request. The first requests hadn't come in I was told. They'd book now.

So much for 24 hours notice.

Three of the agents never got their message which is not a surprise. I find most answering services somehow lose showing requests on a regular basis.

My client and I went to see 5 homes. The other two hadn't confirmed by showing time.

So my question is... if you're paying so much money to your brokerage for a great service, why is an answering service responsible for your image? Most people (agents and customers) call at night after the office is closed. The services most brokerages use are the same and are overworked. They also have no clue who you are.

I work for a small, 100% commission brokerage. You know, the kind that are frowned upon by the big franchises. We hire a top knotch answering service because they're in charge 24/7. And most of the people answering know me as they've had our business for some time.

I pay for answering services just like you do. I pay a little more because they're on tap all day and night. But I don't pay the heavy fees you pay to have office staff work 9-5 when most clients are working themselves (and not thinking about real estate).

Wouldn't it be easier to do the "showing" thing by computer? Are we such an backwards industry that we can't come up with an online system for booking?

Of course, then you wouldn't need all that office staff. Heaven forbid, we need to keep them working. After all, that's what the fees are for.

Robert J. Morrow is editor of www.HamiltonHomeReview.com, an online real estate magazine serving Greater Hamilton, Ontario. Click here for a FREE SUBSCRIPTION sent to your email monthly. Click here to receive new Hamilton area listings in your email daily.

This from my friend and associate, Rita Cruse of Mortgage Alliance:

"There has never been a better time for people to take a close look at their current mortgages...

However the Bank's are also aware of the fact that rates today are significantly better then they were 6 months ago... So watch out for the penalties.. We are seeing "HISTORICAL PENALTIES" that are being quoted with these new historical low mortgage rates... I had one client this week with $36,000 being quoted.

In the last 2 weeks I have had clients penalties go from $4000 - $25,000 and up...

How can the Bank's get away with these "HUGE" penalties???

Because, it appears back in 2006 most of the major banks, rewrote the equation of the calculation of Interest Rate Differential.

I am using the following scenario for you to see how mortgage penalties are increasing.

Client has a $380,000 mortgage at 5.66% that will mature on Feb 1 2013 or in 3 years and 2 months.

Old Method of Calculation (before 2006)

The Bank would take your actual rate and compare it to the discounted rate of the equivalent mortgage ter m for the time remaining; they would then multiply your current mortgage balance by the difference in the 2 rates, and take the number of months remaining in your term.

Current Rate, 5.66%, subtract their current discounted rate for 3 years is 4.95% = .71%

$380,000 X 0.71% = $2698 X 3.16666 (3 years and 2 months) = $8543.65 (Still a really high number) but when you use today's rates the client would save over $14,000 just in the 38 months alone, and the client will benefit from the extra 2 years... I was using a new rate of 3.72% for this calculation.

New Method of Calculation

They now look at your current mortgage rate, figure out how much of a discount you receiv ed from the posted rate at the time you took out the mortgage. (The longer the term, likely the larger the discount.) In some cases it could have been 1.45 - 2.00% So if I use 5.66% (It was a 5 year term), but back when it was obtained the posted rate for the 5 year term was 6.75%, The identified discount amount is now 1.55%.

Now, the following will show you how the Banks are controlling the penalty amounts, forcing client's penalties to in some cases double or triple.

During the last 2 weeks, which was when these penalties jumped, the Banks forced a sizable drop in their Posted mortgage rates, if you look back in time the Bank's would advertise a higher posted rate, and then leave it up to the client to negotiate a lower discounted rate, back in 2006 this is why the Bank's rewrote mortgage penalty calculations, now by dropping the posted rate to be closer to their discounted rate they are actually more then doubling the amount of the differential.

Let's look at my example now.

5.66% - (4.95% (Current lowered posted 3 year rate) - 1.55% (Discount they received on old mortgage))
5.66% - 3.40% = 2.26% new Differential Amount


Now we can calculate the client's new penalty......

$380,000 X.2.26% = $8588 X 3.16666 (3 years and 2 months) = $27,195.76

My recommendation before you call me, is to call your bank first, find out your current mortgage balance, and get a quote on the penalty, and then call me......

If you had previously investigated your penalty more then 2 weeks ago, I highly recommend you call them again, as the penalty amount has likely to have increased.

The clients who are being affected the most are those who obtained 5 year fixed mortgages or longer terms after 2006.with the 5 major Banks, there are differences from lender to lender as to how they calculate mortgage penalties..... Not all lenders adopted these changes

I had a client who's rate is currently 5.79% and he will only be paying a $1800.00 penalty, depends on the lender and the amount of the mortgage.

One thing that is very clear is that with the BANK RATE at 0.25% there is not a lot of room for the BANK rate to go down any further, I think we have officially hit bottom, which means PRIME RATE has likely hit bottom as well...

I do have clients who are looking at getting out of their current Varaible rate mortgages to take advantage of these historical low fixed rates mortgages, and good news for them is the Penalites on these are very small.. There is no such thing as a Interest Rate differential on a Variable rate mortgage. This will give you the opportunity to lock your mortgage payment in for the next 5 years."

Rita Cruse is Mortgage Broker with Mortgage Alliance in Dundas Ontario. to reach her go to www.mortgagealliance.ca/ritacruse

Robert J. Morrow is editor of www.HamiltonHomeReview.com, an online real estate magazine serving Greater Hamilton, Ontario. Click here for a FREE SUBSCRIPTION sent to your email monthly. Click here to receive new Hamilton area listings in your email daily.

Councillor Bob Bratina blew it recently when he stated, with disgust, that the university is "an unwieldy leviathan ruining everything around it," and a "huge nuisance".

MacMaster University-with more than 19,000 full-time undergraduate students, almost 3,000 grad students and more than 7,500 employees--has a huge positive impact on our city with its ability to attract bright minds, research money and prestige.

Bratina made the comment at a council meeting that concerned a proposed zoining change so a developer can build a 10-storey apartment building to house 600 students between Rifle Range and Ewen roads, south of Main St. West.

I don't particularly agree with multi-user apartments and if you talk to a lot of the students, they don't like them either; too much like residence. They like to live in homes but of course the city finds that hard to swallow. But since the school can't afford to build housing, and the municipality/province won't subsidize, just where are the students to go?

At a special "student housing" meeting last week with Councillor Brian McHattie, Realtors from the area (including yours truly) were met with several proposals concerning new regulations and bylaws designed to limit student housing in the immediate area surrounding MacMaster University. This despite the lack of housing available.

Naturally, the Realtors let him know that new laws and even licensing wasn't going to solve the problem. In fact, it isn't much of a problem it seems. Of all the resident complaints about bad, noisy, or derelict housing, it affects less than 200 students (out of 1,900 at any given time). Most student housing is responsible, healthy, and affordable. Socially, it's a preferred environment that fosters independence and responsible behaviour--at least once they've finished first year.

It's comments like these made by uniformed councillors which cause those of us who help put students and investors together cringe. Student Housing is a viable, high yield investment. And there are some good investors out there--the majority in fact. In other words a win/win/win situation for students/MacMaster/investors.

Make laws that stop the slum lords, the partiers, etc. But don't stop student housing, regardless of its form. MacMaster is a vital part of Hamilton and to lose it would make losing Stelco a minor glitch in the economy in comparison. And of course, no housing....no students!

In hindsight, perhaps City Hall is that leviathan that is, more often than not, the nuisance.

Just a thought.

Robert J. Morrow is editor of www.HamiltonHomeReview.com, an online real estate magazine serving Greater Hamilton, Ontario. Click here for a FREE SUBSCRIPTION sent to your email monthly. Click here to receive new Hamilton area listings in your email daily.

No, it's not a misprint. Sound ridiculous? Click here for proof. So you think we have problems in Ontario?

The median price of a home sold in Detroit in December was $7,500, according to Realcomp, a listing service.

Detroit, which has lost half its population in the past 50 years, is deceptively large, covering 139 square miles. Manhattan, San Francisco and Boston could, as a group, fit inside the city's boundaries. There is no major grocery chain in the city, and only two movie theaters. Much of the neighborhood economy revolves around rib joints, hot dog stands and liquor stores.

Often described using same terms as that of 3rd world countries, Detroit is in a tailspin. But if you want cheap housing...

Not sure about the investment value though.

Robert J. Morrow is editor of www.HamiltonHomeReview.com, an online real estate magazine serving Greater Hamilton, Ontario. Click here for a FREE SUBSCRIPTION sent to your email monthly. Click here to receive new Hamilton area listings in your email daily.