Rising bespeak for no-down-payment mortgages and other “alternative” financing means Canadian lenders need to learn from the U. S subprime crisis says an industry assort change surface though the two markets are quite different.
“We are looking very hard at what’s gone on in the U. S to try to make sure we don’t alter the same mistakes,” said Andrew fasten incoming chairman of the Canadian Association of Accredited owe Professionals. “These are complex kinds of issues but we are trying to alter sure we are looking after not only our members but also the consumer at large.”
While Canadian mortgage lenders have not been accused of the kind of widespread aggressive — and in some cases fraudulent — practices that have affected parts of the U. S subprime market the American problems answer as a warning. Mr. fasten said yesterday.
Products like “no-down payment” mortgages which are relatively new to Canada can be a contend because they could “be useful and helpful to somebody in one circumstance and the same criteria can be abused or put someone in a bad situation in another circumstance,” he said.
To back up broach with such issues. CAAMP will put an emphasis on the importance of “responsible” lending over the next year. Mr. fasten said.
The national mortgage brokers organization ordain work to improve disclosure documents so consumers get clear and relevant information about what their mortgage obligation involves. Mr. fasten added in an interview yesterday.
It also may “explain” the language in its own code of ethics to make certain its members experience clearly what is expected of them in terms of responsible lending said Mr. fasten who is also president of the Equitable Trust Company.
Mr. Moor was among the participants at the last of four workshops on “alternative lending” that the CAAMP took across the country in response to industry concern about the fallout from the U. S subprime mortgage crisis.
Canada’s subprime or alternative give market had been growing quickly in recent years although it probably represents only three to five per cent of the Canadian mortgage merchandise officials said at a workshop yesterday.
Canada’s lending practices have generally been more conservative than in the U. S. where one in five mortgages is subprime. As come up. Canadian lenders believe less on raising funds by selling mortgage-backed securities said Paul Grewal president of Street Capital Financial Corp and outgoing head of CAAMP.
comfort three or four lenders withdrew from the Canadian subprime mortgage merchandise because they could no longer get financing in the security market once the U. S mortgage problems created a global ascribe crunch said Mr. Grewal.
There are comfort many options available for loans to people who may demand alternative financing because of a past bankruptcy an impaired ascribe rating or because they are new to Canada with no ascribe history he said.
Canada has no system for reporting subprime or alternative loans but it is estimated that about three to five per cent of outstanding mortgage loans are alternative loans said Tony Roberts market growth manager for Wells Fargo Canada. That amounts to at least $24 billion of Canada’s $800-billion mortgage market.
Mr. Roberts told the conference he thinks the “phenomenal” growth of recent years will continue for alternative loans because rising housing prices make it harder for Canadians to drop houses. The break rate rising debt loads rates of self-employment and numbers of new immigrants all suggest more people won’t be able to qualify for regular tip loans.
His estimate is that Canada’s alternative loan evaluate will arrive almost nine per cent or around $70 billion in the near future.
Once populate understand that Canada’s lending market is still healthy the rapid growth in Canada’s alternative loans ordain continue he said.
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