News from Canada's Mortgage Experts

"‘Orphaned' homeowners face foreclosure - Lenders ask federal government to back special billion-dollar fund" by Greg McArthur and Jacquie McNish on GlobeInvestor.com

This article fails to point out the obvious - these clients have fallen prey to a predatory lender and poor advice from a mortgage broker.

With poor credit and zero downpayment, these clients fell victim to 7% lender fees, a 9.15% interest rate and an extended amortization that has left them paying close to $40,000 over three years to a lender and still owing $1,000 more then they netted to purchase the home to begin with. This is on a $127,000 purchase.

These clients should have been given a plan to clean their credit rating and improve their beacon scores, save some money over the next 18-24 months and consider purchasing at a later date. This could have put them in a mortgage with possibly half the interest rate they were charged, a 2.75% insurance premium and a healthy financial situation.

Unfortunately, we have a lender that has earned about an 11% yield, a mortgage broker that was paid handsomely and a homeowner that will need to sell their home.

Who's to blame? It sure isn't the government. Maybe the lender should kick in some of the yield they earned or the mortgage broker clean up the mess.

Education is key to purchasing a home. Sometimes the best decision is the one you don't make....here is the perfect example.

Vince