Wednesday, February 1, 2012

Buy fire insurance

Because the place is on fire!  The CMHC "has recently received an unexpected level of requests for large amounts of CMHC portfolio insurance."
Don't worry, the stupid corrupt government will sell it to them.  They'll raise the cap if necessary. Anything to loot the taxpayer. Privatized profit and socialized loss. That is why it's good to be a bank.  But what's this?  CIBC may actually require you to prove your income. That's a big step up from simply making an 'X'.
In the United States these stated income loans were called "liar's loans", and they were widely used by realtors, mortgage brokers, construction workers, and the poor to speculate on housing. But Canada doesn't have any of those "subprime" lending practices, right?  So says our national media, over and over again.  But the Americans know this game:
Hat tip to AG Sage, for recording these for posterity.  Here's your prudent Canadian banks.  I wonder if anyone got a cash back mortgage with no job.  I might have tried, but I have a job.
I'm curious, what subprime practices did the US have that we don't have?  We have liar loans, cash back loans, and the entire country is on a teaser rate.  One thing I do not recall from the US is taxpayer gifted down payments (hat tip
I think it's interesting that the City of Saskatoon is willing to spend precious tax dollars to help put the working poor under an unrepayable mountain of debt.  Privatized profit, socialized loss.  The banks won't lose anything if these people default.  It's all insured by your old age pensions and medical care.  What's this?
And that's why it's good to be a Canadian bank.

Tuesday, January 17, 2012

Last call for retards

This reads like marketing slosh.  Last chance to be an idiot?  Let's say you jump in and borrow $500,000 on 30y amortization with this mortgage.  Your mortgage payments will be $2374.76 per month.  Each year you will pay $28497.18.  After 10 years your balance owing will be $393349.39, so your interest payments are $178321.19.  You will kiss that money goodbye for the luxury of borrowing from a bank.

Now let's say the price of houses declines 10%, which is definitely at the low end of predictions. You borrow $450,000 on 5 year mortgages at the same 4% rate (because the interest rate went up from the current 3.34%).  Your mortgage payments will be $2137.29 per month.  Each year you pay $24647.49, and after 10 years you will owe $354014.45.  You get a free fucking vacation every year and at the end of it, you're an additional $39335.05 ahead.  You would, of course, be massively ahead by putting that $4000 a year extra into your much smaller mortgage, but life comes with unforeseen expenses.