June 21, 2018

Watch Out, Tighter Mortgage Lending May Still Be Coming

When will it stop!  After all the changes implemented to cool the housing market and reduce consumer debt, more tightening may still be coming.  Wouldn’t you think that the Ministry of Finance and OSFI would wait to see the impact before implementing more changes?

The recent changes targeted insured mortgages.  Now the Bank of Canada has identified the uninsured mortgage market as the next place to make tougher regulations.

The first measure that is likely being considered is related to Home Equity Lines of Credit (HELOCs). This is clear for two reasons. First, because the Bank of Canada believes that the greater use of HELOCs could also be contributing to increasing household indebtedness raising concerns that HELOCs may be putting some Canadians at risk of over borrowing.

The critical policy question that the Department of Finance could be considering is whether to extend the stress test for insured mortgages to uninsured mortgages as well.  This could possibly have an impact in further cooling the markets of Toronto and Vancouver.

Let’s hope the government shifts their focus to unsecured household debt instead of further secured debt restrictions. However, if the Bank of Canada’s review is representative of the Ministry of Finance’s considerations, watch out for changes to HELOCs with the stress test being applied to uninsured mortgages.

We should all write to our MP’s, enough is enough.  The market is cooling and all that is going to happen is more expensive mortgage financing and reduced competition.  Go after the unsecured loans and credit card companies, that is where consumer debt is out of control!

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406


Mindful Money Tips

Why is it we can talk about any subject but money.  We can give intimate details about our health issues, relationships, the bedroom but not our money situation.

Why is there so much shame and guilt around our finances?  We are always looking in the past, we should have done this or if only we had done that.  Only look back to learn from the past, not to blame or berate ourselves.  Look forward with the goal to empower yourself on how to change in order to give youself the life you want.

Here are some tips on how financially successful people achieve their goals:

  1. Devote at least 1 hour each week to manage and plan your finances.  Update your budget, review upcoming expenses, pay bills
  2. Read about personal finance each week.  Break up your financial education into chunks and choose 1 topic a week
  3. Have conversations with financially successful people you respect, what do they do?  What has worked and what has not. Most people love to help and share
  4. Try different strategies and find what works best for you.  Try different types of budgets, goal setting
  5. Know your numbers.  What do you need to make to cover all your expenses and fund your financial goals.  Get clear on your magic numbers
  6. Separate your business from your personal accounts.
  7. Build a cash surplus.  It would be optimal to have 6-12 months cash set aside to cover your expenses
  8. Pay off your debts.  Build a plan to pay down your debts every month not just the minimum payment
  9. Think about your retirement plan.  Start now, it is amazing how quickly it will grow

Financial education is the key, don’t be frightened of the subject.  Watch your money grow and reduce the financial stress in your life.  Have fun with your money!!

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406

article:  https://www.mindbodygreen.com/articles/10-mindful-money-habits-of-successful-entrepreneurs?utm_term=pos-5&utm_source=mbg&utm_medium=email&utm_content=daily2&utm_campaign=170619

What Led Up To The Decline Of Home Capital

It all began as Home Savings Loan Corp., a St. Catharines-based company which Home Capital founder Gerald Soloway bought in 1987.  At the time, it had just 12 employees, with $51 million in assets and $3 million in equity.

By 1990, Home Capital started focusing exclusively on residential lending and aimed to provide mortgages to those who didn’t qualify for traditional bank loans — to borrowers were self-employed or had once been bankrupt, or had no credit history.

By 2001, the company was thriving on customers with spotty credit.  When Ottawa tightened the mortgage lending rules in 2012 and the big banks started pulling back from the non-prime mortgage market, Home Capital stepped into the void and picked up even more business.

In November 2014, Home Capital’s quarterly earnings fell short of analyst forecasts.  According to the Ontario Securities Commissions (OSC) timeline of events, Home Capital had become aware of irregularities associated with applications for insured mortgages as far back as June 2014. Two months later, it claims Home Capital launched an internal investigation to examine fraudulent employment income documentation.  “The findings highlighted the scale of the fraudulent documentation flowing through HCG, and the serious systemic underwriting control deficiencies within HCG,” the OSC says.

By February 10, 2015, the securities watchdog says Home Capital was finishing up the six-month probe and had cut ties with four underwriters, two brokerages and 30 brokers.  These brokers were integral — they had a cumulative total of $881.4 million in mortgage originations in 2014, or roughly 10 per cent of all of Home Capital’s originations that year.

But, when Home Capital filed its 2014 annual financial statements that month, the OSC alleges the company made materially misleading statements, blaming the decline on “external vagaries such as macroeconomics, seasonality and competitive markets.”

Home Capital publicly announced on July 10, 2015 that an ongoing review of its business partners had led it to terminate certain brokers, causing an immediate drop in mortgage originations. The next day, Home Capital’s stock price fell by 18.9 per cent — erasing $600 million from its market capital.

In March 2016, Soloway announced he was stepping down from his role as CEO after 30 years but would remain on its board. During his tenure, Home Capital grew from a dozen employees and about $51 million in assets to more than 870 employees and more than $25 billion in loans under administration.

In February and March, Home Capital said that the OSC had served the company and some of its former and current directors with enforcement notices, charging that it “failed to meet its continuous disclosure obligations” in 2014 and 2015.

The company’s problems began in April 2017 when the OSC alleged that several company executives broke securities laws and misled shareholders in their handling of a scandal involving falsified documentation for  mortgages almost two years ago.  The company was hit hard and deposits dropped by nearly $600 million between March 28 and April 24, and it needed to secure a $2 billion lifeline to mitigate the impact.  It did secure one in the end, from a syndicate of lenders including the Healthcare of Ontario Pension Plan — but at an onerous rate that analysts pegged at a 22.5 per cent effective interest rate for the first $1-billion.

Today, Home Capital has announced an agreement with KingSett Capital to sell a commercial mortgage portfolio valued at around $1.2 billion.  Last week, Home announced a settlement with the OSC and class action matters.

The real problem if Home Capital ceases to exist, is that consumers have one less option for mortgages, and that’s bad news for everyone.  Home Capital was the prominent equity lender in our market and without their resources, we have already seen equity rates rise 1-2%.  Should the company have to liquidate all their assets, it will be a sad day for consumers and the mortgage industry!

A house of woes: How Home Capital went from market darling to the brink


Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406

Financial Firsts To Help Prepare Your Children

Income expensesWhen my children were growing up, I used to split their allowance into 3 categories: saving, spending and charitable contributions.  I thought this was a great start on learning how to save but I could have done so much more to teach them about saving for their education, their 1st car, engagement, marriage, their 1st home and then children.

Even though money has an impact on practically every aspect of our lives, personal finance is usually relegated to the back burner – at home and at school.  Even though teens seek financial advice from their parents, many parents avoid the subject because they lack confidence in their own ability to manage their money. If parents don’t discuss money with their kids – and teachers don’t teach it – who is educating the next generation about these things?

Better Money Habits, a website created by Bank of America in partnership with Khan Academy, tries to make it easier to understand personal finance. Better Money Habits offers a different approach to grasping personal finance concepts through videos and other content covering topics ranging from building credit to making a budget to more complex transactions. The content can also prepare parents to guide their children through a number of financial firsts, including:

Opening a first bank account: Encouraging children to develop an appreciation for money and saving at a young age can teach them important financial habits they can use throughout their lives. Savings accounts help children understand the time value of money by demonstrating how compound interest works and also teaches them the importance of establishing a relationship with a financial institution and building credit, which will become important as they grow up.

Understanding a first paycheque: Starting a first job is exciting and also represents independence. However, that first paycheque can quickly inspire panic if it doesn’t match income expectations. Teaching teenagers about deductions for such things as income taxes and Social Security before they receive a paycheque can better prepare them for the reality and help them plan how to use the money they earn. This video helps break down the anatomy of a paycheque.

Signing up for a first credit card: While it’s essential to build credit, it’s critical to avoid abusing it. Before your teenager/young adult is tempted to spend up to his or her credit limit on late-night pizza deliveries, teach him/her how to use a credit card wisely. To help avoid debt, Better Money Habits offers a video that explains how credit card interest is calculated.

It’s up to us, as parents, to make sure our children successfully navigate life’s milestones, especially if they aren’t learning personal finance in school. By teaching, encouraging and helping them learn from the good examples we set, our children stand a much better chance of making smarter money choices throughout life. We can contribute to establishing a more financially responsible generation.

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406

Article, Huffington Post, 08/08/2014, http://www.huffingtonpost.com/andrew-plepler/teaching-your-kids-about-money_b_5567567.html

You Can Get Out Of Debt!

You did all the right things. You earned a good education. You’ve worked hard and you earn upwards of $100,000 a year; yet increasing debt has your stomach in knots.

You are not alone. According to statistics Canada, higher income is associated with a higher debt load. Households earning at least $100,000 had an average debt of $172,400. Compare that to households earning between $50,000 and $100,000, which had an average debt of $95,400.

It doesn’t have to be this way. But before you can turn things around, it’s important to understand how you arrived where you are.

How Did I Get Here?

Technology has changed the world dramatically in the last 20 years. In many ways for the better, but the internet has also put shopping at our fingertips and smartphones keep us constantly connected to our work, and the work and lifestyles of everyone around us.

This new world has given rise to three of the primary reasons so many people are in debt despite earning a good salary: increased expectations of what we “deserve.”

Increased expectations

Social Media offers up an upbeat version of everyone’s lives. We see what everyone else is doing or owns and we want it too.  You work hard, make good money so why shouldn’t I have that new purse or that trip or new car.  Why shouldn’t my children have the best of everything.  Debt creeps up slowly and our justifications keep pace.  As long as the money keeps flowing, who has time to plan long term or manage a budget?

No longer any stigma

In our grandparents’ time, debt was something to be avoided. Being in debt carried shame and embarrassment. While I’m not an advocate for shame, the normalization of being in debt hasn’t made life better; it has allowed debt to flourish. Today, many people would be less embarrassed to admit they have debt than to admit they can’t afford something.

What Can I Do Differently?

You can get out of debt, you just need to challenge your perceptions and do things differently. Here are some ideas to get you started today.

  • Create an authentic vision for your life:  Have you ever realized you wanted something only when you saw someone else had it? Maybe you were completely happy with your family camping trips until you saw your friend’s photos from Europe. Before you jump on a travel site, think about what you really want. Define two or three financial goals for yourself that align with your values.
  • Be honest about your current situation:  Have you accepted debt as part of life? Be honest about where you are overspending. The moment you tell yourself living with debt is not O.K. you will realize new ways of doing things.
  • Create a plan and systems:  Living in the moment is great for meditation and calming your mind, but money needs a plan. Learn to track your daily expenses.  Understand what you need to save and invest. Be realistic. Challenge your assumptions about what’s a necessary expenditure.
  • Have positive money conversations:  You’ve probably commiserated with friends about how expensive everything is, and how just when you’re getting ahead, the car breaks down or the roof leaks. These are just excuses. These are the conversations that normalize debt and keep everyone stuck. Instead, talk about positive money goals and how you plan to achieve them.
  • Start today:  Changing your habits, reaching goals and eliminating debt, takes time. A small change today will start the ball rolling. Once you get some momentum, the financial and emotional rewards will keep you going. You will never regret making these changes.

What if I Don’t Do Anything Different?

No matter how many Canadians are in debt, debt is not normal or O.K. It steals your piece of mind and puts the security of your future at high risk. Interest rates will go up and a debt that seems manageable now could suddenly impact your life in a significant way. Over time, debt will wear you down. It can affect your relationships, your self-esteem, and your health. Living well is not enough; you also need to sleep well, knowing that you are in charge of your financial future.

What You Really Deserve

You work hard; you deserve to put that hard earned money to work for you. You deserve to reach goals that matter to you. You don’t deserve to have your money evaporate on interest payments for things you barely remember buying. The first steps to change are acknowledging that change is possible and being honest with yourself about your current situation.

article: http://moneycoachescanada.ca/blog/good-income-but-cant-get-out-of-debt/

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on our site or call 416-459-2406