Personal Finance

Bank can cancel mortgage after term expires

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  • Mar 23rd, 2015 9:47 pm
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BlueGray wrote:
Mar 22nd, 2015 6:02 pm
Great answer. Thanks Jucius Maximus! This is one point I do not understand - why the Governments and regulators do not stop this trend now.
Many governments are already bought and paid for. Even in Canada, we are only a small economy and we're largely held powerless to what larger economies do.
The people who could actually demand change are too busy watching Survivor or trying to get the latest iPhone.
BlueGray wrote:
Mar 22nd, 2015 6:02 pm
What is your view on the TSX now? I have a colleague who has made a killing on equities in the last few years.
Stock tips are not allowed on here.
To paraphrase Warren Buffet, I don't know or care where the TSX will be in 1 year. I only care about 5+ years from now.
What if there were no hypothetical questions?
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Jucius Maximus wrote:
Mar 22nd, 2015 6:10 pm
Many governments are already bought and paid for. Even in Canada, we are only a small economy and we're largely held powerless to what larger economies do.
The people who could actually demand change are too busy watching Survivor or trying to get the latest iPhone.
I would agree, but was hoping there was a better reason.

Thanks.
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Jucius Maximus wrote:
Mar 22nd, 2015 5:58 pm
Agreed; Americans can get FULL 15 year mortgages for under 3% interest right now. That is, you have a 15 year long mortgage contract. I'd sure love to do one of those right now.
Shocking to say the least, one enters into not just a financial obligation but has extra periodic hoops to jump through (rubberstamping or otherwise). Just gives the banks another 'out'. Never heard of this crazy sys before. Wonder what is the norm in the world?
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Jucius Maximus wrote:
Mar 22nd, 2015 5:58 pm
Over time, new generations of young / naive / stupid people will make their way into the world and into banking. This is one reason why markets are cyclical and have corrections. Eventually, bad money and stupid decisions are swept out of the economy, and the only people left standing are the ones who were making responsible decisions and living within their means to begin with. The people who got swept away will come back smarter, wiser and 10 years from now they will be laughing at the next naive generation's bad decisions...
While a comforting thought, this is simply not the case. There are plenty of people who NEVER learn their lesson, no matter how many opportunities they are given. The wheat isn't always separated from the chaff either. You probably didn't mean it in such an absolute way but thought I'd comment anyways.
leflower wrote:
Mar 22nd, 2015 1:33 pm
Alex, I do understand amortization. I simply didn't know the 21 day rule that a lender has to call in the loan at the end of the term as haven't had a mortgage in 15 years. ( yes, I am lucky ).
In a bad market fall, lets say 30-40% which is possible, after 5 years, many could be in negative equity and run the risk of losing their house even though they are making payments.
I did not know this was possible until my friend pointed it out.
I was under the impression you didn't since you seemed to think that the lender should be obligated for the amortization period instead of the term....which is the length of the commitment terms.

I guess I'm not seeing the part you find alarming. Its a relatively straight forward agreement but you've combined a time period along with so many other factors that would have to align just so (extremely severe RE downturn, job loss, no other lender willing to do business, etc.) that its certainly dramatic but very unlikely.

It would be as if I gave a scenario while renting with similar circumstances and outcome. Typically there's a rental agreement for a year. If RE prices increased dramatically (say 30%), the owner may decide to exit the arrangement and want to sell their property (or simply raise the rent to a level you can't afford). Couple that with you and your spouse losing your job AND not being able to find anywhere else to live.... well, you'd be homeless after 21 days I suppose.

But again, how likely is that to be the case? You can be certain its happened in the past. If anything, I'd wager that is more common than the mortgage situation but that's just a guess.
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Does this possibly make sense - sure. But it is not probable.

Technically, we don't actually own any of the land anyways, and the governments can come take that at their will ... possible? Sure. Not very probable.
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Alexandero2 wrote:
Mar 22nd, 2015 7:33 pm
While a comforting thought, this is simply not the case. There are plenty of people who NEVER learn their lesson, no matter how many opportunities they are given. The wheat isn't always separated from the chaff either. You probably didn't mean it in such an absolute way but thought I'd comment anyways.
I'm not denying it. There will always be a snake oil salesman ready to take the money and/or votes of lazy people who want the "quick fix" in their lives.
What if there were no hypothetical questions?
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You have no God-given right to a mortgage but the chances of you not getting a renewal even if you qualify is almost 0.
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Jucius Maximus wrote:
Mar 22nd, 2015 5:21 pm
Lots of people in the US have been sued by banks for shortfalls after a foreclosure; The idea that Americans can just give the house back and walk away is limited to certain situations and lenders. Please see my post above.
While it's true that lots of people have been sued by banks for shortfalls after a foreclosure, the reality is they can often avoid that. If they manage to declare bankruptcy before their bank completes forclosure it becomes incredibly complex and in many cases they wind up keeping their home and short changing the bank.
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rj2wells wrote:
Mar 23rd, 2015 6:43 am
While it's true that lots of people have been sued by banks for shortfalls after a foreclosure, the reality is they can often avoid that. If they manage to declare bankruptcy before their bank completes forclosure it becomes incredibly complex and in many cases they wind up keeping their home and short changing the bank.
Although filing bankruptcy can get people out of paying a mortgage foreclosure deficit, this should not be taken lightly as just another procedural step. It is an extremely emotionally destructive process that destroys families and marriages. The mere existence of a US bankruptcy shortfall in itself does not, in my opinion, automatically mean that filing for bankruptcy is the next step. The bank might never actually come after you. Even if they do, they have to have all their documentation to win in court. Even if they win, they have to execute on the judgement in order to affect your life. And even if it does get to that point, by the time it's happened, the person would have had enough time to do something about it like save a bit of money to offer in settlement while threatening the collector that bankruptcy will otherwise come.

In summary, there is a time and place for bankruptcy. Filing bankruptcy because you are concerned about what *might* happen is premature.

RE: Keeping the house - Depends on the state's foreclosure and bankruptcy laws. For example, it's more likely to keep the house in Texas or Tennessee due to homestead laws. In NY and California, their foreclosure laws are ridiculously complex.
What if there were no hypothetical questions?
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TodayHello wrote:
Mar 22nd, 2015 8:04 pm
Technically, we don't actually own any of the land anyways
Not true - you do own the land, it has your name on it (recorded in the local land registry).

Subsurface rights (minerals, oil, etc) are another story, along with the airspace above your land.

However, in Canada the govt can seize your property (not just land) for any reason they choose by passing a law to that effect, and they don't owe you a penny in compensation.
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M8Rxmjsik wrote:
Mar 23rd, 2015 9:18 pm
Not true - you do own the land, it has your name on it (recorded in the local land registry).

Subsurface rights (minerals, oil, etc) are another story, along with the airspace above your land.

However, in Canada the govt can seize your property (not just land) for any reason they choose by passing a law to that effect, and they don't owe you a penny in compensation.
They probably won't. Even if they could convince the senators and the high court, they would still risk economical chaos.

The Banks' positions are more interesting. Would a bank finance negative equity? Not sure.

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