More Albertans unable to make mortgage payments

[wealthyboomer]

More Albertans unable to make mortgage payments

Posted by CBC | Edmonton News on Sep 29th, 2008

A growing number of homeowners in Alberta are having trouble paying their mortgages on time, according to statistics from the Canadian Bankers Association.

The numbers, pulled from seven major banks in Canada, show that in June 2008 the number of people behind on mortgage payments three months or more doubled to 1,208, up from 659 in June 2007.

Bud Stein, a lawyer with Whitten LLP in Edmonton, who specializes in foreclosures, said he is seeing five times more foreclosures than he saw in 2007. Stein said he has had approximately 550 foreclosure files since the beginning of 2008.

"To a very great extent, property owners have been living beyond their means," Stein said. "They've been living off the equity in their property and that's just not available to them any longer … they are just simply in over their heads in terms of their entire family debt load."

With the housing market in decline, Stein said, real estate speculators who bought multiple homes when the price was high are feeling the pinch.

"There are many, many cases where we have problem investors or speculators, if you will, who owned three or four … or 10 homes, and when property values stop increasing they were caught because they could no longer sell the property, take their profit and move on to the next one," Stein said.

[wealthyboomer]

Mortgage defaults on the increase
Real estate downturn hits homeowners and investors

Colette Derworiz, Calgary Herald
Published: Thursday, October 02, 2008
For years, bankruptcy trustees and credit counsellors in Calgary haven't had enough work.

But in the past couple of months, the workload has picked up as some Calgarians fall behind on their mounting debts and mortgage payments.

"We are seeing people now who are going into bankruptcy, walking away from properties that in the last . . . four years in Calgary has been very, very, very rare," said David Smith, a trustee in bankruptcy at Bromwich & Smith Inc. "Now it's becoming more common."

In July, 494 Albertans declared bankruptcy -- a 24 per cent increase from the previous year, according to the Office of the Superintendent of Bankruptcy.
There has also been a hike in the number of people who can't keep up with their mortgage payments.

Statistics from the Canadian Bankers Association -- compiled from the seven major banks -- show the number of Albertans who haven't paid their mortgage for three or more months has nearly doubled in a year.

There were 1,301 people behind on their mortgage payments in July, up from 702 people a year earlier.
A real estate expert believes there is no need to panic.
Don Campbell, president of Alberta Real Estate Investment Network, said the number is relatively small, making up 0.28 per cent of the 471,913 mortgages across Alberta.

"It's not going to skyrocket as it did in the United States because our banks are substantially more conservative in their lending," he said.
Still, local lawyers who specialize in foreclosures said they have also been busier.

"We have definitely noticed a pickup in foreclosure work," said Andrew Maciag, a partner with Borden Ladner Gervais LLP.
"I wouldn't say it's dramatic, but there is a definite increase."

Maciag said he believes some homeowners got in too deep in 2006 and 2007 -- when housing prices went through the roof -- and are now dealing with costs they can't afford.

"Some of the mortgages that were taken out during that period now are higher than the property value itself," said Maciag, noting some people have left the province and others are investors who got caught with a property they couldn't sell.

House prices in Calgary have dropped by nearly six per cent, to an average of $444,048, from $470,888 a year ago.

A lawyer with Vickers & Associates, which deals with a lot of foreclosures, said she's also noticed a slight increase -- particularly among investors -- in recent months.
"Our foreclosures are up and lasting longer," said Denise Hendrix, "but it's nothing compared to the U.S."