Canadian here. Looking for other Canadians who are in the foreclosure business.
CMHC, the national 1st mortgage lender insurer, which insures mortgages that are above 75% LTV are giving me the most problems when dealing with short sale candidates. So many loans these days are CMHC insured.
The 1st mortgage lenders aren’t even considering short saling the property because they know they will just receive a check from CMHC to cover their losses.
Anyone else ever deal with CMHC successfully?
It seems like these cannucks at the loss mitigation department up here don’t even know what short saling is.
Down here in the land of neuroses, we have PMI, which is roughly the same thing, it covers the top 20% of the principal. So banks here will readily accept a short sale on 80% of a mortgage because the PMI covers the rest.
The reason banks accept short sales is because, when anyone takes out a mortgage, the bank gets that money back from the federal reserve, but as soon as the mortgage goes into default, the bank has to pay the money back to the federal reserve. So they’d rather take the loss and get a non-performing loan off their books. This is a simplified view, so no complaints please.
I suppose you should check into the banking system in Canada to see if there’s anything in their regulations to prohibit a short sale, if there isn’t, just point out the above advantages to the bank and see if they’ll bite.
PMI covers only 20% of the principle?
I have been calling CMHC themselves and here is what they tell me:
Whatever loss the insured lender receives from the foreclosure and sale of the property, the lender will ask CMHC for a check and CMHC will cover the entire loss.
If the bank does not want to take back the property for whatever reason, they will hand it over to CMHC and CMHC will give them a check for the entire balance. CMHC will then do the necessary requirements to fix the house and sell it.
I spoke the “loss mitigator” as well as the lawyer who was in charge of the file. They told it is by “law” (prolly bull****) that they have to follow a certain protocol when a house is in default. I firmly explained to them that the house that was going to go to foreclosure would sustain even more damages by the time they receive the property and basically their response was that it was protocol.
They told me it was the bank’s decision to take back the property after reviewing the package I sent them.
Maybe I should hassle them again? Ask to speak directly to the manager next time? This 9-5 “bot” i spoke to basically had no idea what she was talking about. She gave me that “bank’s decision, not mine”, “talk to the lawyer in charge, he would know more than I” crap at me for 5 mins. The lawyer spewed the same nonsense at me when I called him.
BTW, Americans know how to do business, while the Americans are busy making all the money, Canadians are sitting around with a thumb up their butt saying “Eh?”. I need to move down south.