Ever heard of an ‘orphaned’ mortgage? If you haven’t, you’re not alone. But estimates from at least one predominant lobby group suggest there could be more than 30,000 Canadians facing foreclosure, from orphaned mortgages.

A recent article in The Globe and Mail breaks this issue down in much more detail, but long story, short: the article hints there’s a significantly large number of Canadians who suddenly face being ‘abandoned’ by their respective alternative lenders. And that’s because these alternative lenders can no longer lend to those customers, based on more challenging critera like poor credit scores, lower-paying jobs, or minimal home equity (criteria upon which a traditional lender,  such as a bank, wouldn’t normally approve).

The article goes on to explain that, upon renewal, these customers who’ve borrowed from non-traditional lenders and whom appear to have diligently paid their mortgage payments on time, every time,  will be ‘orphaned,’ and expected to either pay the balance of their mortgage – or face foreclosure.

Top-level execs with these alternative mortgage companies, like XCeed and Ontario-based N-Brook Mortgage Group Inc., say they cannot renew the stranded mortgages because, quote, “the once-thriving securitization market that attracted investors to these risky – and lucrative – mortgages collapsed in the wake of the U.S. subprime mortgage crisis. To replace the lost pool of capital, lenders are asking the federal government to back a special billion-dollar fund that would renew the healthy mortgages of borrowers who do not qualify for loans from traditional lenders.”

And these execs, along with lobbyists, are asking the feds for a $1-billion dollar bailout program, as a solution to offset the potentially sky-rocketing costs associated with these possible foreclosures.

At the risk of seeming insensitive to these peoples’ plight, I think this is not our government’s responsibility. Ultimately and sadly, these people have to take responsibility for their decisions. Albeit, while these decisions they’ve made may have been a result of misguided advice from some of my colleagues in the Mortgage Brokerage business, they still have to face their brutal realities.

Most of these people will be able to re-qualify, and for those who can’t, they will have to move into a rental and yes they will likely face foreclosure as they will not be able to just sell their house. Also, I fear their closing costs (mortgage balance, payout penalties, and commissions) will exceed their sale price and they likely will not have the money to absorb these losses.

Which brings me back to the very lenders who loaned these people these mortgages and are now trying to look like “Robin-Hoods” and lobby the government to help these poor people.  Make no mistake here – these lenders are not asking for the handout, out of concern for their borrowers. Rather, it is strictly out of concern for themselves.  Who will be left holding the bag when these uninsured mortgages go into default and foreclosure?  Yup, the lender.  Shame on you guys. Nice try using the media and “wolf in sheep’s clothing” tactics.  Fact is, you were paid a healthy risk premium to take on this risk, so put some ketchup on it and eat it. Don’t ask us (taxpayers) to bail you out of the mess you created.

What do you think? Send me your comments.

A lot of the water-cooler talk, media-buzz, and overall conversation starters lately seem to be centered around the real estate market. In Calgary, much is being made of the latest Re/Max Housing Outlook for 2010, and a Calgary Herald article highlights that outlook.

According to the Re/Max forecast , local inventory will edge up slightly but high demand areas will see limited listings. In addition, the average MLS residential sale price of a Calgary existing home is expected to rise to $403,000 in 2010 – a rise of about 5%.  The same average price fell an estimated 5%, in 2009, to $385,000 from the previous year. Now, keep in mind that average price is for all residential properties including single-family homes and condominiums, in all of the Calgary MLS.

So where does that leave us? Well it continues to fit within the guidelines of a more balanced market – which Calgary has been in since at least the summer. The volume of listings is significantly lower than it was in fall of 2008 and the winter and early spring of 2009.

Interestingly, the Canada Mortgage & Housing Corporation (CMHC) is also forecasting growth of 4.8% for Calgary’s average MLS sale price, in 2010 – after falling 5.1% in 2009. The CMHC also says sales are predicted to rise more than 10% in Calgary and surrounding area in the new year.

If those numbers seem a bit optimistic to you – you’re not alone. There are some finance experts, mortgage experts, economists and real estate pros who argue that the threat of rising interest rates, the continued slow recovery rate regarding Alberta’s economy, or even the possibility of a greater than expected number of listings flooding the market will serve to soften those numbers instead of pacifying those predictions.

Also, keeping an eye on interest rates, with both fixed and variable products, may factor into the mix as usual when it comes to consumer confidence and following the herd. As long as first-time and move-up buyers continue to keep buying, we may very well see this upward trend come to pass.

And whether this prediction comes true or not, when you compare the numbers with recent years past (as the Herald does, with a neat stat at the end of the article: “in 2007, Calgary had 32,176 MLS sales for an average price of $414,066. In 2008, there were 23,136 sales for an average of $405,267“) we’re still below previous Calgary real estate market highs.

Thoughts? Send me your comments.