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Mortgage Broker News | 04 May 2010, 12:00 AM Agree 0
The CMHC recently tightened the reins on its self-employed borrower
program to avoid some of the problems the U.S. is facing. Kit Kadlec
checks in with brokers who see both the pros and cons of the changes
  • AB Mortgage Broker | 21 May 2010, 02:57 AM Agree 0
    It's nothing more then a tax grab! The Government needs more tax revenue and this is one way to achieve that. That's it that's all!
  • Edmonton Mortgage Broker | 21 May 2010, 03:07 AM Agree 0
    It is too bad all of these changes. When we have small business and self employed spurring on and keeping our economy strong just to penalize them when they want to purchase a home. Employment letter and paystub from that company will get the employee a mortgage but they look past the person that is paying them. We have to change our mindset if we don't think that small business is what keeps this train going.
  • Barbara Buote | 21 May 2010, 04:27 AM Agree 0
    My personal belief that this is a Conservative Gov't attempt
  • Barbara Buote | 21 May 2010, 04:28 AM Agree 0
    My personal belief that this is a Conservative Gov't attempt
  • Bitter Business Owner | 21 May 2010, 06:43 AM Agree 0
    I own a business with a 50 year track record. Several years ago I created a new profit centre within the business, but unfortunately it did not fly. Consequently, the business lost about a quarter of a million dollars over a two year period. Prior to this loss the business provided me with a six figure income. Now that the loss is two years old I'm back to a six figure income. During the two years of losses and writeoffs, I withdrew cash from shareholders loans as well as increased my personal debt load. I planned an ETO on my personal residence to consolidate personal debt to replace equity I drained out of the business, but unfortunately, using two years of personal N.O.A. shows one year of good earnings and one year of non-existent earnings, resulting in a TDS that doesn't allow me to get traditional financing.

    There are many statistics about the number of new businesses that fail in their first three to five years. The amount of failure is extreme yet these entrepreneurs can do a stated income application and I cannot. I think some bureaucrat missed the boat on this one.
  • AB Mortgage Broker | 21 May 2010, 07:13 AM Agree 0
    I agree with you Bitter Business Owner! They do more for themselves and their friends while in office then they do for the tax payers.
  • Calgary Broker | 28 May 2010, 03:40 PM Agree 0
    Come on guys, you dont show income, you dont have any money or assets & you want to buy a home with 5% down? Maybe at 85%LTV the program has more merit. If you are writing off all your revenue to expenses, if its not reasonable expenses, Im sure Rev Can will be knocking on your door. if its reasonable then you arent making any money, simple as that. Drawing down on shareholder loans rather than pulling out management draws is easy to document if financials are in place. Losing that program wasnt a big deal, it's other lender stupidity thats more of a problem. Right now I have deals I used to have lenders rolling out the red carpet to get & couldnt pay me enough, now I have to beg someone to do the deal like it's a big exception. Hasnt anyone noticed the friggin hoops we are going thru to get solid deals done these days. Kind of ironic, BMO 2/3 weeks ago hit front pages of losing 90 million on fraud, then today they announce net profit for the quarter to $700+ million, double compared to 2009. Wonder why, maybe its called IRD. CMHC dont seem to care about banks hosing people on penalties but are forcing more Canadians there. Lenders used to care about what the field sales people(brokers) who have their fingers on the pulse have to say. Not anymore. I dont think there is such a thing as Broker Advocate anymore. I sure miss the old days!
  • Marjorie | 29 May 2010, 01:07 AM Agree 0
    I agree with 'we got other things to fix'. The conservatives say government shouln't meddle, but what do they do? They arrange it so te 'big' guys can get bigger and the small ones just et a bigger hill to climb. Why is it fair for someone buying a 150 unit building to get 95% financing and the purchaser of a 4 plex only 80%? That's easy - the rich get richer and the government maek sure it's thir friends so they all get richer.
  • M | 09 Jun 2010, 03:09 AM Agree 0
    Aaah People!! Don't forget about Genworth. They didn't impose the three year rule.
  • TMACC in Alberta | 11 Jun 2010, 05:52 AM Agree 0
    Yeah, this one has me scratching my head. On one hand they don't want those who are not actually making money - to state their income....which makes sense. But, those who legitimately succeed in their self employment ventures, cannot write off legitimate expenses to reduce their tax bill? Why are the self employed descriminated against. Some lenders are allowing add backs, but not many...where is the common sense?
  • Gidia | 25 Jun 2010, 05:13 AM Agree 0
    The BFS clients, that will likely default are the ones in the business for LESS than 3 yrs, NOT the ones that have been successfully self employed for more than 3 yrs. BFS less than 3 yrs generally do not have an accumulation of assets, as opposed to one who have successfully operated a business, knows how to manage money, expenses, etc. This new rule will and has affected the market conditions and I believe will continue to do so as the months go by. No offense to New to Canada, but they are able to purchase with 5% down,no credit history and 3mths job stability. We are punishing the BFS people that provide jobs to this country.
  • vittorio oliverio | 14 Jul 2010, 04:56 AM Agree 0
    when they changed the rules it was not because of the bfs problem, no it was because the government wants bfs to pay more taxes and the best way to do this? if you want a good mortgage and you been in business for over 3 years pay your taxes claim higher income and the gov't will be happy. that is the reason. this goes the same with the new rental rules- show a positive income on your rental and pay your taxes and you can have more. you show no positive income on rental and to bad. simple as that.

    if the government wanted to do a proper job. bfs should be in business for at least 3 years before you can buy a home if you want stated, at least this way you know that person can make money in his business. I have seen so many times when bfs fails in the first 3 years and they have more debts or declare bankrupt. now that is when problems starts----SO LETS KEEP IT WHAT IT REALLY IS, THE GOV'T WANTS MORE TAX MONEY, so this way if you want a mortgage start paying your taxes.
  • Tracy Luciani Price | 20 Aug 2010, 09:27 AM Agree 0
    I am frankly appalled at the new rules for self employed which has effectively shut out long time business people with good credit from getting high ratio mortgages. Even GE is asking for clients to disclose their 'line 150' and if it is not high enough and most of the applications are declined. Self employeds are the backbone of our economy and they are once again being relegated to second class citizens for mortgage purposes. When I asked an GE insurer recently whether there have been an increase in defaults by self employed people he told me it was no more than the norm. Wow! And to give new self employed with no history a mortgage is just bad underwriting. Where was our industry when this ridiculous changes were made by our government to the self employeds. The guidelines are forcing self employeds people to write up their income just to qualify for a mortgage. Tax grab---You Betcha! The banks have never supported self employed and most are forced to refinance their homes to capitalize their businesses. Shame on the federal government for bringing in this punitive legislation. And the situation is even worse if you are a commissioned self employed like ourselves...where do we go for mortgages now???
  • Chris Richards | 20 Aug 2010, 01:29 PM Agree 0
    Really, just a touch of irony. The BFS has trouble getting a mortgage but his/her employees don't! The BFS can write a job letter so that his 3 month hire can get a mortgage at 95% LTV, but if he doesn't have a line 150 SOL. It is tax collection tactic by the gov't.
  • Jan notsmiley | 25 Apr 2014, 07:11 PM Agree 0
    My father, who is retired now, was an CAA and so I learnt from him how to do the taxes for my business. I have been doing them for over twenty years. This will now require me to pay an accountant to do them, and frankly I know I will still have to go over them in detail to make sure they haven't missed something. There are many self-employed people who do their own taxes, and now it isn't enough to have a statement of return from CRA. This sounds more like a tax grab and insurance against tax fraud then about protecting CMHC and defaults on mortgages by the self-emplyed!
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