In response to the recent Financial Post article (link below), do you feel like the tighter mortgage rules will show a great deal more cheating?
I'm torn because I know that a 20% downpayment from an investor is difficult, though not "impossible" as this article states, to find for some investors. But I have to wonder if it is not exactly what we need to protect the market from people who really shouldn't be investing in some cases. Speaking from personal experience, it takes a good deal of credit and/or liquid assets to manage a property properly and not be hanging on by your fingertips. After all, if the mortgage payment is reliant on rental income there has to be some kind of padding for carryover for at least a few months in a tenant-less or "worst case" scenario.
What are your thoughts?
Tighter mortgage rules may lead to more cheating
By Andy Holloway, Financial Post
Mortgage fraud may not be the most serious crime in the grand scheme of things, but it's not something the government should be helping. But that's exactly what real estate professionals say is a likely result of the new mortgage rules being put into place on April 19.
"There's going to be a dramatic increase in mortgage fraud again," says Don Campbell, president of the Real Estate Investing Network, a Calgary-based association of investors who collectively own more than $3 billion in property. "You watch this thing start to take off."
The reason? It's virtually impossible for investors to buy a third rental property without putting 20% down because the new Canada Mortgage and Housing Corp. rules use a 50% add-back policy instead of an 80% offset for rental income. Essentially, that means investors get less mileage from the rent that is typically used to pay off the mortgage.