Despite insurance payments, woman remains homeless a year after fire

by Matt Gephardt and Cindy St. Clair

Despite insurance payments, woman remains homeless a year after fire (Photo: KUTV)

(KUTV) On the recordings to 9-1-1, you can hear the panic in Patrice Harris’ voice as she screams from them to “hurry.”

Her home was on fire and she was trapped inside. It was a cop who first arrived on scene and thanks to some heroic, and aerobic efforts, Harris escaped from her second story window.

“He found a ladder in my backyard and I climbed out the ladder on top of his shoulders to get out.”

It was a harrowing ordeal — but it was not a recent ordeal. It all took place way back in in July of 2016.

Despite the home being insured, Harris is still homeless more than a year later. She is waiting for her home to be rebuilt and living in a tent in her backyard?

“Nothing wakes you up like a cold hose shower,” she joked.

The problem, she says, is that even though her home was insured, her contractor can’t get paid. She’s spent the last year fighting to get the funds so construction can get moving but she can’t get the people who control the money to budge.

“I feel hopeless, like I’m never going to get home,” she said.

Harris’ insurance company, Farm Bureau, tells Get Gephardt that they have already paid out on the claim. The money was not paid to Harris. It was paid to her mortgage company, the primary lien holder on the home.

The mortgage company is “responsible for releasing the funds to the builder,” a Farm Bureau spokesperson wrote.

Harris’ mortgage company, Seterus, did not respond to multiple requests for comment, but perhaps they got the messages because, a short time later, Seterus sent the funds to Harris’ builder so he can complete the work on her home.

She’s still frustrated.

“They have really put me through a living hell,” she said.

According to the Utah insurance department, it’s common for an insurance company to send the money to the mortgage company rather than to the person whose house burned down.

What is not common is the time frame. In Utah, repairs are supposed to take around “180 days” according to most insurance contracts.

Is mortgage protection insurance necessary when buying a house? | Money

Q I have been reading articles regarding mortgage life insurance cover. Unfortunately I have a higher-than-wanted body mass index (BMI) count, and from what I’ve read I believe I would find it hard to get insurance.

If I wanted to sell my existing property and buy a new place, but couldn’t get mortgage life insurance due to my BMI, is it compulsory to have cover to be accepted for a mortgage? Would my lender still lend to me if I earn enough to pay the mortgage? AM

A Mortgage life insurance, also known as mortgage protection insurance, pays out a lump sum which is sufficiently large to pay off the outstanding debt if you die before the end of the mortgage term. Unlike buildings insurance, which lenders do insist you take out, it is not normally a definite requirement that you take out this sort of life insurance. So provided you pass your lender’s affordability test, your lender will still lend you the money whether you have a life policy or not.

If you are buying property on your own and have no dependants, you don’t need mortgage protection insurance, because if you died the property could be sold to pay off any outstanding mortgage. If, however, you do have a family whose home the property is and who could not afford to pay the mortgage without you, then you should consider taking out a policy.

You are right in thinking that your high BMI will affect any life insurance application, but it doesn’t necessarily make obtaining cover impossible.

According to the Special Risks Bureau, which specialises in finding cover for people regarded as high risk, including those with a high BMI, if your BMI is within an insurer’s standard minimum and maximum levels (which vary from insurer to insurer), your weight is not likely to affect your application. However, if your BMI is under or over these levels you are likely to see an increase in the cost of the policy.

Some insurers will increase premiums, typically by 25%, for someone with a BMI of 30 or above, which is deemed clinically obese. But there are others who will charge the standard premium for those with a BMI of 36 or more. Premiums tend to be loaded incrementally for BMIs between 36 and 50. For people with a BMI over 50 there are specialist insurers, but the price will be high.

Should You Rent or Buy a Home? — The Motley Fool

Homeownership was once the cornerstone of the American Dream, but times are changing. More U.S. households are renting today than at any point in the last 50 years, according to a Pew Research Center analysis.

For many people, the comforts of home include a well-funded bank account — and in some circumstances, renting can be more financially savvy than buying. Ask yourself these questions as you make long-term housing decisions. You might find that renting is the better option.

1. How long do you plan to stay?

Whether renting or buying a home is the best financial choice usually comes down to one thing: timing. Finding an affordable home (and later making a profit on it) depends heavily on how long you plan to keep the property. According to Zillow (NASDAQ:ZG), for instance, the current home listing price in Bothell, Washington, is $698,448, and the average rental price is $2,500. Assuming a 20% down payment on a home purchase or a 5% annual increase in rental price, you’d need to own the home for at least two years before it becomes the better option.

Keep in mind that not every market is booming. In fact, two-thirds of U.S. homes still haven’t returned to their pre-recession values, according to a Trulia report, and owners looking to cash out may have to wait until 2025 before securing a profit. Carrying debt is something of a risk, and a 12-month lease gives you the freedom to move and adjust your housing expenses based on your current needs and income level — two things a fixed mortgage can’t deliver. Do your homework and use a comparison calculator to help you understand the costs of buying and renting.

handing house keys to owner

Image source: Getty Images.

2. Do you know all the costs?

Comparing rental prices to mortgage payments is a good start, but it’s also important to consider the hidden costs associated with each. For renters, the “cost” is the lack of home equity and the inability to claim housing-related tax breaks.

For example, suppose you’re a homeowner who lives in New York and falls within the 28% income tax bracket. If your mortgage is $200,000 with a 4.5% interest rate, you qualify for $3,585 a year in tax deductions. That said, you’ll also deal with expenses that don’t impact a renter’s monthly budget, including:

  • Homeowner’s insurance: Protecting your home from damage comes at a price, and while insurance rates vary, the rule of thumb is to divide your home’s value by 1,000 and multiply the result by $3.50. If you home’s value is $200,000, for instance, you’d pay around $700 per year, or $58 per month, for coverage. Renter’s insurance, meanwhile, is usually less than $20 per month.
  • Private mortgage insurance (PMI): If you have less than 20% equity in your home, expect to pay PMI, which is usually between 0.50% and 1.2% of your loan value. For example, 1% assessed on your $200,000 mortgage would add $200 to your monthly housing expenses until you built up at least 20% equity in your home. 
  • Property taxes: A typical household spends $2,127 each year on property taxes, but you could pay much more depending on location and community benefits.
  • Maintenance: Homeowners shell out nearly $170 per month on average for regular maintenance and repairs, and that’s not including big-ticket items like a roof repair, a new HVAC system, and other needs that can cost four or five figures. 
glass jars filled with money

Image source: Getty Images.

In this scenario, owning that $200,000 home costs $7,267 a year in extra expenses — more than double what you’d save in taxes. As a renter, you won’t need to worry about adding these fluctuating expenses to your budget, and your landlord may even pick up the tab for your utilities, saving you even more compared to the average homeowner. Consider the hidden costs to learn whether those big tax breaks are worth it. 

3. Are you “throwing money away?”

It’s often said that renting is “throwing money away,” but building home equity isn’t the only way to watch your money grow. There’s no denying that property can be a valuable asset, but on a month-to-month basis, owning a home is still more expensive in all 50 states, according to a 2017 NerdWallet analysis, and an inflated budget can seriously impact your ability to save for retirement.

According to the Economic Policy Institute (EPI), the average American has less than $5,000 in savings, and couples between age 50 and 55 only have about $125,000 earmarked for their golden years. That’s not nearly enough to fund a long and financially secure retirement, and lower monthly costs can help you divert funds into catch-up 401(k) and IRA contributions, liquid savings, and other investments. For instance, if you’re 50 and can save $500 a month in housing-related costs, investing it at a 7% return will yield almost $169,000 by the time you reach age 66. 

Over the course of several years, you’ll likely come out ahead by owning rather than renting. However, if you have reason to doubt your ability to keep up with the costs of homeownership, or if purchasing a home would leave you unable to save for the future, then renting could be the more responsible choice for now.

The Numbers Don’t Lie: Buying Is Better Than Renting by Patrick Stoy

The numbers make a compelling argument for why it’s a great time to stop throwing money away on rent and become a homeowner instead.

The following example should help determine whether you should purchase a home or continue renting.

If you are currently paying $1,500 a month in rent, you will spend $90,000 over the next five years to cover the cost of housing.  Stop and think about that for a second. That’s nearly $100,000 in funds that are gone forever, money that could have been spent on a child’s education, a boat or a vacation home – money that met the same fate as the dinosaurs!

On the other hand, if you decided to put the same amount – approximately $1,500 per month – toward purchasing a home valued at $250,000, the long-term financial gains and emotional rewards could be substantially higher.

Believe it or not, it is still possible to buy a spacious, well-built home in Wilmington for $250,000. This may not be the case for much longer, as many experts are predicting that the influx of new residents projected to move here over the next few years will likely drive prices higher.

If the borrower has good credit, it should be possible under current conditions to obtain a loan at 4.25 percent – with no mortgage insurance – on a home purchased for $250,000 in an area without HOA fees. With a five percent down payment of $12,500, which could be a gift from a friend or family member, the remaining principal would be $237,500, and the payment would be about $1,537 per month, including taxes and insurance.  Assuming the property is in the city of Wilmington, where the current tax rate is 1.05 percent, the $1,537 would include about $218.75 per month for taxes, and approximately $150 per month for insurance.

After five years, the homeowner would have paid $92,226, plus the initial down payment of $12,500 and any costs associated with repairs and maintenance. That’s more than $100,000 in costs for the homeowner over five years. 

Yes, that is more than the cost of renting, but renting for five years does not leave you with a home at the end of the term, just a state of mental and physical exhaustion from treading water for so long.

Homeownership provides the dual advantage of principal reduction and price appreciation. In a five-year period, the homeowner would have paid down the principal by an amount of $21,832, assuming no extra payments were made. The remaining loan amount would be $215,668.

Taking a conservative estimate of price appreciation, two percent per year leaves the owner with a residence valued at $276,020 after five years have passed. The difference between the remaining principal – $215,668 – and the new value after five years – $276,020 – is $60,352 in home equity. 

If you subtract the initial down payment of $12,500, that leaves a net financial benefit of $47,852, achieved through principal reduction and appreciation.

It may seem complicated, but if you sold your home after five years and were suddenly holding a check in your hand for $60,352, it is highly unlikely you would regret the decision to stop being a renter. Of course, if you decided to stay in your home instead of selling, this would not be applicable. However, it could be possible to do a cash-out refinance and gain access to a significant amount of funds at a low interest rate. 

Even without considering the tax advantages associated with homeownership, which can be significant, it is clear that owning a home provides a wealth of benefits compared to renting. Of course, you should always consult an accountant or tax attorney prior to making a decision.

It’s worthwhile to point out there are many programs available that allow for a down payment that is lower than five percent. Though the initial costs of homeownership are higher, mainly because of the down payment, the financial gains accumulate and the underlying value of the investment remains. 

After a term of 30 years, the renter is left with nothing. After a term of 30 years, the person who took the leap and made the investment is left with a place to call home.

For a no obligation consultation about your options for purchasing a home, give me a call at the number below. 

Patrick Stoy (NMLS Numbers 39527 and 39166) has 18 years of mortgage lending experience. Patrick is CEO of Wilmington-based Market Consulting Mortgage, which he started in 2005 with a mission to build lifelong customer relationships by providing real value. To learn more about Marketing Consulting Mortgage, visit Patrick can be reached at [email protected] or 910-509-7105.

Programs offer help for Irma victims

The Coastal Empire may have fared better than many communities in its brush with Hurricane Irma, but there is still plenty of pain to go around — from flooded homes and tree damage to the economic impacts of shuttering a business for days.

Luckily, assistance is available in a myriad of forms from a variety of agencies and organizations.

To help our readers and business owners sort through the programs available and find what best suits their situations, we’ve compiled a list of what’s being offered and who qualifies. As other programs become available, this list will be updated online at


Register for FEMA assistance

Homeowners, renters and business owners in Camden, Chatham, Glynn, Liberty and McIntosh counties may register for disaster assistance from the Federal Emergency Management Agency for disaster assistance for uninsured and underinsured damage and losses resulting from Hurricane Irma.

To be eligible for federal aid under FEMA’s Individual Assistance Program, storm damage and losses from the hurricane and flooding must have occurred as a result of Hurricane Irma, beginning Sept. 4.

Register at or through the FEMA app. Applicants will need to provide their Social Security number, daytime phone number, current mailing address and the address — including zip code — of the damaged property; and any private insurance information.

When an applicant registers, each receives a unique registration number. The registration number is important and should be written down and kept handy. Anyone who does not have a registration number is not yet registered.

Registering allows applicants to:Look up an address to find out if it is in an area declared for individual assistance”

Check the status of their application and get updates by SMS or email,

Upload documents to support their application.

FEMA Disaster Survivor Assistance teams are currently canvassing Irma-stricken neighborhoods in the five counties to help residents register for assistance and to quickly identify and address immediate needs.

Mobile team members can be identified by their FEMA clothing and photo IDs. Residents should ask for photo identification before providing any personal information.

HUD offers help to homeowners, renters

The Department of U.S. Housing and Urban Development has announced it will speed federal disaster assistance to those in the five Georgia counties impacted by Irma, providing support to homeowners and low-income renters forced from their homes due to the storm.

HUD offers foreclosure relief and other assistance to certain families including: A 90-day moratorium on foreclosures and forbearance on foreclosures of Federal Housing Administration (FHA)-insured home mortgages for the approximately 11,639 FHA-insured Georgia homeowners living in the impacted counties;

Making mortgage insurance available — HUD’s Section 203(h) program provides FHA insurance to disaster victims who have lost their homes and are facing the daunting task of rebuilding or buying another home. Borrowers from participating FHA-approved lenders are eligible for 100-percent financing, including closing costs;

Making insurance available for both mortgages and home rehabilitation. HUD’s Section 203(k) loan program enables those who have lost their homes to finance the purchase or refinance of a house along with its repair through a single mortgage. It also allows homeowners who have damaged houses to finance the rehabilitation of their existing single-family home;

Information on housing providers and HUD programs — The department will share information with FEMA and the state on housing providers that may have available units in the impacted counties. This includes public housing agencies and multi-family owners. The department will also connect FEMA and the state to subject matter experts to provide information on HUD programs and providers;

Assisting state and local governments in re-allocating existing federal resources toward disaster relief. HUD’s Community Development Block Grant (CDBG) and HOME programs give the State and communities the flexibility to redirect millions of dollars in annual formula funding to address critical needs, including housing and services for disaster victims. HUD is currently contacting state and local officials to explore streamlining the Department’s CDBG and HOME programs in order to expedite the repair and replacement of damaged housing; and,

Offering Section 108 loan guarantee assistance. HUD will offer state and local governments federally guaranteed loans for housing rehabilitation, economic development and repair of public infrastructure.

For more information on HUD disaster resources, go to


USDA has help for rural communities

The U.S. Department of Agriculture’s Rural Development arm is providing tools and resources to help rural communities recover from the devastation brought by hurricanes Harvey and Irma. The emergency procedures provide additional flexibility for Rural Development borrowers and community partners to help them recover as quickly as possible and ensure they have what they need to rebuild their homes, businesses and communities.

Rural Development is helping businesses and utilities that are current USDA borrowers by considering requests to defer principal and/or interest payments, and to provide additional temporary loans. Current USDA single-family home loan customers may also qualify for assistance. Borrowers can contact their local Rural Development office to obtain information on potential assistance. Additional information may be found at

IRS, Georgia Revenue Department extend relief

The Internal Revenue Service and the Georgia Department of Revenue is offering tax relief to victims of Hurricane Irma by postponing until Jan. 31, 201 certain deadlines for individuals whose homes or businesses are located in declared disaster areas and have been affected by the disaster.

The postponement applies to return filing, tax payment and other time-sensitive acts as specified by the IRS. This includes taxpayers who had a valid extension to file their 2016 return that was due to run out on Oct. 16, 2017. It also includes the quarterly estimated income tax payments originally due on Sept. 15, 2017, and Jan. 16, 2018, and the quarterly payroll and excise tax returns normally due on Oct. 31, 2017.

The postponement also includes return filing, tax payment, and other time-sensitive acts related to Georgia tax types not administered by the IRS such as Georgia sales and use tax but does not apply to International Fuel Tax Agreement interest.

For more information, go to


Free legal help available for Irma victims in Georgia

A disaster legal aid hotline is now available for Hurricane survivors in Georgia who reside in Camden, Chatham, Glynn, Liberty and McIntosh counties and cannot pay for an attorney. Disaster survivors may call 1-866- 584-8027 (toll free) or (404) 527-8793 between 9 a.m. and 5 p.m., Monday through Friday, to request assistance.

When connected to the hotline voicemail, callers should identify that they are seeking disaster-related legal assistance, brief details of the assistance needed and in which county they are located. Individuals who qualify for help will be matched with Georgia lawyers who have volunteered to provide free legal assistance. Survivors may also request assistance online by emailing type of legal assistance available includes:

Securing FEMA and other benefits,

Making life, medical and property insurance claims,

Dealing with home repair contractors,

Replacing wills and other important legal documents destroyed in the hurricane,

Helping with consumer protection matters, remedies and procedures and

Counseling on mortgage-foreclosure problems or landlord/tenant issues


SBAC has business loans available

Savannah’s Small Business Assistance Corporation has loans of up to $30,000 available to assist businesses trying to recover from the effects of Hurricane Irma.

Eligible uses include building repair, equipment repair and/or replacement, inventory replacement, bridge loans to insurance claim payment, and operating capital.

Small businesses in Savannah and the surrounding counties of Chatham, Bryan, Bulloch, Effingham, Liberty, and Long can apply for the storm recovery loans. In South Carolina, the counties of Hampton, Jasper, Beaufort, Colleton, Charleston, and Dorchester also are eligible for assistance.

Qualified borrowers must be an existing business with a 2016 business tax return and a current business license.

The SBAC offers loans of up to $30,000 for a term of up to 36 months, with amortized principal and interest at a 7 percent rate. All loans are subject to availability of funds and prudent business lending practices. There is also a zero interest express loan – up to$5,000 for six months – for those businesses that need a quick kick-start to re-open.

For more information on the Storm Recovery Loan Program Program, contact the Small Business Assistance Corporation by email(, phone (912-232-4700) or website (

Reverse mortgage reforms create stampede among would-be borrowers – Orange County Register

Buying a Home? The Real Cost of Homeownership – ZING Blog by Quicken Loans

Young couple eating together at home

We talk a lot about the advantages of homeownership. You get to have your own space in the world. As opposed to paying a landlord, your mortgage payment is an investment in yourself because you’re gaining equity in the home with each mortgage payment.

That being said, what’s the real cost of owning your own home? Sure, there’s the mortgage and the down payment, but there’s a lot more involved. Let’s go over some of the math involved to see if you’re really ready to buy your own place.

Housing Costs

One big factor to consider when it comes to whether you should get a mortgage is the cost compared to renting. Cost of living definitely varies depending on where you live, but in most places, you will find it makes more sense to buy.

According to the latest data from Zillow, the average cost of a two-bedroom home across all major areas in the United States was $157,400. Although costs vary depending on what state you’re in, that equates to a mortgage payment of about $774.31 if we assume a 4.25% interest rate.

You can check out our amortization calculator to plug in your own numbers based on your situation.

By comparison, the average monthly rental cost for a two-bedroom home is $1,575. By renting you just about double your housing cost.

As a percentage of income, Americans spend about 15.9% of their income on monthly mortgage payments as compared to 29.1% of income spent on rent. Rent also tends to go up every year. On the other hand, even if you have a mortgage with an adjustable rate, the mortgage payment will only change after an initial fixed period of between five and 10 years.

Couple this with minimum down payments that are anywhere from 1%*– 3.5% and buying a home can be a very good deal. However, there’s more than just the mortgage. Let’s talk about some of the other stuff.

Costs Beyond the Mortgage

After the mortgage and down payment, there are other costs associated with becoming a homeowner. We’ll go over what these costs are as well as the factors that might help offset some of them.

Property Taxes

One thing to keep in mind when purchasing your home is that you will have to pay property taxes. Tax rates and any exemptions you qualify for vary across the country, so it’s a good idea to take local taxes into consideration when selecting a location for your home.

It’s especially important to be aware of property taxes now. The key reason for this is that property values are rising in most areas of the country at the moment. This can be a double-edged sword.

On one hand, you’re gaining equity faster, meaning you can convert more of it into cash for renovations, investments or even a new car you need. You’ll also get more out of the property in a sale.

On the flip side of the coin, when your property value rises, your taxes tend to go up along with it. If you have an increase in any kind of valuable assets, the government is going to want its cut.

When you’re shopping for a home, be aware of your effective property tax rate after any exemptions you would get. It can definitely make a difference in the cost of housing in the area.

While you will get taxed on the value of your property, there are also a number of tax deductions you can take that are associated with both your mortgage and the property itself.

Homeowners Insurance

Another key consideration is the cost of homeowners insurance. This helps protect your possessions in your home as well as paying for any damage to the home caused by a number of different events.

All of the major mortgage investors – including Fannie Mae, Freddie Mac, the FHA and VA – will require that you have homeowners insurance in order to protect their investment in your loan. This is a cost you have to consider.

Your premiums may also be different depending on where you live. One thing homeowners insurance doesn’t cover is flooding caused by a natural event. If you live in a flood zone or in states that may be regularly impacted by hurricanes, you may be required to buy additional flood coverage. If you live near a forest area, you might need additional hazard insurance to deal with the impact of potential wildfires.

With all of this said, you can think of homeowners insurance as an analog for renters insurance. It’s not really an additional cost compared to rental. It’s just a different one.

Homeowners Association Fees

Depending on where you live, you may end up as part of a homeowners association. Sometimes you have the option of whether to join. Often, you don’t.

Living in a homeowners association can have its advantages. Snow removal and yard maintenance are two things that are commonly taken care of by associations. They may also do things like host neighborhood events.

If you do look at a house that’s part of an association, be sure to get a full breakdown of what the association fees cover. Once you buy the house, the fees aren’t optional and the association can often put a lien on your house for unpaid dues. Make sure the services provided are worth it to you.

Appliances and Furniture

Another thing you’ll want to take into account are any appliances and furniture you need. You’ll definitely want an oven with a stove, a refrigerator-freezer and a microwave, at minimum. Having a dishwasher isn’t necessary, but it’s nice.

A washer and dryer is a must if you want to avoid trudging to the laundromat.

New homes may or may not include appliances. If you’re purchasing an existing home, you can take a look at possibly buying from these goods from the seller if they don’t want to move certain appliances.

The nice thing is that appliances tend to last a while and you can even move them between houses if you want. Incidentally, moving is one of those tax-deductible, so long as your relocation is work-related (moving for a new employer or being transferred by your current one).

With furniture, if you’ve ever lived in your own place, odds are you already have some of your own pieces and design aesthetic you can bring to your new space. You can supplement that with a couple of new items if you want.

Repair and Maintenance

When you do you have your own house, you definitely have to deal with your own maintenance and repair. Some of this is basic stuff that you do regularly, like replacing furnace filters, cleaning the gutters and mowing the lawn. On the other hand, you only have big expenses like replacing the furnace and getting new siding every decade or so.

The only thing to be aware of is that everything doesn’t fail at once. Once a year, it helps to redo the floors. Two years down the line, it might be time to get new windows. You should always be putting something aside for maintenance.

Taking Care of Outside Maintenance

There’s lawn care, as well as driveway and sidewalk maintenance issues, to think about. You’ll need a lawn mower or a lawn service. If you’re not into landscaping and planting, there are companies you can hire that do that as well.

If you’re living in a snowy climate, you need to clear the driveway and sidewalk to make sure everyone stays safe. You can shovel and salt. You can also hire someone to do that.

If you don’t want to put a lot of effort into your lawn, it helps to budget to bring someone in to do it for you.

In some areas, you may be susceptible to certain pests. It’s important to be prepared for bug mitigation if you live in an area where there are commonly termites, cockroaches or other creepy crawlers.

Utilities and Services

Depending on what’s included in your monthly rent, it may be the first time you pay for utilities like electricity, water and gas when you get your house. It’s important to take these things into consideration in your monthly budget.

You should also look at internet and cable services. What service you can get is sometimes tied to where you live. Garbage pickup is sometimes included in your city taxes and sometimes it isn’t.

The Bottom Line

Even when taking into consideration all of the factors mentioned above, if you can afford it, in the majority of cases, it makes more sense to buy your home. You can spend so much more money on rent and it goes up every year. Buying a home also gives you the ability to make it yours.

Are you looking to buy a home soon? You can get a safe, secure, online preapproval through Rocket Mortgage® by Quicken Loans®. If you’d rather get started over the phone, one of our Home Loan Experts will be happy to speak with you at (888) 980-6716. If you have any questions, let us know in the comments.

For example, the payment on a $200,000 30-year fixed-rate loan at 4.625% (5.012% APR) with an LTV of 97% is $1,028.28, which includes a mortgage insurance payment of $61.67. Taxes and homeowners insurance are not included. Rates shown valid as of 09/21/2017. Restrictions may apply.

Update on impact of Federal Mortgage changes on Atlantic Canada

HALIFAX, Sept. 25, 2017 /CNW/ – Paul Taylor, President and CEO of Mortgage Professionals Canada will be traveling across Atlantic Canada to meet with local community leaders and senior government officials to discuss issues of housing affordability, availability and accessibility. Paul will focus his discussions around the negative impacts that the federal mortgage insurance and eligibility changes are having on first-time homebuyers in the four provinces.

CREA Residential Market Forecast (CNW Group/Mortgage Professionals Canada)

“I am pleased to be in Atlantic Canada discussing how the impacts of the federal changes are impacting those in the region” said Taylor. “I am hopeful that this week’s advocacy efforts can help inform Atlantic Canadians on the reasons why their housing markets may be slowing and encourage consumers to speak out against these policies.”

The association’s Atlantic Canada members are very concerned with the negative economic impacts that these recent policy changes are having on housing activity in the region. The policies, designed to cool the hot markets of Toronto and Vancouver, have generated negative results for Atlantic Canada’s housing market, and placed additional costs on middle-class consumers through higher rates and reduced purchasing power. According to a report issued by the Canadian Real Estate Association, modest price growth is expected in 2018 for Prince Edward Island, New Brunswick and Nova Scotia, with prices declining in Newfoundland. PEI’s housing price growth is expected to slow from 7.4% in 2017 to 0.2% in 2018; New Brunswick’s growth is expected to slow from 4.4% to 2.2% and Nova Scotia’s growth is expected to slow from 3.5% to 0.2%[1]. 

About Mortgage Professionals Canada

Mortgage Professionals Canada is the national mortgage industry association representing 11,500 individuals and 1,000 companies, including mortgage brokerages, lenders, insurers and industry service providers. Our members make up the largest and most respected network of mortgage professionals in the country whose interests we represent to government, regulators, media and consumers. Together with our members, we are dedicated to maintaining a high standard of industry ethics, consumer protection and best practices.

The mortgage broker channel we represent, originates more than 35% of all mortgages in Canada and 55% of mortgages for first-time homebuyers, representing approximately $80 billion dollars in annual economic activity. With this diverse and strong membership, we are uniquely positioned to speak to issues impacting all aspects of the mortgage origination process.


Who We Are
Mortgage Professionals Canada is non-profit industry association whose members include mortgage brokers, mortgage lenders, mortgage insurers and industry service providers.  We have over 11,500 individual members and over 1,000 businesses across Canada.  The mortgage broker channel originates approximately 35% of all mortgages in Canada and nearly 55% of mortgages for first time home buyers. This represents more than $80 billion dollars in economic activity.

Housing Market Outlook
In Atlantic Canada, the Canadian Real Estate Association has recently released numbers that show modest price growth is expected in 2018 for Prince Edward Island, New Brunswick and Nova Scotia and declines in Newfoundland. PEI’s housing price growth is expected to slow from 7.4% in 2017 to 0.2% in 2018; New Brunswick’s growth is expected to slow from 4.4% to 2.2% and Nova Scotia’s growth is expected to slow from 3.5% to 0.2%[2]. Newfoundland is expected to improve slightly from 2017 from -4.3% to -1.9%. We expect growth to be even lower or declining should the federal government continue to move forward with more policies to limit demand.

Impacts of the Changes
CMHC’s insured volumes fell 41% in the first quarter of 2017, including a 23% reduction in homeowner insurance and an 87% decline in portfolio insurance.  The people that have most been impacted by these changes are first-time homebuyers needing mortgage insurance, which are more likely to be young Canadians from middle and low income families.

We believe that the cumulative impact of various policies has created uncertainty in the Canadian housing market. We acknowledge that the cooling of certain markets was the objective and seems to is showing signs of being achieved, at least in the Greater Toronto Area and to a lesser extent the Greater Vancouver Area. However, we are seeing reductions in housing activity, both sales and housing starts, in areas of the country that were already moderate, flat or even declining. We are concerned that the combination of all of the changes, and the speed with which they have been cumulatively implemented, have created some adverse effects which could cause a further, and potentially significant, decline in housing activity nationally. Homeownership is one of the best ways to combat asset inequality and ensure a growing and thriving middle class. Policies that make it harder for young people to purchase a home hurt the overall growth of the middle class.

What We Are Asking the Federal Government

  • In light of all of the changes that have been made recently by both federal and provincial governments that the government slow down and hit pause on the measures yet to be implemented, most specifically its proposed risk sharing provision. We believe it prudent for the government to take 12-18 months to examine and assess the impact of these changes before proceeding with new measures.
  • That the government adjust the November 30th change to allow for refinances to be included in portfolio insurance. If 80% LTV is unpalatable, please consider reducing the threshold to 75% rather than removing these products’ eligibility altogether.
  • That the government decouple the stress test rate from the posted Bank of Canada rate. Instead, set the stress test based on a market rate and consider having the Bank of Canada set a rate that is independent of the banks’ posted rates. We recommend a stress test of 0.75% be used.
  • For the sake of ensuring competition is maintained in as fair a manner as possible, OSFI should require all mortgages to qualify at the lower 0.75% stress test rate, not just insured mortgages. We have responded directly to OSFI on their propose changes to the B-20 Guideline. 
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    SOURCE Mortgage Professionals Canada

    Allied Home Mortgage companies to pay $296.3M for FHA fraud scheme

    Two affiliated mortgage companies and an executive have been ordered to pay a trebled award of damages related to a fraud scheme involving the Federal Housing Administration’s mortgage insurance program.

    Entities formerly known as Allied Home Mortgage Capital and Allied Home Mortgage were ordered to pay approximately $296.3 million, while CEO Jim Hodge was ordered to pay about $25.3 million, according to Joon Kim, the acting US Attorney for the Southern District of New York.

    Allied had been accused of numerous instances of misconduct as far back as 2010. Several lenders have sued the company, claiming it tricked them into funding unqualified loans, and federal agencies have cited the companies numerous times for overcharging clients and other offenses.

    The latest judgment follows a November 2016 unanimous jury award of about $93 million in penalties against the companies and about $7.4 million against Hodge in favor of the federal government. The original award was grounded on the defendants’ violations of the False Claims Act (FCA) and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA).

    The new judgment, awarded by District Judge George Hanks Jr. of the Southern District of Texas who presided over the trial, trebled the jury verdict and added statutory penalties under the violated laws. In addition to the trebled amount, the court also imposed a $10,000 penalty for each violation of the FCA and the maximum penalty of $1.1 million for each FIRREA violation. The additional penalties total approximately $13 million for FCA violations and $6.6 million under FIRREA.

    “Jim Hodge and Allied defrauded a federal mortgage insurance program designed to help spread the dream of homeownership, and then lied about it repeatedly,” Kim said. “A jury saw through their lies, and now the court has imposed millions of dollars in additional penalties. This office will continue to investigate and root out fraud in all of its forms.”

    Related stories:
    Allied slapped with $93 million in penalties for mortgage insurance fraud
    Feds to go after mortgage firm accused of fraud, threats to employees

    Stock Review: Viewing the Technicals for Genworth Mortgage Insurance Australia Ltd (GMA.AX)


    The twenty one day Wilder Moving Average has recently been seen below the fifty day Simple Moving Average on shares of Genworth Mortgage Insurance Australia Ltd (GMA.AX). Traders following these numbers may be watching for a possible shift in the short-term momentum.

    Moving averages have the ability to be used as a powerful indicator for technical stock analysis. Following multiple time frames using moving averages can help investors figure out where the stock has been and help determine where it may be possibly going. The simple moving average is a mathematical calculation that takes the average price (mean) for a given amount of time. Currently, the 7-day moving average is sitting at 2.91.

    The Average Directional Index or ADX is a popular technical indicator designed to help measure trend strength. Many traders will use the ADX in combination with other indicators in order to help formulate trading strategies. Presently, the 14-day ADX for Genworth Mortgage Insurance Australia Ltd (GMA.AX) is 18.07. In general, an ADX value from 0-25 would indicate an absent or weak trend. A value of 25-50 would indicate a strong trend. A value of 50-75 would signal a very strong trend, and a value of 75-100 would indicate an extremely strong trend. The ADX alone was designed to measure trend strength. When combined with the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI), it can help decipher the trend direction as well.

    Let’s view some technical levels on shares of Genworth Mortgage Insurance Australia Ltd (GMA.AX). Presently, the 14 day Williams %R is -93.75. Readings may range from 0 to -100. A Williams %R that lands between -80 to -100 is typically seen as being in strong oversold territory. A reading between 0 to -20 would represent a strong overbought condition. As a momentum indicator, the Williams R% has the ability to be used with other technicals to help define a specific trend.

    When looking at technical levels, traders should not overlook the RSI reading as it often can dictate if momentum has pushed past a key metric. 36.02, the 7-day stands at 26.95, and the 3-day is sitting at 15.64. The Relative Strength Index (RSI) oscillates between 0 and 100. Generally, the RSI is considered to be oversold when it falls below 30 and overbought when it heads above 70.

    Looking further at additional technical indicators we can see that the 14-day Commodity Channel Index (CCI) for Genworth Mortgage Insurance Australia Ltd (GMA.AX) is sitting at -126.12. CCI is an indicator used in technical analysis that was designed by Donald Lambert. Although it was originally intended for commodity traders to help identify the start and finish of market trends, it is frequently used to analyze stocks as well. A CCI reading closer to +100 may indicate more buying (possibly overbought) and a reading closer to -100 may indicate more selling (possibly oversold).