“They didn’t people want to lose all of the farming because of some crisis,” he said. Ray Leclair, vice-president of public affairs with the Lawyers’ Professional Indemnity Company, said at least part of the reason non-recourse loans are part of Canada’s landscape is our agricultural heritage. Heon says Alberta created non-recourse loans because the market gyrates so much due to factors like oil prices, making consumers more leery of taking on loans. He says banks tightened standards when the economy buckled in 2008 and some lenders have created structures that force borrowers to give personal guarantees on mortgage loans. “In the lending industry they call Alberta the wild, wild west because of that,” said Dan Heon, a mortgage broker and the owner of Canadian Mortgage Team Alberta, referring to the non-recourse rules. “Frankly, it should impact your credit score.”īut the scenario still could prove tempting for some consumers if Alberta or Saskatchewan prices start to plunge quickly. “It really would depend on how you walked away from your mortgage,” she said. In Saskatchewan the rule is limited further to and doesn’t allow people with renewed mortgages, as well as no government backing, to walk away.īefore you call your bank, there is the thorny issue of your credit rating. Regina Malina, senior director of decision insights at ratings agency Equifax Canada, said getting another mortgage would likely be more difficult. And anybody with less than a 20 per cent downpayment must get that insurance in Canada. The only eligible people are those with a loan without mortgage default insurance backed by the government. “We are very far from seeing this in Alberta, so far.” The price is going to have to drop at least 20 per cent or more for it to make sense,” said Pinsonneault. ![]() “It really depends on how much equity you have put in. Mark Pinsonneault, senior economist with National Bank, said there is little question some Albertans engaged in strategic defaults at the time. Considering how much listings have spiked in Alberta as people test the market, there is clearly concern among homeowners about whether the value of their property will hold.Īnd guess what? Albertans did take advantage of the rule in 19 when home prices fell more than 30 per cent and mortgage delinquency rates rose sharply. The problem is it can happen here, namely in Saskatchewan and Alberta – the only two provinces that have similar rules. ![]()
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