Moochacha

The New Economy and Canadian Housing's Bubble Status

The concept of a housing bubble is a bit foreign to Canadians to begin with. How can there be a housing bubble when many people don\t own there own home, and people who have a home are losing them? Irresponsible lending?

In the U.S. where foreclosures are rising, the real reason that many of these are taking place is because people signed up for ARM's (adjustable rate mortgages that really didnt benefit them, but were extremely beneficial to companies such as Countrywide, who were able to securitize them and make a killing. The states where the housing crisis is the worst is exactly where these so called subprime mortgage companies operated.

People applying for mortgages to these companies were often
simply misinformed that they would get 1/4 percent savings if they chose this mortgage over the regular mortgage according to there accounts. This was an arbitrage play by these subprime vultures who profitted when they were able to securitize these mortgages, and package them with higher rated mortgages. With all the investig tions by congress etc they dropped the ball on this. I am not sure but I think there may be some court cases regarding this.

The subprime mortgage companies have not gained ground in Canada because these subprime companies and the infrastructure of the derivitive markets are not fostered by the banking system in the US.

Affordable housing through economic stimulus is taking a bum rap for the excesses of greedy bankers in my opinion.