One Place With No Bank Failures, Few Foreclosures, and Still Working

I am totally amazed at knowing this, but there is only ONE country in all of the developed group of nations that is not facing any bank crises, closures, or banking bailouts, as well as few mortgage foreclosures or personal bankruptcies. ONE

This country has strong legislation on banks that demands a much higher ratio to loans vs. deposits, so the money within the system is higher. In fact, these banks are posting profits, albeit lower than previous years.

This country has strong federal legislation over the ratio of down payments to the total mortgage amount, so that unless you have saved at least 20% of the purchase price of a house or condo, you cannot get it.  The lenders are NOT allowed to issue sub-prime mortgages, are NOT allowed to turn the mortgage papers over to others to be used in credit default swaps, and each bank must keep track of the mortgage within their books. Housing prices have dipped, not dropped, losing maybe 18% overall, with some markets remaining stable.

So, there is a solution for other countries to follow.

Add in the fact that this same country has a national health care system, and it is also one of the major trading nations in the G8 and the G20 and there is a huge number of people all over the world wondering how this one country managed to avoid the meltdown and crises affecting them.

Basically one country is a total anomaly to the whole financial mess. Weird but true. Yes, one or two of the banks within this country did get bitten by their transactions in the U.S., but only in a minor way and the deposits and other investments were more than enough to cover the losses.

Where is this place? Straight north of the U.S., Canada.

There are those who use the word “socialism” without knowing the truest meaning of that word, but for years Canada has been labelled as a socialistic society.  The government was seen as overbearing, intrusive, even too conservative to allow free markets to thrive. Taxes are only slightly higher in Canada than elsewhere.

If that is the picture of stability, then perhaps it is time some of the world governments and banks, investment houses and other agencies learned to be far more conservative, even boring.

Legal Solution to Housing Foreclosure Mess?

I decided to do some thinking on this, trying to see if there was a possible solution that is relatively simple. I came up with this one, although I am not familiar with all the legal bafflegab or laws, it may just work.

My understanding is that a mortgage is a contract, and under contract law, if one party breaks it, they can be liable. So, logically, if a bank puts out a mortgage that has the terms of repayment, and states that the bank is the holder of the mortgage, then if that bank “sells” off parts of the mortgage by “repackaging” it, the bank is in breach of contract, and possibly breach of trust.This puts others, such as investment houses, as party to the contract, without your knowledge or consent?

For example: I take out a mortgage on a home, and in the contract it states that I am to repay the bank on terms such as a monthly or weekly payment, and the bank is the sole holder of the mortgage, then if I find out my mortgage was, in fact, passed on to another entity such as a broker, then I am placed in a position of having no recourse. This is apparently what has happened with a lot of the mortgages. Banks made further contracts on my mortgage without my knowledge, agreement, or consent. This, logically, is a breach of contract and I could take that bank to court for putting my mortgage in jeopardy by parties I have no knowledge of, and without my consent. The reasoning I have here is that those unknown parties could well default, or in some other way, cause me to have my mortgage in jeopardy with, perhaps, the collapse of the bank that is holding my mortgage.

If I live in a neighbourhood where a bank and their brokers hold most of the mortgages, and those same mortgages were treated the same way, perhaps there is good grounds for a class action suit.

I do know that brokers, banks, investment houses, and others, all made separate contracts among themselves and with banks. This took the mortgages out of a contract basis between two aware parties and put the people in the houses in a position of being unable to renegotiate their mortgages. It is happening all over the US right now.

Common sense tells me the banks have, in fact, broken all those mortgage contracts unless they did put in clauses where the splitting of the mortgage was stated clearly and those who signed the mortgages knew about these clauses.

Theoretically, the class action suit could go up the chain to the top, including the owners of the banks, the corporations or companies that took part in the splits, and their executives.

I would be curious to see if any lawyer would even consider this idea, and if it is feasible. From what I do know of contract law, which is relatively simplified, I do think this would be one answer.

Personally, if I were put in any position like this, I would certainly try to find out. It may just be worth a few hundred dollars to get an answer here.

Fading Out

Up until a week ago, I had not seen much effect from all the turmoil here.  There were few signs of anything really changed.

This week the news here was broadcasting an item about a series of condominium towers that are now in receivership because the developer from Korea had used Lehman Brothers for financing. The owner has now been put in the position of declaring bankruptcy with the sub-company building two of four towers.

The developer had created a company just for those buildings, so the permits, etc. could all be done with local authorities and laws.

Housing prices are still very high, and there have been few here even close to foreclosure, yet. I do know other cities around have seen a slight rise in foreclosure, but those numbers are still in the hundreds, not the thousands.

Linens and Things is the other company that has disappeared here.  They were based in the US, so I gather the finance and company structure was weakened, then went under.  Another sign that some companies went over the capacity for expansion and put themselves into a bad financial position.

I am still confounded by some of the business practices in the US. Take WalMart for example. They tried and almost succeeded to bust unionization here. There was one store they opened, which after the employees did get unionized, WalMart promptly closed. I know of some of the business practices that Wal Mart use, and here they are against the laws. Discrimination against women, refusing to pay for holiday pay, firing with no reason, all kinds of very bad business practices.

Personally I will NEVER spend a dime there. I have no use for any company that will deliberately abuse the public, the courts, the laws, and especially their employees.

Some of the companies that wanted to expand to this country found themselves in lawsuits both from their former employees and from the federal and provincial laws. Most who ran afoul of the laws closed their businesses instead of trying to live up to our standards.  Minimum wages, tax, health care payments are all paid by every business here. I guess those who closed up shop did not realize that we are more “social” here, and our idea of the common well-being is much deeper.

With the disastrous down-turn in the US economy, I am still trying to figure out how on earth someone who is a parent, who has a child with a long-term medical condition like diabetes, can possibly deal with the cost of health insurance. It certainly gives me a stronger appreciation for the one man who started our “socialized” health care system. It may not be perfect, but from watching what others have gone through, even going without seeing any medical services because they cannot afford them, I shudder to think how this is going to work out.

Each person does have choices, every moment, to either get into the quicksand with those in trouble, or to stand on solid ground and put out a hand to help others get out of the quicksand. Mentally that means being strong, being able to maintain a healthy perspective, being someone who recognizes that we must take care of ourselves, otherwise we are basically useless to anyone else.  Jumping into the misery, diving into the quicksand, is no help, and those who are in the quicksand will definitely NOT thank us for doing it. Strength comes from within our own beliefs, and support is something everyone will need at one time or another. If I have strength to spare, then I guess I “socialize” myself enough to help someone out.

If you see a theme here, yes, there is one. Socialization is something every society does, and I am confounded that some would see banking regulation, knowing what is going on in the financial world, as a bad or unwelcome thing known as socialization. Sorry, but I believe that all of us have to depend on honesty, and if greed is going to wipe out integrity and honesty in business, then regulation, socialization, is necessary.

Here We Go

With all the upheaval this week, I decided to do some looking around, not so much to invest, but to see where things had gone.

There are, as per usual, people acting like hyenas over the properties and the pain, picking away on the corpses of the housing market. There are a huge number of sites now all listing foreclosures, pre-foreclosures, and seller motivated listings. For the most part, the listings are done by people in trouble, but there is a highly disturbing trend to another vehicle.

Companies are using vulnerable properties to make huge amounts of money by getting owners to list through them. Remember, these companies are NOT licensed Realtors, they are not property brokers, they are companies using the madhouse mentality to circumvent the need for a license, the need for any regulatory oversight.

If you think you want to buy a distressed property, then remember this. If the person selling is a private seller, and they OWN the property, then check to see if they are in fact buying and selling property in bulk. You may well end up with more headaches than you think.

It seems that there are far too few people paying attention to the entire housing market right now, far too few regulatory watchdogs.

As for Wall Street, what a sweet deal! I can work for some company that went way over the amount of money the company had, lend and lend and then cause a huge problem, and after all of it is done, the US government will just sweetly walk in with bags of taxpayer money and solve it! Woo Hoo! No repercussions for me or the company, except I get another job to do it all over again!

The proof is in the way housing has been the one main tool to manipulate the government, with the Savings and Loan fiasco, and now this one. No, these were not illegal, and no-one will actually ever be charged, because the governments, civic, state and federal just could not be bothered.

Yep, it will happen again, so if you are buying land, buying a home, BUY A HOME! Not a box to sell again, but some place you are capable of owning IF you lose your job, IF you divorce, and that means one you actually can afford.