Recession drags rising number of Albertans into financial ruin

[jammies]

Originally Posted by Enoch Root

I agree completely with your post, except for the last line.

The Money Marts of the world provide a service - one that there is demand for..

The last line was mostly a joke. Although making payday loans unprofitable and driving the different companies out of business would indeed move that business to illegal providers. Undoubtedly a large portion of the business would just go away, but those that are truly desperate for instant cash would have no other recourse.

That's why you regulate so far, but no farther. It's hard to say what the maximum interest rate should be, but as long as that rate is driven by the principle that you want it to be as low as possible while still allowing such places to make a reasonable profit and continue existing - and not ideological slogans like "let the market decide!" or "Down with the Man and his usury!" - you should be able to find that rate by slow incremental experimentation, if no other method suffices.

[OMG!WTF!]

Originally Posted by Cecil Terwilliger

That's totally untrue. Getting a conventional mortgage, if you have the money for a down payment, is incredibly easy and the banks have incredible flexibility that they don't have when they have to follow CMHC rules.

In the States you actually have to have a higher credit score for non insured mortgages than insured. Our banks will give you a break on credit scores but will require even more money down which is actually the biggest risk mitigation tool they have. For the risk they take on non conventional mortgages they require an awful lot and they make no secret of their preference for consumers to use CMHC.

Well that's really weird that there are at least half a dozen national companies with literally thousands of stores if it isn't lucrative. They must all like losing money. And they must like doing it in close proximity to each other because they have a habit of opening tons of stores in low income areas where they can prey on people.

Yeah that's because this business requires very high volumes. While each store needs to make their margin, there is a huge economy of scale when you have several locations. It's very hard to make one or two stores profitable. But several stores in several locations changes that dynamic. The average business in Alberta has almost 10 outlets.

You're right though. They do place them in low income areas for a reason.

Banks don't do it because it is a waste of their time and it is a scummy business for scummy companies. And banks will do just about anything for profit, so it tells you how bad predatory lending must be for them to not want to be involved.

Sure. If you say so. But in reality, it's because there is no enough profit involved for the amount of work required.

[GGG]

Originally Posted by Cecil Terwilliger

Like any available credit facility it can be abused. I don't think credit cards should be banned just because a lot of people misuse them. Neither should payday loans, but it doesn't make all people who rely on them irresponsible simpletons.

But sometimes the government uses regulation to protect consumers from themselves because they can't be trusted. Same with the companies that provide the loans.

That being said, they are essential for a lot of low income people who are vulnerable and can't turn to a bank for lending because they don't meet the requirements. No one is going to give you a $2000 loan so you can make rent that you can't afford because of the hospital bill you paid for your sick kid.

But the person who takes 2k on a payday loan is likely screwed forever now. If they didn't have enough surplus money that the hospital wouldn't take payments on the debt then they can't pay back the loan. They are better just not paying the hospital bill. Essentially they will be forever using payday loans to payoff the payday loans. Also in Canada you don't get a 2k hospital bill.

[Cecil Terwilliger]

Originally Posted by GGG

But the person who takes 2k on a payday loan is likely screwed forever now. If they didn't have enough surplus money that the hospital wouldn't take payments on the debt then they can't pay back the loan. They are better just not paying the hospital bill. Essentially they will be forever using payday loans to payoff the payday loans. Also in Canada you don't get a 2k hospital bill.

I know. That's why I'm saying payday loans comapanies are crooks.

And in Canada not every aspect of health care is free. Running up a large medical bill is easier than most people think.

[GGG]

Originally Posted by Cecil Terwilliger

I know. That's why I'm saying payday loans comapanies are crooks.

And in Canada not every aspect of health care is free. Running up a large medical bill is easier than most people think.

I missed that, I thought your position was they should exist because responsible people use them. My mistake.

[Locke]

Just when they turned that Hooters on Macleod Trail into a Cash Money store.

Such a shame.

[taco.vidal]

Few former oilpatch workers find new jobs in Alberta's growing high tech sector

Catch is not all laid-off energy employees have transferable skills

By Dan Healing, The Canadian Press Posted: Aug 04, 2016 8:01 AM MT Last Updated: Aug 04, 2016 8:03 AM MT

http://www.cbc.ca/news/canada/calgar...jobs-1.3707060

[albertGQ]

Originally Posted by GGG

Unless you made insurance illegal a private company would step in and offer insurance. For example Genworth provides the same rates as CMHC. So CMHC just keeps a cap on the premium a private company might charge.

You also have some interesting side affects. Rents would go up dramatically as the barriers to entry for housing became higher. Rather than the demand side being driven by the relative cost of a mortgage it would be supply driven.

It would also decrease housing value which would be positive outcome for those who don't currently own however I think overall such a move is negative as it decreases home ownership and increases rent costs.

The reason Genworth (and Canada Guaranty) charge the same premiums as CMHC is because they are also backed by the government. But "only" 95% instead of 100% like CMHC

[albertGQ]

Originally Posted by Cecil Terwilliger

CMHC puts in rules because they know that banks are generally stupid and will do stupid things to get short term business at the expense of long term catastrophe.

Let the banks totally self regulate mortgages and you'll be able to sign a 50 year amortization with 1% down.

I disagree. Although banks would have more flexibility without default insurance, I don't think they would be that much looser with their lending. They won't have the government backing up those high ratio mortgages so they would do their due diligence.

[accord1999]

I believe CMHC allows the banks to be more flexible, as CMHC insured mortgages are backed by the full faith and credit of the Canadian government, which means that these mortgages are essentially risk-free for the bank and allows them to reserve very little capital for each insured mortgage.

The purpose of CMHC and the similar Fannie Mae/Freddie Mac in the US is to allow banks to make more loans and without these organizations, I'd expect loan standards, at least at the big banks, would be much tighter.

[heep223]

Originally Posted by accord1999

I believe CMHC allows the banks to be more flexible, as CMHC insured mortgages are backed by the full faith and credit of the Canadian government, which means that these mortgages are essentially risk-free for the bank and allows them to reserve very little capital for each insured mortgage.

The purpose of CMHC and the similar Fannie Mae/Freddie Mac in the US is to allow banks to make more loans and without these organizations, I'd expect loan standards, at least at the big banks, would be much tighter.

Yep.

And one of the bizarre side effects is that you can get a lower rate if your mortgage is high ratio.

How ####ed up is that.

[Hockeyguy15]

Originally Posted by heep223

Yep.

And one of the bizarre side effects is that you can get a lower rate if your mortgage is high ratio.

How ####ed up is that.

It kind of makes sense, it's like an incentive for you to use their service since they make no money if you put 20% down.

Also if you put 20% down your loan isn't guaranteed by CMHC so the bank has more risk.

[Kavvy]

Originally Posted by heep223

Yep.

And one of the bizarre side effects is that you can get a lower rate if your mortgage is high ratio.

How ####ed up is that.

It is also a loan against a fixed asset, one that generally appreciates in value over the long term.

For the record, I am for stricter housing policies.

[corporatejay]

Originally Posted by corporatejay

Giving to charity teaches kids that if they don't save someone will bail them out. No thanks.

So I was out of town and slammed at work, and still managed to post little bits here and there but totally missed this.

I was kidding.

[BigNumbers]

Originally Posted by corporatejay

So I was out of town and slammed at work, and still managed to post little bits here and there but totally missed this.

I was kidding.

How anyone didn't see your post as a joke is beyond me. I can't believe the number of people who took such an obviously sarcastic and hilarious post as serious - it really surprised me.

[V]

I guess. Others on this board have a real problem with giving to charity, and are pretty happy to say it, so I didn't find it too out there.

[GGG]

Originally Posted by V

I guess. Others on this board have a real problem with giving to charity, and are pretty happy to say it, so I didn't find it too out there.

I would say people on this board are against giving to poorly run charities like breast cancer walks and rides or flavour of the month MS ice bucket stuff. I don't think anyone has actually ever opposed charitable giving.

[billybob123]

Originally Posted by GGG

... flavour of the month MS ice bucket stuff.

That is actually ALS, not MS.

[bizaro86]

I had a coworker send out an email blast asking for donations to her daughters "biking tour of Spain to raise awareness for cancer" once.

[polak]

Originally Posted by GGG

I would say people on this board are against giving to poorly run charities like breast cancer walks and rides or flavour of the month MS ice bucket stuff. I don't think anyone has actually ever opposed charitable giving.

Why would you be against those things? You realize that the ALS Ice Bucket Challenge and Run for the Cure raise huge money?