GE Money announces winding down of Canadian mortgage business

"To our broker partners,

GE Money wishes to advise that, effective at the close of business this coming Thursday, July 31, we will no longer be accepting mortgage applications. This difficult decision to wind down our mortgage business in Canada comes as a result of a lengthy analysis of our global business, as GE and GE Money continue to apply investment capital in areas providing the best potential return for our shareholders.
Though we will stop taking mortgage applications as of Thursday, we will fund our outstanding commitments.
We are grateful to our employees, and to our many broker and business partners who assisted in the development and launch of our mortgage products across Canada. Our first priority today is to assist the members of our talented team who have been impacted by the announcement with the transition to the next steps in their careers.

Best regards,
Joe Veckerelli
President, GE Money-Mortgages"

Computer crash and a forced holiday

Hi there and sorry for a little radio silence here but the "blue screen of death" as the techies like to call it paid our blog computer a visit and interrupted the flow here (but it was a nice time for a forced holiday !) Who would have known that 5 years lifespan was "pushing it" for a laptop ?

We're back and at it again refreshed and a little soggy after all the rain we've experienced here in Southern Ontario lately. I guess now those recent posts on water conservation tips seem a little silly don't they?

Starting in a day or so we'll kick off a run of postings about why borrowers at any stage of experience should seriously consider using a mortgage broker to help arrange the financing they require.

Have a great holiday weekend everybody ... can't believe the end of the week sees the arrival of August already !

Ottawa tightens mortgage rules to avoid "bubble"

Globe and Mail

LORI McLEOD & KEVIN CARMICHAEL

The federal government is cracking down on the mortgage industry in a move that could help protect against a U.S.-style housing bubble, but will also make it tougher to borrow money to buy a home.

The Finance Department said Wednesday it will stop backing mortgages with amortization periods longer than 35 years as of Oct. 15.

It will also start demanding a down payment equal to at least 5 per cent of the home's value, rather than guaranteeing mortgages where they buyer has borrowed the total amount.

“Today's announcement marks a responsible and measured approach by the government to ensure Canada's housing market remains strong, and to reduce the risk of a U.S.-style housing bubble developing in Canada,” the Finance Department said in a statement.

Existing 40-year mortgages will be grandfathered, a Finance Department spokesman said.

In 2006, the maximum amortization period was extended to 40 years from 25, and longer-term mortgage products have become increasingly popular with buyers looking for lower monthly payments as the price of Canadian homes soared.

Last year, 37 per cent of new mortgages were for terms of longer than 25 years, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP).

But while longer amortizations stretch out monthly payments, they also greatly increase the cost of a mortgage over its lifetime.For example, the total interest on a $300,000 mortgage can soar from $286,161 over the life of a 25-year mortgage to $498,416 over a 40-year amortization period – adding more than $200,000 to the cost of the home.This, combined with the fact that these mortgages are often combined with little or no equity, raised alarm bells with policy makers looking at the turmoil that took place in the U.S. when house prices started to fall.

“We've seen an inclination now, a trend, toward longer-term amortizations and smaller down payments, and that is a matter of some concern,” Finance Minister Jim Flaherty said in a speech in May. Mr. Flaherty was not available for comment Wednesday.

Jim Murphy, president and chief executive of CAAMP, said in talks with him the government expressed concern about the risky lending products that collapsed the U.S. housing market.

The Finance Department was also worried about the future impact of competition between mortgage insurers, which led to the introduction of 40-year mortgage in 2006, Mr. Murphy said.

“I think you have a clear case of the government sitting down and looking at its risk exposure and wanting to review that. They have financial guarantees in place for the CMHC and private insurers, and they were saying, ‘What is our risk, and what is the risk to the Canadian taxpayer?' ” he said.

Reaction from the industry was mixed.“CMHC supports the new parameters … . We also support their efforts to maintain the strong Canadian housing market,” said spokesperson Stephanie Rubec, adding CMHC will stop insuring 40-year and zero down payment mortgages in October.

“It's the right move,” said Nick Kyprianou, president of Home Capital Group Inc., whose principal subsidiary, Home Trust Co., provides alternative mortgages. “Why get people overextended? Nobody wins by getting people right to the end of the cliff.”

Others, however, say home buyers and banks have been prudent with their finances, and are being punished for the more lax approach south of the border.

“Things here are not like they are in the U.S. where they had those NINJA loans, no income, no job, no assets. … It's only going to hurt the consumer,” said John Panagakos, owner of Toronto brokerage Mortgage Centre.

The move actually comes at a time when the housing market has moved on to other concerns, the most pressing of which is chilling consumer sentiment due to high fuel prices, said Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc.

“It's a bit like closing the barn door after the horse has already run down the road.”

Water saving tips for your lawn and garden - Part 3

Tips for Trees, Shrubs and Flower Gardens

Here are some water-saving tips for trees, shrubs and flower gardens:

Direct water to the root system. In the case of trees and shrubs, the roots that take up the most water are generally located within the top 30 cm of the soil and near and even beyond the drip line. This is the area directly below the outer tips of the branches.
Plants have different watering requirements at various stages of their growth. Keep soil moist in the first growing season. One rule of thumb is to water trees with a one-hour trickle using a soaker hose at least once per week, barring a good rainfall and more frequently during hot weather. Taper off watering in the fall. In the second growing season, water twice per month in late spring and summer. Once established, trees that are well-selected should require little or no watering other than that provided by rainfall, but ensure they get adequate watering during periods of low rainfall or drought. Actual water needs depend on factors like soil type and species.
Water perennials and vines well in the first growing season after planting. One rule of thumb is to water with a one-hour trickle at least once per week using a soaker hose for the first three weeks, barring a good rainfall and subsequently during hot dry weather. Afterwards, perennials selected to match site conditions should need little or no supplemental watering. If you notice wilting or browning on your perennials, water to a depth of 10 to 20 cm to help restore the plant's turgidity and vigour.
Apply a layer of mulch about 5 to 7.5 cm deep over the soil surface of the garden to retain moisture, moderate soil temperature, control erosion and suppress weeds. Wood chips, bark and crushed rock are just a few of the materials that can be used as mulch.
Use a soaker hose placed at the base of plants, rather than using a sprinkler. This will help to apply water to the soil and roots—rather than the leaves— and reduce evaporation.
Believe it or not ... we've got one more instalment to come so check back again in another couple of days.

Water saving tips for your lawn and garden - Part 2

Tips for Your Lawn

Established lawns generally require about 2.5 cm (1 inch) of water per week to thrive (Newly seeded or sodded lawns have greater water demands, actual water requirements depend on individual conditions, such as soil type ) If Mother Nature is providing this amount of rainfall, your lawn will thrive without supplemental watering. When rainfall does not provide adequate moisture, your grass may start to turn brown. This does not mean it is dead—it's simply dormant. An established lawn will recover and resume its green appearance shortly after sufficient rainfall returns.
Apply these tips to save water and money without compromising the health of your lawn:
Apply about 2.5 cm of water not more than once per week and skip a week after a good rain. The correct amount can be estimated by placing an empty tuna can on your lawn as you apply water evenly across the surface. When the water level reaches the top of the can, you've applied about 2.5 cm of water which is all your lawn needs. You can time how long it takes to reach this level, then set the timer on your sprinkler.
Water thoroughly. Deep watering at this rate is better than frequent, shallow watering because it encourages deep roots.
Don't water your lawn excessively. When it's waterlogged, it may turn yellow and develop fungus and diseases. Oxygen and mineral uptake may be restricted on heavy clay soils. Too much watering can also lead to thatch and fertilizer leaching.
Check your municipality to see if watering restrictions are in effect.
Avoid mowing and unnecessary traffic on your lawn when the lawn is dry or dormant.
Don't cut your lawn too short. Set the blade on your lawn mower to cut no lower than 6-8 cm so that the roots are shaded and better able to hold water.
Aerate your lawn once a year in the early spring or fall to improve water penetration. Afterwards, topdress by applying a thin layer (max. 15 mm) of organic material and rake to distribute evenly. You can overseed after this to help thicken the lawn.
A thick, vigorous lawn is the best prevention against weed invasions and can better withstand heat and dryness. A healthy lawn needs nutrients, such as nitrogen. Application rates, sources and timing will depend on many factors including soil type. As a rule, a healthy lawn with good soil needs about ½ kg of nitrogen per 100 sq. m. of lawn area every year. Leave grass clippings on the lawn to return nitrogen to the lawn, and reduce moisture loss.
Check back in a couple of days for part 3 - your garden will love you for it !

Water Saving Tips for Your Lawn and Garden - Part 1

In the summer months, municipal water use doubles. This is the season when Canadians are outdoors watering lawns and gardens, filling swimming pools and washing cars. Summer peak demand places stress on municipal water systems and increases costs for tax payers and water users. As water supplies diminish during periods of low rainfall, some municipalities must declare restrictions on lawn and garden watering. By applying some handy tips, your lawn and garden can cope with drought conditions and you can minimize water wastage.

General Tips

Much of the summer peak demand is attributed to lawn and garden watering. Often water is applied inefficiently, resulting in significant wastage due to over watering, evaporation or run-off. Here are some general watering tips to help avoid wastage:
Before watering, always take into account the amount of water Mother Nature has supplied to your lawn or garden in the preceeding week. Leave a measuring container (empty it once per week) in the yard to help you monitor the amount of rainfall and follow the tips below to help determine how much water to add. Also bear in mind any watering restrictions that may apply in your municipality.
Water in the early morning, before 9 a.m., to reduce evaporation and scorching of leaves from the sun. Water on calm days to prevent wind drift and evaporation.
Set up your sprinkler or hose to avoid watering hard surfaces such as driveways and patios. If you're not careful, it's water and money down the drain.
Water slowly to avoid run-off and to ensure the soil absorbs the water.
Regularly check your hose or irrigation equipment for leaks or blockages.
Collect rainwater from your roof in a rain barrel or other large container and keep it covered with an insect screen. Direct the down spout of your eaves troughs into the rain barrel.
Choose an efficient irrigation system. A soaker hose placed at the base of plants on the ground applies water to the soil where it is needed—rather than to the leaves—and reduces evaporation. Drip or trickle irrigation systems are highly efficient because they deliver water slowly and directly to the roots under the soil surface. This promotes deeper roots, which improve a plant's drought resiliency. If you use a sprinkler, choose one with a timer and that sprays close to the ground.
Tune in again in a couple of days for our next instalment !