GTA Housing Insolvency Disaster Episode 32

Investor shenanigans

Scenario:

She: makes $165,000/yr; approx. $9,300/mo net

Married; husband works $5,200/mo net

$14,500/mo total

No kids

Primary mortgage $972,000 (big 5 bank) bought in 2018 for $1,440,000

Private 2^nd $210,000 (12%)

Total mort $1,182,000

Payments are $4,300 and $2,100 = $6,400/mo

4 owners; the other two are family; 33% each

Renewed in 2023 with rates up substantially; payments increased 28%

Now worth $1,152,000 – market is down 20%

All payments are still on time but struggling now due to investment property (see below)

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Investment property: bought in 2021 for $785,000; 4 names on the condo (theirs plus her parents)

1^st $490,000 1^st mortgage (major credit union)

2 privates; one $60,000, the 3^rd is $35,000

Total mortgages $585,000; monthly mortgages total $3,350

Downpayment came from unsecured lines of credit

Tenant left; got a new one after 7 months but had to drop the rent; now cashflow negative by $700/mo

Value dropped 20%; now $628,000; 2 payments in arrears on both privates, no remedy done (could not afford to); power of sale initiated by private so equity was as preserved as possible before any further erosion (this will start happening in general), condo sold for $599,000; shortfall of $16,000 after sale costs

So:

UNS: = $82,000 (lines of credit + long tax arrears; CRA threatening action/lien on primary residence)

Plus shortfall $16,000 on the invest prop

= $98,000 total UNS debt

(Note: if CRA liens as property, that formerly unsecured debt is now secured and cannot be dealt with in an insolvency filing)

File a Consumer Proposal on the UNS debts. Keep the primary residence.