Uneasy Money

Easy money
You say I fool myself
But better me than someone else

Brokered mortgages. When there is no income, but equity. When there is not enough income, but equity. When there is no equity, but anticipated income. When there is…or isn’t…

All these riskier situations that the banks and other financial institutions generally won’t touch. Leaves a lot of people looking for money in secondary markets. Hence the mortgage brokers.

Have clients in these circumstances. Very expensive money. Lots of fees, in addition to much higher interest. Lots of interest only, short-term mortgages; maybe one year or so. Becomes a payday loan of sorts, where the expectation is that it will be rolled over within a year or so, for a bit more money, and a lot more fees. Funding often coming from private individuals, wanting to earn much higher returns.

Used to question this market: surely they are all exploiters. Then saw the circumstances of various clients. Similar to payday loans, the services provided here are useful and necessary, and are also a function of banks and other financial institutions often being restricted by regulation or policy as to lending circumstances.

Would hope there would be some middle ground. Cheaper money, but still reflective of risk. What if banks and similar “A level” financial institutions could invest in companies that are in this secondary market? What about credit unions? Payday loans and related mortgages having greater competition?

Magnify the payday loan by a similarly framed mortgage:

Yet the loan types wouldn’t be there, if they weren’t needed. And wouldn’t be so onerous if there were some mid-market competition.

I’ve been working all my life
Can’t afford to wait

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About brucelarochelle

Practising Lawyer and Part-Time University Instructor (Accounting, Commercial Law, Organizational Behaviour); Part-Time Federal Tribunal Member. Non-practising Chartered Professional Accountant (Chartered Accountant and Certified Management Accountant).
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