I read an article that said credit is stuck on stupid. This article talks about how willing buyers and sellers just can’t get deals done. It is hitting particularly close to home because we are just now buying a house in Quebec and let me tell you things are stuck on stupid.

Let’s say that we are buying a house with 33 acres. And let’s say that we came onto a deal and the sellers said, sure let’s do it. Well we went to the local bank (the ones my inlaws and us have dealt with on ages). We talked to them, showed them the papers of income and put our 20% down.


The bank doesn’t know if they can make a deal because the municipal evaluation is higher than the selling price, and the house is too small for the lot size.

Huh? was my answer.

My wife says, oh this is the way things are done in Quebec. Really? The calculation goes as follows whatever property you have is free, and only the valuation of the house matters. I find that stunning because after all we all know that land is free (NOT)! And we all know that the municipal evaluations are always correct (NOT)! They said they need to do an evaluation, but oh, guess what the deal expires before the lending lady comes back from vacation! Though what was galling is that they have a special on bank evaluations! (Yippeee can we say SCAM!)

We then said, ok, what is the difference that we would need to make up so that the deal goes through regardless of the bank evaluation? Answer another 20%. My wife and I looked at each and said, WTF! Though we wanted the house and said, “ok we have the other 20% and just push the deal through!” As a result the bank issued a statement to the sellers that the deal is conditional, but that was wrong and the bank later pulled it back and said the mortgage has been approved.

What is really funny about this is that we are selling a property that we bought in cash and with the proceeds of it it will pay the 60% that remains on the mortgage. In other words our net value exceeded the price of the property we wanted to buy! Yet this bank is stuck on stupid in terms of credit and that made me wonder.

Is the bank really stuck on stupid or is there something else going on? In the past we bought a house in the nearby region and there was no stupid in part of the mortgage from the same bank. Then it dawned onto me that property was a foreclosure and the bank wanted to unload it quickly.

What if the bank is not stuck on stupid, but wants to force the market to sop up the foreclosures? Let’s say that you are in the market and you buy a house. If you buy a traditional mortgage house the bank has no benefit other than the mortgage. However if you buy a foreclosure you take a liability off of the banks bottom line and you buy a mortgage. Thus it is in the interest of the bank to sell you a foreclosure and not a traditional mortgage.

I am willing to bet that within the banks there is probably a mandate that says make the traditional mortgage market as difficult as possible, and the foreclosure market as easy as possible!

I am just glad that my wife and I had the financial means to overpower the DAMM bank and get a traditional mortgage! Though it is sad that others might not have the same means…