Thank you very much

Let’ s face it. Not all homes are in the same condition. Not all home owners can afford to keep with the fast changing interior design experts. So let’ s talk about the dated home. Let’ s use Toronto real estate for an example. I recently rented …

1. Eliminate the current tax relief bill of 2007. If this cannot be done, at least amend it so it will limit the relief to homeowners able to prove income documents to support their original loan application. Government should not give away tax money and liars and flippers.

2. Make sure it is all over media that original loan documents will be sent to some special loan fraud investigation offices for review when a home is foreclosed. Fraud will be prosecuted and income stated on loan application will be verified against tax return. (with so many people out of work in the R/E and mortgage field, finding people at minimum wage should be pretty easy). You don’t need new laws to do it, and a few prosecution over the media will make people think before they walk.

1. Increase conforming loan limit. I don’t mean the temporary increase scheduled to start this summer. Make permanent conforming increase from $417K to $500K. The temporary increase will not work, because people know it is only temporary. Buyers know that once the temporary increase expires, they won’t find a buyer when they want to sell. In a down market like this, who will jump to a trap like that. .

2. The current lending law discourage investor purchases. It has to change.

The market has already dropped 30% on average. This means return on investment is around 6%-10% on rentals. This will be the key to turn market around. When housing rebound from the bottom, the return on investment based on cash flow will drop but the value appreciation will balance out the effect. We may not see the huge appreciation like before, but dropping 20% off from the peak is way better than the current 30% drop (maybe 60% in a year or two if the current trend continues).

3. Tax incentive for capital gain: Federal can issue laws stating investment home purchased in 2008 will be subject to 5% capital gain if sold in 5 year or more. Or 0 captial gain if held for over 10 years. Things like that will not cost government much because if there is no appreciation after 5 years, we will be in trouble. And when there is one more buyer in the market, there is one less vacant property for the police and city to look after. There is one less family “forced” out of their home. If the foreclosure wave does not stop in a few months, you will see many banks going under, all county, city, schools facing budget crisis. That is a cost we cannot bear.

4. Encourage foreign buyers: Create special incentives and reduce capital gain tax for foreign buyers on real estate investment. Provide government guaranteed loans to foreign buyers with 30% down payment.

5. Create Equity Sharing Down Payment Loan: Think of it as a convertible bond. It’s a loan to qualified buyers who has no down payment. The lender for this loan will be co-owner on title till the loan is paid off. These “Down Pay lender” do not need to pay for housing related expenses but will be entitled to a share of the profit when the home is sold. And if the homeowner fail to make 1st mortgage payment, the “down payment lender” has the right to assume the 1st mortgage and ownership of the property. The first mortgage lender can also be the “down payment lender”. It is not much different from the current 2nd trust deed. It’s just safer for the lender, easier for the buyer and much better return (gain) for the “down payment lender”.