Checklist for Avoiding Loser Molybdenum Stocks

To say that the China Moly IPO was over-subscribed in Hong Kong could be a gross understatement. New interest in molybdenum stocks, especially near-term moly producers, has jumped since the beginning of 2007. There are a good number of North American 'potential' molybdenum producers which could attract your eye.

Because of the new wave of primary molybdenum 'near-term producers' knocking on investors' doors, we though it would be a great idea to help the wiser identify the winners and avoid the losers.

What we had in mind was finding a new molybdenum company for our readers. But first, the company's property was required to meet our basic criteria: (a) advanced exploration work previously done in the previous bullish cycle, (b) good drilling results and previous progress toward production made before the moly price fell during the last cycle, (c) being developed by a proven technical team, and (d) current progress being made to move the project forward.

Other key elements included provident metallurgical samples, accommodative infrastructure and an absence of environmental complexities. We also wanted a company whose star was rising and in the good graces of an institution, presumably one which owned 10 percent or more of the company's shares.

Having previously mentioned United Bolero's Bald Butte molybdenum project, we believed this company merited a deeper review.

In late April, Dow Jones newswire reporter Brian Truscott featured United Bolero's molybdenum properties in an article entitled, "United Bolero's Molybdenum Gambit." We liked what we read and phoned the company's chief executive Bruce Duncan to inquire about the company's ongoing plans.

United Bolero fell out of favor a year ago during a transition phase. Since then, it has successfully rebounded. The company's shares have strongly held up while many other molybdenum juniors have slid off their highs.

This may have something to do with an announcement made by Pinetree Capital on May 14th. Pinetree is one of the favored few companies, repeatedly endorsed by uranium guru James Dines. Pinetree has made some very astute investments in uranium and other sectors. The publicly traded company, which Mr. Dines often refers to as a 'closed-end' mutual fund, announced it had acquired nearly 7 million shares of United Bolero.

As of April 16th, United Bolero had nearly 66 million shares outstanding. Depending on the exercise of convertible securities, Pinetree could own between 11.8 and 12.2 percent of United Bolero. This element met one of our key coverage criteria: institutional support. The criteria, found below, may also serve our readers by providing a more advanced methodology when researching molybdenum development companies.

Coverage Criteria

1) Previous exploration summary. Both Amax and Gulf Minerals previously explored the Bald Butte molybdenum property, located about 28 miles northwest of Montana's capital, Helena, and 6200 feet above sea level. The 350-acre property, comprised of 22 patented claims, was well-explored by the above major companies. This included the basic geological surveys, trenching and sampling. But, the two majors also diamond drilled more than 54,000 feet and proceeded with extensive costing and feasibility studies.

Gulf Mineral Resources donated extensive files and reports about its previous work at Bald Butte to the Montana Bureau of Mines and Geology. United Bolero's geological team has reviewed all of this data. A Gulf Minerals drilling program in the early 1980's suggested the possibility of molybdenum mineralization grading higher than 0.1 percent. This could be the results United Bolero hopes for, during the present drilling program.

Bald Butte is a quartz vein stockwork hosted molybdenite deposit, about three miles southwest of an historic gold mining district. It is also located relatively close to Apollo Gold's Montana Tunnels historic open pit gold and base metals mine, which restarted operations this past March.

Historically speaking, Bald Butte reportedly could host nearly 165 million pounds of moly equivalent. For now, the company publishes a National Instrument 43-101 inferred resource of 105 million tons graded at 0.071 percent molybdenum. The inferred resource was calculated using the commonly used polygonal method and demonstrated the potential of 250 million pounds MoS2, or 150 million pounds of molybdenum.

2) Current Exploration plans. This weekend, the company should commence a 16-hole drill program of 1000- to 1200-foot holes to test the deep mineral potential of the property. According to chief executive Bruce Duncan, this will be comprised of step-out and infill drilling. This is a follow up to an April 2006 exploration hole which yielded 14 feet of 0.611 percent MoS2, of which eight feet hit 0.686 percent MoS2.

Duncan told StockInterview, "The first hole will probably be about 100 to 150 feet from the exploration hole and then stepped out every 200 feet." He added, "We are cautiously optimistic." Duncan's geologists hope to get a better idea of the geological model with the four- to six-week drilling program.

3) Environmental Progress. Sooner or later, environmental permitting is going to rear its unpleasant head in any North American mining project. In an April 2007 audio interview we conducted Adanac Molybdenum Corp's executive chairman Larry Reaugh, he warned of difficulties a mining company can have if you don't have a good transparent relationship with the locals. We've seen hurdles and time delays when companies fail on this step.

In previous interviews, it became apparent that the state of Montana's Department of Environmental Quality (DEQ) was a no-nonsense agency when it came to following environmental regulations. We asked Duncan about this. "Our geologists have a great working relationship with DEQ," he told us. "DEQ has come to the property several times, and they've helped us by supplying us with important geological data."

How about the environmental studies? "We've already begun the basic baseline studies, including water quality, flora and fauna, and environmental," Duncan explained. "Right after this particular drill program, we'll be going at the baselines with hammer and tong." He feels that because 90 percent of the company's property is on private land, 'the permitting process will go fairly quickly.' Duncan added, "We are cautiously optimistic we can have this fully permitted in a couple of years."

4) Metallurgical Quality. United Bolero provided material to G & T Metallurgical Service in Kamloops, British Columbia, which was intended to represent the entire deposit. In an October 2006 report, the metallurgical service reported that molybdenum in the ore body could be recovered into rougher concentrate at a rate of between 90 and 95 percent. United Bolero reported the rougher concentrate could be processed into a marketable moly concentrate with an overall molybdenum recovery of about 80 percent.

Duncan told us, "What that means is there is no arsenic, no mercury, no cadmium or any of the show stoppers in the deposit." He explained, "In essence, this is a benign deposit."

In a previous article, metallurgical engineer David Michaud told us, "Liberated grains of molybdenite were 91 percent captured into the final concentrate. Approximately 11 percent of the molybdenite bearing binary composites were captured – predictably these composites contained significant amounts of molybdenite, probably accounting for their enhanced floatability." Although Michaud no longer consults for the company, he recently told us, "It's a good moly property."

5) Infrastructure. Bald Butte is accessible by a dirt road. Duncan pointed out, "It literally goes all the way up to the property and is maintained all year around." He joked that one could back a pickup truck to the drill targets from the road. Eight miles away is a rail siding. The Butte-Mullan power line crosses a portion of the property and two existing flotation mills are within 80 miles from the property.

6) Technical Team. United Bolero has assembled an impressive geological and engineering staff. This may explain the company's ready acceptance by Montana DEQ, which at first puzzled us (having heard numerous horror stories).

In early May 2006, Bruce Parker rescued United Bolero, during the company's transition phase. Parker is a registered professional engineer in Montana, Idaho, Nevada and New Mexico. He assumed responsibility for United Bolero's mineral properties, and became head project manager. According to our research, he is well respected in Montana's mining industry and, over the years, has developed good relations with the state's regulatory agencies.

One mystery is Dr. John Childs, who will be leading United Bolero's exploration efforts on Bald Butte and the company's sister property, Cannivan Gulch. Our independent investigation found him quite productive exploration and discovery in Montana. As a consultant he previously worked with Pegasus Gold and several others. But, we also found his photo on the highly regarded Montana State University geology faculty list, noting his expertise in economic geology. This could explain why Bruce Duncan appears confident and relaxed about his company's six-week infill and step-out drilling program. Dr. Childs comes with the type of history to which many geologists hope to aspire.

Overseeing the company's progress from United Bolero's technical advisory board is Gerald Rayner. His geological expertise has taken him throughout Western North America, Australia and the South Pacific. During his tenure with Kennecott, Rayner ran the exploration in Papua New Guinea and his efforts resulted in several porphyry copper deposits including the Ok Tedi Mine. At one time, this was thought to be the largest copper deposit in the world.

7) Cash. On this item, United Bolero falls short, but only on the face of it. Duncan told Dow Jones, a month ago, "We want to let the drill bit tell the story before we go looking for money." The company has more than sufficient cash in its treasury to complete the current drill program. Duncan told us yesterday his company has about C$3.7 million in the bank. All in, his drilling campaign should cost up to C$1.6 million.

Ongoing warrant exercise has brought fresh cash in, and according to the company's website, there is the potential of C$7.5 million which can be raised by the exercise of options and warrants. Duncan's experience in Toronto's financial circles is a plus for future fund raising. As with others we previously began coverage on, the cash comes when the project moves forward. The company's drilling program – which Duncan hopes would move the inferred resource to a higher category – might become the trigger which brings stronger interest into the company's shares.

Conclusion

United Bolero could also extend its drilling program to include Cannivan Gulch. Duncan considers this nearby Montana molybdenum the company's 'crown jewel.' It could become that, but that is not the focus for this article.

In conclusion, we hope to have provided helpful advanced tips when proceeding through the due diligence stage of evaluating the potential strength of a molybdenum company's shares. We have depended upon such guidelines when reviewing other favorite molybdenum companies.

To summarize, look for a company which has a strong technical team developing a previously explored and ready-to-go deposit in an area accompanied by an encouraging environmental climate with sufficient infrastructure. These seven advanced tips should provide some basic guidelines to separate the highly probable success stories from those which offer your home future wallpaper.

COPYRIGHT© 2007 by StockInterview, Inc. ALL RIGHTS RESERVED.

Drive Your Dreams With Easy Auto Loans

With advancement in the field of technology and automobile industry every year variety of latest models of vehicles are introduced in markets throughout the globe to attract new customers. There has been a revolutionary growth in the production of cars and so has the need arisen to obtain quick money to finance it. The most convenient and easy source of obtaining a dream car is by way of an auto loan.

In today's inflationary period it is not possible to own a car without an auto loan.
There are many ways to secure an auto loan.

1) Banks/Financial institutions: - Now a day nationalized banks and financial institutions provide their customers a wide range of auto loans containing various terms in compliance with their demand. Any person can borrow up to 125% of the assessed value of car. Such loans are generally available for a term of 3-5 years but the term of the loan can be extended up to 6 years if the value of the car goes beyond $15000. Generally bank or financial institution grants the loan only after checking the financial position of any individual.

2) Secured loans: - Secured auto loans are the loans which are issued that are secured by the liens on the car/vehicle that is being purchased. It gives the much needed security to the lender on the lent out money. As repayments are made the securitization liquidates and becomes zero when the entire amount with interest is re paid. Only thing is that one must be regular in paying the repayments as the default causes in loss of vehicle.

3) Unsecured auto loans: - such loans can be obtained easily without placing any collateral against the vehicle. Here there is no fear of losing an asset but it carries a higher rate of interest as compared to secured loans.

4) Bad credit loans: - Generally a person intending to buy any vehicle must enjoy a good credit score. His monthly earning should exceed $2000 and his credit score must touch 550 points to achieve his dream car. But if in case his credit position is less than desired and still he wants to realize his dream of owing a car than he can resort to sub prime loans. Such loans are offered to people with bad credit on a higher rate of interest. One must be smart enough to negotiate a best deal with a suitable lender.

5) Online lenders: - In order to secure an auto loan a person can browse through relevant websites and compare rates with different schemes with a lender only with few mouse clicks. Such lenders starts the process of granting loans immediately through mails and one finds the best deal knocking his door within minutes at his doorstep.

Secure your loan an easy way and take your dreams to a long drive.

Tips for Avoiding Foreclosure

Foreclosure can be a annihilating change in your life. If you lose your mortgage payments, you could be in danger of foreclosure: you'll have got got got to travel out of the home you have worked so hard to own.

Here are some ways that you can avoid foreclosure.

* Set up your mortgage payment on direct sedimentation from your bank account and arrange an overdraft, just in lawsuit you have a tight month.

* Associate In Nursing emergency account is a good idea, but not very practical for most people. The money they salvage in that account is often better spent on the necessities of life. Set up an emergency account but without any of your ain money; make this by arranging a personal line of credit or borrowing account which will cost you very small if you don't utilize it, but if you need it it's there and can be substantial.

* Maintain a good credit rating. If you lose a payment or two and person is considering delivery a foreclosure judgement against you, they may be less likely to make so if you have got shown that this is a singular form incident and quite uncommon to your typical on time payment. On the other hand, if you lose your measure payments on a regular basis, they may not give you the second opportunity you want.

* If an emergency strikes, instead of paying your mortgage with your credit card or going to those high-priced loan places, seek asking a trusted friend or household member to supply you with a low interest rate bridge loan to assist you through your tough spot. Be certain to a wage them back promptly.

* If you happen that foreclosure is imminent, your best hope is for a foreclosure sale, the return of which will pass over out your judgment. Spend some money to beautify your home with a paint occupation and a thorough cleaning, which will increase what you get for your home and could minimise or eliminate the difference that you'll have got to pay.

No 1 desires to lose their home. There are strategies to avoid having a foreclosure judgement brought against you. If you follow these strategies and manage you money carefully with a budget, you should be able to enjoy your home as you long as you want!

Stocks Or Foreign Exchange - Which One?

Many people would wish to put in pillory or Forex but are not really certain of the difference between the two and don’t cognize which is the right pick for them. There is small uncertainty that there are many options out there for you. But, it is hard to state which the right pick is until you garner some information about them and then do the right choice.

Stocks? Forex?

Stock trading is similar to owning portion of a company or organization. You purchase the pillory so that the company can then utilize this money to reinvest to increase their profits. Most people cognize about the stock trading market and have got a basic apprehension of how it works.

On the other hand, though, not many recognize what Forex trading actually is. Forex trading is a type of investment that deals with currency trading. In its basic form, you cash in United States dollars for the currency of another country. You cash out when you do a net income or to cut your losings short. The Forex market is a truly planetary marketplace where millions of dollars are traded everyday. Here, you can do a batch of money and lose a batch of money fairly quickly.

Making The Choice

Forex trading is a relatively new method of investing. It is a good pick for person who is willing to take greater hazard for a greater reward. In stock trading, you can do smaller net income in the short-term and only in the long-term can you do a important profit.

It is often wise for the novice to dabble in pillory trading before looking at Forex trading. It is an first-class manner to get your feet wet without a whole batch of risk.

Nevertheless, it is of import to observe that anyone that is a novice in the field of investings should pay close attention to inside information here. It is of import for both types of investings that owed diligence is paid in order to do any money. Survey both word forms of investings and make some paper trading. This simply intends you do determinations to purchase or sell but don’t set any ‘real’ money down. The cardinal here is to track consequences like you would make for a ‘real’ trade. Initially, you will do errors so, travel easy on yourself. With experience you will begin to do net income on a consistent basis. When this happens, start putting some money on your trades.

Good fortune with your investing efforts.

How to Get Your Consolidation Loan Interest Rate

The advantage to trying to consolidate your student loans is that it is likely to be a less expensive way to pay out your loan with a better than expected interest rate. If you need to pay your loans out over a longer period of time, say twenty years, then, although you will have a lower monthly payment, you should know that you will wind up paying more interest over the longer period of time. That means it will cost you more in the overall picture. If you are trying to figure out what the consolidation loan interest rate would be if you were you to try this method of loan repayment there is a formula that can be followed to tell you if it going to work for you.

Determining the consolidation loan interest rate is done by taking the loans you already have, calculating the weighted average of the interest on those loans and then rounding that rate up by one eighth of a percent. That will give you the interest rate that you can expect to pay. This rate will then by locked in until for the full life of the loan no matter how long it will be.

The weighted average is determined by multiply the interest rates by the amount of the loan. This is called the per loan weight factor. Once you have these numbers add the loan weight factors up. Then add together the total of your outstanding loans. Once you have this number take the total per loan weight factor and divide it by the total loan amount. Take the number you get and multiply it by one hundred. You then take this answer and round it up to the next one eighth percent. With this resulting number you compare it to eight point twenty five percent. Whichever number is the lower one will be the consolidation loan interest rate that you will have for the lifetime of your loan. It may seem like a lot to figure out. It may seem like a long commitment to paying off the one loan when you feel you could just as easily pay your student loans a little bit against each one each month. But the truth is this really is the best way for a student to get out of debt.

China Syndrome

There have been great disapprobation recently because People'S Republic Of China have been merchandising its commodity on the human race market at terms below what other countries, especially the U.S., tin produce. It have been called exporting deflation.

The major ground for these extremely low terms have been their labour costs which I am told are about $100 per calendar month for ordinary mill workers. Even mills in United Mexican States are being closed and shipped to People'S Republic Of China because of the labour differential. These extremes in production costs are literally putting many, many companies out of business. When you look at the labels in almost any shop you will observe the merchandise is made in some Asiatic country. As far as you, the consumer, is concerned you are buying a merchandise at a good value. Political considerations aside there is no inquiry this have been good to retail buyers.

Is there any ground People'S Republic Of China should move otherwise? No, they are acting like any businessman. Yes, I recognize it is a country, but states make the same as businesses just on a larger scale.

Suppose you and I each ain a hamburger franchise. I have got got a McDonalds and you have a Berger King across the street. We each sell our hamburgers for 99 cents. The competition is equal. You also ain a huge cattle spread and slaughter house/packing set as well as a large bakeshop and you desire to increase your retail nutrient business so you go through along the nest egg you do from the meat production and bakeshop to the burger stand. You reduce the terms to 75 cents and now do a net income of 20 cents per burger whereas I only do 10 cents and must sell it for 99 cents. When person desires a hamburger where make you believe they will go?

I can shout all Iodine desire about how partial this is, but so what. He is not selling at a loss and even if I lower my terms I can't travel low adequate to do a profit. I eventually will lose all my clients to him and will travel out of business. Are that fair? Sorry, but just doesn't count. That's business.

China is selling hamburgers (whatever) cheap, but they are of equal quality. Consumers desire both quality and terms (value) and don't care where it come ups from. Countries are complaining that they are selling "too cheap". No they are not because they are making a sensible profit. One of their production tools (cheap labor) is so good that businesses from all over the human race are moving there to take advantage of it. If they don't they will be out of business. You can't fault them.

Over the adjacent 10 to 20 old age People'S Republic Of China can go the world's leading country because of their economical development. They don't have got the operating expense (translation - cardinal government, entitlement programs, lawyers, labour unions, etc.) we make so they will be able to maintain costs down. Eventually (many years) their cardinal authorities will slowly germinate toward giving more than to their people, but it is going to be decades. In the meantime, learn to talk Chinese.

Finding A Good Stock

One of the things people are always asking me is how can I happen a good stock. The reply I give makes not delight them. I say, "You are not qualified to pick stock. You don't cognize how so don't try. Put your money in a no-load common monetary fund that is going up".

The adjacent outcry is, "I don't desire to purchase common funds. What make I do?" OK, so I'll state you. It is easy. You will have got to make less than an hr of work. None of that Wall Street mythology about research which is all horse hockey. The manner Wall Street makes research is worthless. And don't listen to any broker. Advice from a broker is a encomium for your money.

They desire you to look at the company prospectus. This written document isn't deserving the paper it is printed on. It was not written for the investor; it was written to go through review by some Dilbert lawyer in American Capital to see that it rans into all the regulations. You can take a course catalog of a very good company and one of a company that have gone bankrupt and you will see they are almost identical. Throw them away.

Read the Annual Report. Another spot of fume and mirrors. The statute title should state you - Annual. Much of what is in it is a twelvemonth old. Worthless. And let's trust it doesn't have got a lawsuit of Enronitis.

Get a report from Morningstar. They cognize all about every financial statistic for a company that you can believe of. You might even happen out how many refined sugar lumps the chief executive officer have in his coffee, but there is one thing you won't learn. If you purchase this company's stock will it travel up? What I am saying is that all the conventional wisdom methods of doing research are worthless. So what make you do?

On the Internet you can happen a listing of the best acting common funds. Go to www.smartmoney.com Oregon www.yahoo/finance.com . There are other topographic points also, but these 2 are very good. List the top 5 common finances (write down their symbols). Now travel to www.bigcharts.com .
Put in the symbol for one of the funds. A chart will come up up giving you a image of the terms public presentation of that fund. If it is going up at a 25-degree angle or more than it intends the monetary fund manager is doing a good occupation of picking stocks. At the top of the chart image there is a legend for Morningstar. Chink on that. The new page will demo near the underside the major retentions of this fund. Again you need to get the symbols for his top 5 pillory and expression at the chart image for each one. If that stock is going up in a nice steady terms over a clip period of time of 6 calendar months or longer you have got establish a winner. Bash this with respective finances until you have got got establish some pillory you like.

You have allow a professional stock chooser make all the work for you and now can piggyback his expertness at no cost. Please retrieve that when that stock turns down you desire to sell it. You may be able to sit one up, but you can never state when it will turn into another Enron. Always be ready to sell.

Stealth Bull

If you have got been watching the stock market at all you are probably very confused. You are not alone. One twenty-four hours is a hundred points up for the DOW and the adjacent a hundred down. What is going on? There are many pillory that are going up and unless you are in the right 1s you will be left behind.

The professional money managers split pillory and common finances in subdivisions they name equal group. Many modern times you will happen that while the general market is going down there will be one or respective groupings that are going up. Also when the market is going up you will happen some equal groupings that are going in the other direction. Today there are equal groupings that are doing very well – small capitalization value pillory and funds, existent estate grouping and pillory located in emerging markets.

To happen individual pillory like these is pretty hard so I have got a professional make it for me. And he makes it free. I engage this individual to work 60 or 80 hours a hebdomad to make my research. If he doesn't make a good occupation I won't give him any money. He first have got to turn out to me he cognizes what he is doing.

Who is this cat that I can get to do me rich and not have to pay him? It is the manager of a no-load common fund. Fund managers were paid an average of $275,000 last twelvemonth so you won't have got to experience bad for him. In my sentiment most of them are over paid because last twelvemonth 90% of all stock common finances lost money. It is the other 10% Iodine desire to be invested in. Where are they hiding? Why hasn't your broker told you about them?

First, your broker will never state you about a common monetary fund that makes not pay him a commission. That is how he do his life so I can't fault him. There several topographic points you can happen first-class funds. If you don't have got a computing machine you may look in Investor's Business Daily newspaper. Once each hebdomad they will name the best acting common finances for the past 6 months. You will check them with your price reduction broker to see if they have got any committee charge. As long as that monetary fund stays in the top 15 on the listing you will have got a winner. When it drops below you sell it and purchase a better one. Yes, it's that simple.

If you have got a computing machine it is even easier. Go to www.smartmoney.com, chink on common finances and they will give you a complete list. There are many other web land sites with this sort of information.

If you are going to do money in the market you must be in the current strongest equal grouping sectors at all times. That agency that when the monetary fund you have starts down you must get quit of it in favour of one that is going up NOW. Never mind the 3-year and 5-year public presentation nonsense. With this strange amalgamated market we have got now you must be where the UP action is. The bull is sneaking around very stealthily. You can happen out where he is and fall in him.

Canadian Mortgage Report

Mortgages !!! How much do we know about them ? I remember when I was a young man in the military I called about a farm for sale near my home town. I asked the realtor who answered the phone what the asking price was. He responded $20,000. I had about $10,000 in savings. I told him I only had about $10,000. He informed me the owner wouldn't accept that and hung up. That was a 150 acre farm with a nice house and barn. Today I realize how misfortunate I was that that particular realtor answered the phone. A different realtor would've advised me that with 50% down and a stable career in the military I would have no problem getting a mortgage for the remaining 50% and that the payments would only be about $60.00 per month. Imagine what that farm would be worth today and imagine what that realtor cost me and his customer who obviously wanted their property sold. I didn't realize I could get a mortgage and I didn't realize I should've called another realtor or even that I could. I'm telling you this story to emphasize the power of knowledge and what the lack of knowledge can cost you. Knowledge and expertise come from a life time of learning.

Here is another example. A friend called for advice. A local company had approached him about a valuable surface mineral they had discovered on his property that they wanted to purchase from him by the ton. (so much per ton).I advised him that was outside my area of expertise and he should consult with a mining engineer or geologist who would know the current market value. He said he would do that. Some months later I asked him how he had made out and if he had checked with a professional. He said no and that the company had made him an offer and he had countered back double the price they offered and they had agreed to pay his price and he had signed a contract to that effect. I advised him that I had heard that the company had also made a deal with a large timber company on the adjacent property and he should check with them to see what they were getting. Several days later he called me back very upset. The timber company was getting 5 times the amount he was getting. I advised him to consult a lawyer. This time he took my advice. After a 10 year legal battle he did receive a settlement but why didn't he take my advice the first time ? I'll tell you why ! He thought he knew. I have to tell you this fact. Most of my customers think they know more than me and in many areas they do but not when it comes to real estate and mortgages,( in most cases they don't) but human nature makes it very hard to trust someone else's opinion especially someone who is looking to make a dollar off you. Penny wise and dollar foolish. Probably but understandable because most of us are this way, myself included.

We all in most cases would rather make our own mistakes than feel taken advantage of by some professional we don't know or trust. That is why some one listing their house will always list with a friend over an experienced realtor because trust is more important than experience in the minds and hearts of consumers even though in the long run it may cost them dearly.

In this report my goal is to give you information. How you use it will be up to you. My goal is to gain your trust so you will not hesitate to contact us should you need any of our services. Now on to my report.
Mortgages A Brief History

In 1975 when I got into the real estate business banks didn't do mortgages per say. Mortgages were mostly done by the trust companies. Banks would give you a loan secured by real estate usually no more than 50% of the value. Back then many people would borrow enough to put in a basement. Finish the basement ,live in the basement while repaying the loan and then borrow again to finish the house. Trust companies would lend a conventional mortgage of 75% of the appraised value or the purchase price which ever was least as dictated by the bank act. As you can imagine selling real estate was a little more difficult than it is today. In the governments attempt to make home ownership easier for Canadians CMHC came up with high ratio insurance which gave the lenders the option to lend up to 90% of the purchase price or the appraised value which ever was least. The lender would tack the insurance fee on top of the mortgage and send the fee off to CMHC. This was a win win for all involved . Home buyers, lenders, realtors, appraisers and lawyers. More people qualified to buy homes so more homes sold and more homes were built and more people were put to work.

Last but not least lenders couldn't lose because the loan was insured by the government. YES FOLKS THE GOVERNMENT CAN DO SOMETHING RIGHT. Although they receive little in the way of recognition CMHC is one of the best things to have happened for all Canadians economically and beneficially. Helping us all prosper.
Of course by now banks were into mortgages in a big way because our historically conservatives banks liked the no risk factor associated with high ratio insured mortgages. The competition was fierce . The 1981 recession slowed things down a bit when rates hit 22% but when the rates came back down things rolled on again until 1989 when the next recession came. In my opinion this was a much tougher recession. Consumers hated the new HST tax and just refused to spend. Many business's folded including most of the trust companies who were caught with most of the commercial mortgages which with so many companies struggling many were in default and of course not insured because high ratio insurance was not available on commercial properties. A long come our friendly banks who pick up their assets for pennies on the dollar and very few trust companies survive this recession. Even today it is very difficult to get a commercial mortgage with most of the banks and lenders willing to do only 50 to 65% of the appraised value with their main competition today being the credit unions or some government agency as a choice of last resort.

Although commercial loans are difficult ( I would love to see high ratio insurance for commercial) residential mortgages are amazingly easy to obtain with 30/40 year amortizations, no down payments and I declare products for the self employed and commissioned consumers. A vast array of products and terms. There has never been an easier or better time to get a residential mortgage. There are even products for previous bankrupts and those with past credit problems. I continue to be amazed as CMHC and the lenders continue to make home ownership more obtainable. CMHC even has some competition for their insurance products in the private sector. Note: Do not confuse mortgage insurance with life insurance. Mortgage insurance insures the mortgage for the lender. If the borrower doesn't pay the mortgage the insurer will pay the bank out. Hence the bank can't lose. Mortgage insurance fee average 3.75 %. Eg: 100,000 mortgage the lender gives you $103750.00. Your payments are based on $103,750 and on closing the $3750 (the premium) is sent to the insurer (CMHC). You pay for it and the bank /lender can't lose. So you see why lenders love high ratio mortgages and why it's so easy to get a residential mortgage today.

Most mortgages fall into two classes Prime ( strong borrower with a high beacon score) and Sub-prime ( weaker borrower with a lower beacon score) Note: Every borrower has a beacon score which is utilized to determine their credit worthiness. Credit agencies such as Equifax and Trans Union use a complicated formula based on your credit history that determines your ability to pay two years down the road to assign your personal beacon score usually ranging from a low of 400 to a high of 800. Between 600 and 800 is prime and anything less normally sub prime. It is very important to maintain a good beacon score to access credit at a reasonable interest rate. The interest rate you are charged is mostly determined by your beacon score. Right now we can get a prime borrower 5.019 %. A sub-prime borrower would pay between 9% and 12%. To give you an example the prime borrower would pay around $500 per month PI (principle and interest) on a $100,000 mortgage over 25 years. Sub-prime at 12 % that same payment would be around $1200 per month. So you can see how important your beacon score.

Here are some tips on how to maintain a good beacon score


1. Always make your minimum payment on credit cards and never be late.


2. If in business. Always pay your personal bills before business loans. (usually only personal credit is shown on your credit check most business loans are not.


3. Do not shop for credit by applying at different lenders. The system assumes you are turned down and each application lowers your score. ( a plug here for mortgage brokers we take one application and can shop over 40 lenders for you with one credit check thus maintaining your good beacon score.)

How does bankruptcy effect my beacon score ? Many of my customers have been bankrupt in the past. Bankruptcy today is common place and no longer as stigmatic as it once was. Computers have basically taken the human factor out of the credit system. It no longer makes sense to struggle for years under a mountain of debt if your circumstances change and you can't afford to meet your commitments. Bankruptcy quite often is the most reasonable solution mainly because the credit system gives you no recognition for struggling and overcoming your financial problems. Once you are behind your beacon score drops and no one will deal with you. That bad history stays on your credit for 7 years. If you go bankrupt you are usually discharged within 9 to 12 months. After that you have to re-establish a credit history usually by a secured credit card or car loan and with in 18 months with a good job you would qualify for a mortgage. Yes , record of the bankruptcy stays on your credit but once you re-establish it is not as detrimental as a previous bad repayment history. In many cases as long as there's no substantial equity in your home you can even keep making your mortgage payments and keep your home through the bankruptcy. Please understand I am not an advocate for going bankrupt. That is a very personal decision but now you know how it works and if a decision is required that decision can be based on the reality of the situation and not misinformation.

With this report I have just scratched the surface of the basics of how the mortgage industry works and the credit scoring system. Hopefully you have found it informative and insightful. I would be pleased to help you with any real estate , mortgage, appraisal or business consultation you may need.