The rules should have been changed to 20% down payment and 25 year amortization maximum. If the banks want to be in the mortgage business then they should be on the hook for the defaults and not the Government of Canada.

Up until January 16, 2011 all HELOCS that were obtained through a bank were guaranteed by the Federal Government. That means, that if a borrower obtained a HELOC and subsequently defaulted on his payments, the Federal Government would reimburse the bank for its losses. It works the very same way as mortgage insurance. If you purchased a home with less than a 20% down payment, it is mandatory for you to have mortgage insurance usually through CMHC. If the mortgagor defaulted on his mortgage, the bank would foreclose on the property and sell it. Any shortfall on the sale price would be guaranteed by the Federal Government.

Initially, the intent of a HELOC was to provide a source of funds that a home owner could draw from to make renovations and improvements to his home at a reasonable cost. However, like everything else, the purpose of a HELOC has now been abused. Thousands of consumers are buying furniture, appliances, computers, HD TVs vacations and many other items with a high-interest credit card only to find that they are having problems trying to meet the minimum payments each month.

SOLUTION Obtain a low-interest HELOC and pay off the high-interest credit cards The banks were quick to set up a HELOC because first, it was registered against the property making it a secured loan, and second, the HELOC was guaranteed by the Federal Government should the borrower default on his payments. Now, as of January 17, 2011, the Federal Government will no longer guarantee the payments of a defaulted HELOC.

What this now means is that the banks are going to be more cautious as to who they accept for a HELOC as they are now on the hook for all losses. Expect to see a closer scrutiney of credit reports with any negative items or comments perhaps being the "deal-breaker" in obtaining a HELOC. Also, a good or excellent credit score will become more important than ever before.

can someone please explain what exaclty what this dam govt has done now?..i was gonna get a heloc to solve my credit and house probs

http://www.cbc.ca/money/story/2011/01/17/flaherty-mortgage-changes.html

well i broke down and did something ive never done before and ask my dad to help me out..im gonna borrow some money from him and pay my cards till i get a heloc like you said (it wont be from RBC),,they are basterds ..then pay off the cards, fix the roof in my house and get what i can for it and get the hell out of canada and live in another country on my pension where i dont have to fill out forms for the rest of my life for nothing..thx for ur advice in the meantime

There is jurisprudence ( case law ) that confirms that if a CPP payment is made by direct deposit into a bank account wherein the only monies that are in the bank account are from CPP direct deposits, a creditor is prohibited from garnishing the bank account. A simple analogy follows. If you take $20 from your left pocket and put it directly into your right pocket, this does not change the makeup of the money. The $20 still retains the same purchasing power in the right pocket as it had in the left pocket. However, if the bank account includes monies deposited from any other source, e.g. GST quarterly refund, the bank account now becomes "tainted" and a creditor can now garnishee the entire account. Moral of the story. Keep your bank account clear of any other monies other than your CPP direct deposits. If you are receiving monies from any other source, e.g. income tax refund, GST quarterly refund, etc., set up a separate bank account for these other monies, or better still, elect to receive your cheques personally and then cash them at your bank in order to avoid any garnishment of monies.

If you are sued by RBC Visa, and are subsequently served legal documents, come back and post on this website. We will outline the procedures you should take.

1st thanks for the reply..it was worth the wait...i knew my pension was safe..i had read somewhere they could go inbetween the time it was directly deposited and seize it somehow then though..i dont have enough income for a line of credit is my prob..i tried to do that last summer..to much debt versus income..was gonna try again this spring but its not looking good..thinking of borrowing some money to get me threw this winter to maintain my min payments..im not at home till spring cause i cant live in my house cause the roof leaks and mold has taken over..so im in my rv..if rbc were to sue me can i show up in defence?

Contact RBC Visa and explain your situation to them. If you do not currently have a Line of Credit with RBC, discuss with them if they are receptive to open a HELOC ( Home Equity Line of Credit ) with you. A HELOC is very similar to a mortgage except RBC will place a lien on your house to the limit of the Line of Credit. For example, if RBC approves a HELOC for $40,000, then RBC will place a lien on your house for $40,000. You can then withdraw any amount of money at any time up to and including $40,000. You can use this money for any purpose whatsoever, including paying down or paying off your Visa card. The rate of interest charged will be considerably less than the rate of interest on your Visa card. In addition, under a Line of Credit, you are only required to pay the monthly interest and this interest is charged to your bank account. The bank account does not have to be with RBC. Any payments on principal is decided by you and not by RBC. You can make principal payments at any time for any amount. The interest that is charged by RBC is based on the principal outstanding on a daily basis.

As a side issue, under the Canada Pension Plan Act, your CPP Disability Pension cannot be garnished by any non-government entity, such as RBC. Under the worst case scenario, if RBC decided to sue you for the outstanding Visa account and were successful in obtaining a judgment, they could not obtain a Writ of Garnishment against your CPP Disability Pension. However, they could obtain a Writ of Seizure against your home and RV. What this means is that they could place a lien on your home and RV and seize these assets and sell them at a public auction. What usually happens is no seizure is made but when the asset is either refinanced or sold, the lien then has to be paid before any transfer can take place.

Good Luck and have a GREAT DAY

i cant make my minimum payment on my rbc visa..prob wont be able to make any payments untill i regroup this summer..i owe 31,400.00..i own a home, rv etc...im on a cpp disabilty pension cause im paraplegic..whats gonna happen?