As a US citizen can I cosign a Canadian mortgage?

[10point]

My brother in law has a plan for getting a house and has asked us to consider cosigning. I am hoping as an American citizen it is not even an option for me to cosign on a Canadian loan. Does anyone know?

[JohnF]

The lender may go for it if you're a Canadian resident but not likely otherwise. There may be some law on that but I haven't run across it. I'm betting yer off the hook.

 

JF

[Gerritt]

I believe you can... seeing as how we use the same credit reporting agencies (Equifax, Transunion etc...) perhaps let him know you are not comfortable with doing it.. I had to the same with my sister.. who cannot pay a bill on time for the life of her.. I still have collection agencies calling me.. due to their bankruptcy..

 

If he was able to buy a house he could do it on his own.... how do you think subprime mortgages started?..

 

Do not risk you're financial future on someone else... if he defaults it is you they will come after..

 

it is not worth it.

 

G

[Tarzan's Jane]

I made that mistake once and ended up with a car I didn't need nor want....I'm still paying for it and regret is a hard thing to live with especially when it affects the pocket book. Sorry doesn't make the pain nor struggle go away.

[cuzza]

You probably can co-sign, Canadians are buying propety in the states and I doubt they're using cash for it so I wiould think the opposite works. Ultimately the mortgage co. want someone to chase if you miss a payment and having two people to chase increases their chances, if all else fails they'll take the house and mess up two people credit ratings.

 

Now whether you want to get involved is another question, but it sounds like your BIL can't raise the mortgage on his own and there's probably a good reason for that

[JohnF]

Typically the lenders want someone with subtance they can chase if the primary borrower defaults. If the guarantor is in the States they won't have an easy time chasing him/her. That's why there are hold backs from the sale proceeds when a non-resident sells property here. The CRA knows it's easier to collect from a lawyer holding funds than from a disappeared foreign seller. In fact they have a better alternative. The tax man just demands the payment from the person in possession of the property - problem solved.

 

In this case though I don't think the original poster has much to worry about. I doubt any main stream lenders would consider a foreign guarantor's personal covenant as being worth anything. And just in case they will, take Gerritt's advice and don't do it. You end up on the hook forever and it will probably affect your own credit ability. But I suspect you already know the downside.

 

JF

[bigbuck]

I'd say no, in the U.S. the mortgages are NON-RCOURSE which means that you can leave the keys on the porch and call it a day and nobody comes after you after the fact, here in Canada we have RECOURSE mortgages, the debt follows the mortgagee and guarantor until it is paid off in full. I would say don't do it, it can end up being a major problem for you, if someone needs a guarantor, that means they are on shaky ground credit wise. If they have any sort of financial difficulty which unfortunately is probably quite likely, you will be on the hook. Remember, banks don't normally ask everyone for a guarantor, only those people whose income and credit are borderline.

[cuzza]

I'll defer to these two guys ^^^^^^ who obviously know more than me - my last paragraph still stands though.

[JohnF]

I'd say no, in the U.S. the mortgages are NON-RCOURSE which means that you can leave the keys on the porch and call it a day and nobody comes after you after the fact, here in Canada we have RECOURSE mortgages, the debt follows the mortgagee and guarantor until it is paid off in full. I would say don't do it, it can end up being a major problem for you, if someone needs a guarantor, that means they are on shaky ground credit wise. If they have any sort of financial difficulty which unfortunately is probably quite likely, you will be on the hook. Remember, banks don't normally ask everyone for a guarantor, only those people whose income and credit are borderline.

 

Sometimes folks simply haven't established a credit record (and a beacon score) so the lender has no idea what their risk is. Then they might ask for a guarantor. My son was in that situation the first time he bought a house. He had refused to get involved with credit cards when he went away to university, and I gave him a car, therefore he had no track record for the lender to look at. It wasn't a case of having bad credit. He literally had no credit history.

 

That no recourse thing in the States is more a product of the recent sub-prime fiasco. The banks have been letting creditors walk because of the ridiculous price drops in some markets and the impossibility of selling at enuf to discharge the arrears etc. My understanding is that at least in most states the general policy is not unlike normal lender policy here in Ontario. If you default on your mortgage here the mortgagee is first going to take steps to get legal possession of the property, probably under power of sale, dispose of it to see what proceeds are available to apply to the arrears and costs, then decide how they'll proceed to recover any shortfall. If there's a guarantor they'll probably be the target of opportunity.

 

JF

[Daplumma]

I'd say no, in the U.S. the mortgages are NON-RCOURSE which means that you can leave the keys on the porch and call it a day and nobody comes after you after the fact, here in Canada we have RECOURSE mortgages, the debt follows the mortgagee and guarantor until it is paid off in full. I would say don't do it, it can end up being a major problem for you, if someone needs a guarantor, that means they are on shaky ground credit wise. If they have any sort of financial difficulty which unfortunately is probably quite likely, you will be on the hook. Remember, banks don't normally ask everyone for a guarantor, only those people whose income and credit are borderline.

 

I would be surprised if that was the case.If you are underwater in the loan I'm pretty sure they will come after you for the balance to make them whole.If nothing else your credit is cooked,no mortgage loans for a few years or more.

Joe

[hookerdown]

I work for one of the big banks, and used to work in the Mortgage department. If the mortgage goes to collections, the banks do not have recourse to pursue you if you live in the states. So you are safe, he is outta luck.

 

With out knowing your bother's credit history, it might help if he downsizes the place he is looking to buy, or possibly get a place that he can rent out the basement. That would help strengthen his mortgage application. If he is single, tell him to buy a two bedroom condo, and rent one bedroom out. It should be easier for him to get a mortgage on a condo cause there is usually less risk as far as the stucture, ie no concerns about expensive repairs for a roof repair, leaking basement, etc. As well the heating, insurance, and property taxes are usually less.

[a.cortellessa]

im not too sure about the legality behind it. Why don't you just talk to your bank and see what they have to say?

[OhioFisherman]

You could always ask a Chinese bank to float you a loan? They do it for the government.

[10point]

I am off the hook. My wife told him we wouldn't do it. He was actually trying to buy 2 places and fix one up and sell it and return some money to us.