Jingle mail — the act of walking away from an underwater mortgage by mailing your keys back to the bank — is a peculiarity of the Alberta residential market and an act of desperation. However, a combination of high debt and lost jobs make it an option in a province going through a significant economic reckoning.
It’s enough of a concern that the federal government is watching the Alberta market closely. Jingle mail, or strategic defaults, weaken the housing market and increase loan losses among Canada’s banks.
‘People saying that we can’t make a go of it and mail the keys to the bank.’– Don Campbell, Real Estate Investment Network
“We’re slowly starting to see it in Grand Prairie and Fort Mac,” said Don Campbell, senior analyst with the Real Estate Investment Network.
“People saying that we can’t make a go of it and mail the keys to the bank. In the big cities, not so much because the average sale prices haven’t really dropped much, we haven’t seen the pain yet. But Calgary is getting pretty tight.”
Bruce Alger, an insolvency trustee at Grant Thornton in Calgary, said he is dealing with one such case and has heard of more.
“It’s when you see high-end home prices drop 20 per cent below the peak,” said Alger. “I think there are people considering walking away and I’ve talked to one or two myself.”
Why Alberta is different
Alberta is the only Canadian province to broadly offer non-recourse residential mortgages. Those loans with at least a 20 per cent down payment and thus are not insured by the Canada Mortgage and Housing Corporation (CMHC).
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