The Edmonton Journal – April 15, 2005

TORONTO - When Carel and Susanna Seyffert immigrated to Canada from South Africa, they fully expected to settle their four children into a new family home soon after landing.

With both parents gainfully employed and a 25 per cent downpayment already in hand, the couple were shocked to find themselves among a growing number of new immigrants shut out of Canada's hot housing markets because they lack a financial history in this country.

"It was really frustrating," Carel said of his family's near year-long struggle to buy a house in Calgary. "It was the fact that we had no credit history in Canada ... And our credit history from South Africa does not apply here. They don't even look at it."

Most mainstream lending institutions look to the country's two main credit bureaus, Equifax and Trans Union of Canada, to see how an applicant has been handling credit and paying bills over a minimum six-year term, weighing mortgage approvals quite heavily on that credit score and history.
However, a problem arises when an applicant is new to the country and cannot immediately secure a credit card, line of credit or loan to list them on the system.

Rejected by local homebuilders, the Seyfferts were told their only hope of securing a mortgage from a major lending institution was by paying a premium on the interest, of about seven per cent, to mitigate the so-called "risk" of an immigrant application.

It was a major disappointment for the couple, who were anxious to take advantage of record-low interest rates.

"You've come to this country and you think you can add to the economy and can be of benefit to people, but they don't seem to recognize that. I felt like I just wanted to pack up my stuff and go back," Carel said. "Sometimes you feel like you're a criminal or you're in the wrong because you get treated as if you're absolutely nothing. And I think it's wrong."

Sadly, the Seyffert's ordeal is not an anomaly, says Paula Siemens, a mortgage consultant with mortgage broker Invis Financial, pointing to a recent Statistics Canada report that found the percentage of immigrant homeowners has fallen over the past 20 years.

In 1981, home ownership among working-age immigrant families in Vancouver, Montreal and Toronto actually exceeded that of Canadian-born workers, the report said. But by 2001, the trend had reversed in Montreal and Toronto.

Siemens says independent mortgage brokers can help overcome hurdles posed by mainstream institutions, such as pricey interest premiums or onerous requirements calling for downpayments of 25 to 50 per cent for immigrant applicants.

"As a mortgage broker, because we deal with all of the lending institutions -- major banks, trust companies, mortgage companies, private lenders -- we have a variety of different lending products that we can offer a client," Siemens said.

She said new products have come on the market in the last few years to address these situations. For example, Genworth Financial Mortgage Insurance-Canada, formerly GE Capital, has a foreign employee program for applicants who have been in Canada for fewer than 12 months but have secured employment, such as in job transfer situations. Applicants are able to put as little as 10 per cent down and approval is partly based on a successful credit check in their former country.

There are also other programs designed for people planning to immigrate to the country.
The Seyfferts qualified under the Genworth foreign employee program for a variable rate mortgage, allowing them to put down some Canadian roots with their new five-bedroom home in southwest Calgary.

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