Newsvertising 2: Are there other sections of the Vancouver Sun/Province that are nothing more than real estate advertising dressed up as news?

Yesterday we introduced you to the topic of 'Newsvertising',  a disturbing trend wherin our City's major daily newspapers publish paid advertisements dressed up as legitimate news stories; executed in a way that doesn't clearly tell you that what you are reading isn't news.

You pay them and they make it look like news.

Marvellous.

It's a disturbing journalistic development, especially when leveraged by a real estate industry desperate to 'massage' rapidly falling consumer confidence; confidence which we are now told is dropping faster than ever before.

It begs the question: what other news sections in the Sun/Province portfolio are the editors prepared to journalistically pimp out?

Did you happen to catch two more of those real estate Gallery portfolio's that the Vancouver Sun ran over the past week? You know... like the one that profiled the infamous fake mansion in West Vancouver.

There was this one on March 21st which compared what you could buy in Vancouver vs. Roswell, Georgia.

And then,  on March 25th, the Sun ran another comparing what you could buy in Vancouver with Beverly Hills, California.

In each of these cutsie infotainment-style news pieces the Vancouver Sun gave credit to the originating source, a luxury real estate blog called PriceyPads.com

Faithful readers probably recognized the comparative style format at play from local blog The Thirties Grind. That's where writer Melissa Carr has spent the last year cranking out real estate comparisons in a feature titled the Absurd Vancouver Property of the Week.

Carr has been earning a certain level of notoriety as Global TV and CKNW radio have taken to regularly inviting her on-air to discuss the insanity.

Enter Pricey Pads.

Pricey Pads (PP) has a strong local Vancouver presence and bills itself as a "luxury real estate" blog.  Run by Mitch Cal, he says:

Pricey Pads was created as a way to showcase the greatest Estates and Mansions around the world. It continues it’s goal to compile updated lists of the world’s most expensive luxury Real Estate and Rentals in todays market. Keep checking back for frequent updates and new and exciting features! Be sure to “Become a Fan” of Pricey Pads Facebook Fan Page to see much more content.

Interested advertisers can contact PP for property listings, advertising and support/requests.

Cal even boasts that PP has "worked with the Auctioneers auctioning Sheryl Crow’s Estate on an advertising campaign and have been involved with a number of Realtors from Canada, Brasil and the United States to help market their properties."

Real estate promotion seems to be PP's gig.

One thing PP doesn't regularly do, however, is profile Vancouver properties in a value-vs-value format with other North American cities. From what we can see, this is something new for them.

Incredibly this hasn't deterred Pricey Pads from achieving an astonishing level of success in garnering media attention with their new concept. One can only marvel at the speed in which they were able to gain major newspaper coverage not once, but twice in the same week with their new feature.

It took Melissa Carr and The Thirties Grind over a year to crack Vancouver's major media and gain exposure.

PP seems to have pulled it off in less than a day.

You see, PP published their Vancouver vs. Roswell, Georgia comparison on their website on March 21st. Later that same day it appeared in the Vancouver Sun.

That's impressive.

Presumably some sharp, eagle-eyed editor just happened upon the Pricey Pad piece the moment it was posted and said, "wow... we need to pick up on this and print it in our newspaper. Our readers would find this very interesting!" 

Suddenly the Sun has their latest real estate oriented human interest story for us and Pricey Pads benefits from unexpected media attention to their website link in the Vancouver papers locally, and nationally as the gallery feature syndicates across the country.

Riiight!

You don't suppose Pricey Pads paid the Vancouver Sun to feature them in their little infotainment Gallery, do you?

How can this be though?... There's no indication that what we are looking at is a paid real estate advertising feature. No indication that the Sun is actually running a promotion to drive web traffic to a for-profit website.

Newsvertising. 

It's the formula by which a once respected news organization sells it's journalistic integrity and soul in a misguided attempt to financially survive.

Based on what we have shown you the last two days, how can you trust the actual motive/source behind anything printed about real estate from an organization employing this formula?

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Newsvertising: First we had 'fake' helicopter tours. Then we had 'fake buyers. Next came a 'fake' mansion. Now do we have 'fake' news?

First we had "fake" helicopter tours.  Then there were 'fake' asian buyers for Chinese New Year.  Next we had a "fake" mansion.  Now do we have "fake" news created so that our cities' major daily newspapers can sell real estate advertising?

Last decade news entertainment, or “infotainment,” dominated the news landscape. Sharply scorned by many traditional journalists and academics for focusing on “entertainment” rather than “news,” the practice has taken hold notwithstanding.

The trend has been for news programs to make their broadcasts more entertaining to gain ratings. By incorporating more lighthearted presentations or human interest stories into newscasts, they could hold their audience. While there is still a line between a traditionally hard news approach and infotainment, the current media climate has blurred the distinction.

This decade, with the rise of the internet and the explosion in social media, that line is being blurred even more as print media fights for their very survival.

To stem corporate losses, newspapers have taken to raising the price of their subscriptions and news-stand copies. They have also taken to instituting 'paywalls', methods of charging readers for online content. But it's not enough.  An in desperation another disturbing trend is starting to emerge.

The news media has always been targets for product pitches of one form or another.  Businesses and politicians have always bombarded mass media with press releases designed to promote self interests. From time to time media has picked up on these 'press releases' in the name of informing about 'public interest' stories. And no sector of society has seized on this tendency like real estate marketers.

Stories with a real estate theme have reached legendary status on the Wet Coast, particularly when it is revealed these stories are nothing more that shills or manipulations of the media. (On that note, The TYEE has an excellent article out by Shannon Rupp worth reading titled: Why Blog when you can Flog which outlines the Industry's attempt to manipulate the blogosphere)

But what is disturbing here is that the print media now views the rapacious demands as something to exploit. And exploit it they are. It's a trend we call "Newsvertising."

Real estate marketers crave media spots in the news. And nothing garners attention like a news story profiling your development in a positive way.  Until now that sort of attention has been free!

But not anymore.

Rather than be the lackey who provides 'free advertising", print outlets like the Vancouver Sun/Province appear to be seizing on an untapped opportunity to sell their journalistic souls.

It used to be, if you wanted to advertise you product under the veil of a news story, you had to suffer the ignominy of having a banner placed above your 'fake' news story that read "ADVERTISING FEATURE"

However the moment people see the term "ADVERTISING FEATURE", they tune it out. Makes selling that sort of advertising virtually impossible.

Enter the Vancouver Sun/Province's latest gambit: incorporating advertising so that it appears as "news" without outwardly announcing it's not.

"Newsvertising": the next step for print media.

You can see the tactic here:

This March 21st Vancouver Province story has all the hallmarks of a human interest real estate news story, but it's not a news story.It's an "advertisement feature" cleverly disguised as a news article.

Scroll to the bottom of the 'story' and you will see this:

When you go to the link: theprovince.com/focus you are instantly taken to the Vancouver Sun/Province advertising rates page. This little blip at the bottom is all there is to discern this as an 'ad' from other regular news articles.

And it doesn't stop at fake human interest news stories, The Province appears to be faking hard core news too.

On March 15, 2013 the Province ran this "ADVERTISING FEATURE" dressed up like regular news: 

The headline screams: "Real-estate sales finally recovering: Tighter mortgage rules had put a freeze on activity"

(This while some of the past decades worst year-over-yeary monthly sales figures are recorded) 

Just like the real estate human interest story from March 21st, the bottom of this feature also has that small direction to the province/focus section. Only this time it isn't a hyperlink. You can't click on it and discover you were have been directed to a page detailing advertising rates.  This time you being have to go the extra step of copying and pasting the url into your browser to discover it's an ad.

If you had a print copy of the newspaper, it's even worse.

For all intents and purposes it looks just like a real news article:

Presumably all of this is perfectly legal. But is it ethical?

What are you going to do?  Go find a computer to find out your reading an ad in your hard copy newspaper?

We showed this story to 41 different people on the weekend.  NOT ONE realized they were looking at an advertisement.

Who paid for this ad? What company placed it? You don't have a clue.

The major daily newspapers in our City appear to be so desperate for ad revenue that they have taken to prostituting their journalistic ethics for a quick buck. All while the public is being served up highly misleading advertisements presented as news.

Each and every one of the 41 people we showed the article to felt manipulated and deceived when they were shown the 'news story' was actually an ad.

The Canadian Association of Journalists principles for ethical journalism state:

Journalists have the duty and privilege to seek and report the truth, encourage civic debate to build our communities, and serve the public interest. We vigorously defend freedom of expression and freedom of the press as guaranteed under the Canadian Charter of Rights and Freedoms. We return society’s trust by practising our craft responsibly and respecting our fellow-citizens’ rights.

Presenting these ads in this fashion, in our opinion, isn't responsible. Nor is it properly presenting the truth. And we certainly don't think it's serving the public interest.

If you agree and wish to complain about these practices by the Vancouver Sun or Province you can file a complaint online with Industry Canada about misleading advertisements.

You deserve to know when you are looking at an ad instead of a news story and you deserve to know who is responsible for placing that ad.

You deserve more from your print media.

If they won't give that respect to you, maybe it's time to start demanding it?

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What's the deal with the Globe and Mail's changing real estate headlines? Better than the outright BS from The Province we suppose.

It's one of those things that drives real estate watcher's crazy.

The media comes out with an extremely bearish real estate news headline (which perfectly captures the essence of the story), and before long it changes... and the change is much more neutral in tone.

What's the deal?

The latest example is a story from the Globe and Mail covering the dismal February real estate numbers.

The article starts off with the bad news:

The flicker of optimism that sparked in Canada’s housing market when January sales outpaced December’s has died out, erased by a notable drop in February.

Last month’s declines were significant enough to prompt the Canadian Real Estate Association (CREA) to cut its sales outlook for 2013 on Friday for the third time since last summer.

As you can see by the image above, the G&M originally headlined the article "Real Estate market outlook dims as home sales plunge". (hat tip Greater Fool blog)

Ominous indeed.

If you google that headline, google's search still turns up the link:

Click on the link, and you are still taken to the online story BUT now the headline has changed.  Here is the new version:

WTF???

Why did we go from the ominous "Real Estate market outlook dims as home sales plunge" to the decidedly neutral "Clouds gather over Canadian housing market"

Is it the result of Industry pressure?

Seems odd since the Globe and Mail has been at the forefront of identifying the realities of what's currently happening in the housing market but how else to explain the change in tone?

Meanwhile, as Greater Fool succinctly notes, the real estate industry is busy desperately trying to manipulate public perception in the face of disastrous results.

This from Friday's Vancouver Province (on line version here):

From real estate sales 'plunging' to real estate sales 'finally recovering'?  How does a headline like this even get published?

Wonder it this one will get syndicated all across the nation like the fake mansion photos?

We deserve better than this from our print media.

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The Province's Online News Editor responds to the "fake mansion" story; offers intriguing glimpse into newspaper syndication

Meet Erik Rolfsen.

Erik is a news editor with The Province newspaper.  He oversees the digital team at TheProvince.com. From this Linkedin profile:

I was the first journalist at the Vancouver Province to be assigned digital-only duties. I’ve been immersed in online news ever since, leading the transformation of our print newsroom into a digital-first operation. I oversee the team that edits our web, mobile and social media content, which includes breaking news, enterprise features and special projects. I also collaborate with senior management and other corporate departments on new product development and strategic planning. Mostly, I think about what news coverage is going to look like three years from now and try to act like we’re already there.

Erik stopped by our little corner of the Internet yesterday to respond to our post about The Province perpetuating the fake mansion photo in an article on March 4th.

While here, Rolflsen offered an intriguing glimpse into how the digital news media of our nation's newspapers work.

He also engaged in a little Q and A with some faithful readers. In case you missed it, here's what Mr. Rolfsen had to say.

Regarding the March 4th article::

If you had been paying attention two weeks ago when every media outlet in town was scrambling to post a gallery of this phony house, you might have noticed that The Province was the one outlet that had it right. That's because I personally picked up the phone and questioned the agent representing this property about the suspicious images. He graciously explained that they were indeed artist's renderings. We included this information on the photo gallery we published on our site at the time (we were the only ones to do so), but we later suppressed it altogether because it seems pointless to show people photos of a house that doesn't exist.

The story you reference above is a wire story from Canadian Press that was packaged by CP on Monday and appeared on our site via an automated feed to which we subscribe. Clearly they searched the archives for a recent listing to accompany their story and grabbed one of the renderings. I see that somebody has since brought the error to their attention and the photo no longer accompanies their package.

Thanks for the attention, though.

Erik Rolfsen (Province News Editor)

Many Franks asked:

Erik, I'm genuinely happy to hear you folks are sniffing around this corner of the web. What about this gallery?  It also appears to have made the rounds in other papers, though there's no AP byline I can spot. It pretty clearly mistakes the virtual mansion for an actual one.

Erik Rolfsen:

That's not ours, it's a Calgary Herald copy of a gallery originally compiled by the Vancouver Sun. It's a long story, but try replacing "theprovince" with "montrealgazette" in that URL and see what happens. Did the Gazette just get fooled, too?

Many Franks:

Erik, I'm not qualified to tell you how your business runs, but are you saying The Province is not responsible for the news content that shows up under its own domain name? I understand that the content is compiled from a lot of sources, but it's tenuous to claim that the Province "had it right" while that gallery, which is clearly incorrect, is still active under your domain name and banner. I actually think the Vancouver Sun did fairly well in making up for their own journalistic lapse by being the only outlet that I've seen to actually publish a correction or retraction.

Erik Rolfsen:

The reasons that gallery is able to appear under our name are highly technical, far beyond our control and extremely frustrating to us, so yes, that is what I'm saying. I could not edit that gallery right now if I wanted to, because it is the Calgary Herald's and I do not have access to it.

I'd love to show you the gallery we compiled and posted on Feb. 18 with the correct information, but we made a decision to suppress it and it's going to stay that way.

When realtor Laura McLaren was quoted in the Feb. 28 post that the "media that we did speak to got the story right," she was referring to The Province, possibly among others.

Many Franks:

That does sound frustrating. As News Editor you've done your homework, but nonetheless the paper you represent is running content that is clearly incorrect. To the reader, the distinction between editorial and technical failure is invisible (if not immaterial); at least the "Vancouver Home Sales Plunge" story had a CP byline to indicate its source.

Ray:

Fascinating that theprovince, calgaryherald, montrealgazette, and who knows how many more are completely interchangeable. Just the headers change to make it look like it's your news. Probably all the more reason to make sure these types of country-wide articles are fact checked. I agree with Many Franks, this shouldn't exempt you from responsibility for posting it, however. Not to mention, you know the story is false, and you have no way to disconnect your feed of this article from the group. Laughable

(Rolfsen) doesn't seem to be bringing anything to this conversation except excuses. It's time to get the "highly technical" team together for this shared URL manipulation scheme they have going and add three more requirements:

1. Ability to edit the source's post in case of emergency

2. Ability to delete/suspend an article from Canada-wide circulation if it's found to be misrepresented.

3. Ability to disconnect a single article from the group, stopping local dissemination at the local Editor's choice.

Am I really the only person to think of these?

Erik Rolfsen:

No. 2 is certainly possibly under our existing system. I've just sent the request to Calgary.

Later in the evening, both the photo attached to the March 4th Province article and the gallery of 13 fake mansion pictures had been removed from The Province's online sites.

We salute Mr. Rolfsen for taking the time to explain the situation, answer some questions, and for taking action to delete the infamous pictures from The Province sites.

While there are still a number of lingering questions about the whole "fake mansion" story that bother us, we'll address them in a future post.

In the meantime, Mr. Rolfsen says: "The Province was the one outlet that had it right. That's because I personally picked up the phone and questioned the agent representing this property about the suspicious images. He graciously explained that they were indeed artist's renderings. We included this information on the photo gallery we published on our site at the time (we were the only ones to do so), but we later suppressed it altogether because it seems pointless to show people photos of a house that doesn't exist."

We're curious and hope Mr. Rolfsen will answer two more questions:

1. How did the news story originally come to the attention of The Province causing Mr. Rolfsen to personally pick up the phone and question the agent representing the property about the suspicious images?


2. The Province, after originally publishing the photos, later suppressed it altogether because it seemed pointless to show people photos of a house that doesn't exist.  What prompted The Province to even bother running the photos in the first place if they knew they were fake?

Finally... the $38 million dollar "fake mansion" listing has just had it's asking price slashed by $10 million dollars to $28,888,000.  It's no longer Canada's most expensive property listing and all the phoney pictures are now gone.

As Democrass joked on VCI, the downturn in housing prices spreads - it is now affecting both real and fake houses.

We do live in interesting times.

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Thurs Post #2: Province newspaper first out of gate to expose MAC fraud

Well it seems the Vancouver Province newspaper is the first out of the gate with the MAC Marketing Solutions news fabrication story.

Titled "Vancouver real-estate firm admits faking investor for TV news", the Province tells us:

Mac Marketing Solutions admits on Facebook that it had an employee pretend, in local TV news stories about Vancouver real-estate sales, that her parents were coming from China to buy her a condo.

A Vancouver real-estate company is getting the kind of social media buzz they could surely do without, after apparently admitting to a manipulative Chinese New Year marketing scheme.

After an astute blogger noticed something fishy in several TV news stories involving Mac Marketing Solutions, the company was forced to make a statement on its Facebook page.

The blogger alleged “media manipulation” because a Mac Marketing employee appeared to have acted the part of a Chinese investor on two local TV news broadcasts.

The employee — represented as a young woman from China — suggests her parents are on the way to Vancouver to snap up a condo for her.

In a post to the company’s Facebook page under the Mac Marketing Solutions logo, an apparent spokesperson writes: “Chinese New Year is indeed a busy time across many of our communities. Last year at Maddox, we experienced increased sales volume during our Chinese New Year efforts and this year have already sold a number of homes with several more expected. We do admit we should have been more transparent about the fact that a MAC Marketing Solutions employee was included in this story.”

Multiple calls to Mac Marketing Solutions Thursday morning have yet to be returned.

Without a doubt, reporters often field real-estate story pitches and, in recent themes, marketers have focused on the voracious Chinese investor who comes to Vancouver on holiday during Chinese New Year ready to throw down cash.

On Thursday, the Mac Marketing Solutions Facebook page is getting quite a backlash against that narrative, seemingly from young Vancouverites who are fed up with high home prices and excessive greed in the city.

“Mac has admitted to perpetrating a fraud on both CBC and CTV news as well as their viewing public in conjunction to a condo development they are marketing,” Chris Bullard posted Thursday morning.

“They represented one of their employees as an out of town Asian buyer to fuel their marketing hype of the non-existent Asian real-estate invasion in Vancouver. The management of this company has no ethics and deserves to be drummed out of the business. I’m urging the authorities to charge them with fraud.”

The only clarification is that this didn't come from an 'astute blogger,' it came from the local online community in total who continuously shared the information they were finding. 

Kudos to all of you. 

After watching the 'fake' news stories involving yellow helicopters, groupon sales and one day sell outs, it's nice to finally see the media recognize some of the shenanigans that go on.

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Is BC's first time home buyer grant being used to facilitate CMHC Insurance fraud?

For the past two posts we have been talking about Quadra Homes and their promotional pamphlet for their Langley Condo Development.

Quadra made the news for their unauthorized usage of the BC government's logo when hawking their condo's. The story was headlined in the Vancouver Province newspaper: Major developer was reprimanded over unauthorized use of provincial logo to help sell condos.

But as we asked yesterday, what about counselling buyers to circumvent the new regulations against zero down payments?

House buyers needing 95% financing are not allowed to borrow the last 5% for their down payment. If they do their loans won’t be eligible for CMHC mortgage insurance.

Is the Langley brochure counselling and assisting buyers to do something illegal?

It's an important question because it's not just Quadra Homes engaging in this practice.

One of the contributors to our comments section (hat tip Ray) passes on a similar tactic being used by Aragon Properties at their FLO and DUO developments in New Westminster.

Prospective clients recently received this email blast:

The email clearly promotes a "Zero Down Payment Program" and says:

- 95% insured mortgage financing
- 5% down payment loan with flexible terms
- Offer effective until March 31, 2013

It certainly looks like Aragon Properties is leveraging the BC first time home buyer grant like Quadra was... with one significant difference.

Instead of suggesting you find a generous uncle to spot you the $10,000 down payment until the grant arrives (at which time you pay him back), Aragon says they are offering to loan you the money you need for the down payment themselves.

Perhaps instead of pursuing the unauthorized use of provincial logos to help sell condos, the government should be looking at what appears to be widespread illegal use of the first time home buyer grant to circumvent CMHC mortgage insurance regulations?

Just a thought.

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Major developer reprimanded over unauthorized use of provincial logo. What about counselling home buyers to circumvent 5% down payment requirements?

In our last post we told you about the pamphlet pictured above which had come out for a Langley condo development.

Seems that pamphlet got the attention, not only of this blog, but of the Provincial Government.

As a faithful reader pointed out in our comments section, the Vancouver Province reported that a Major developer was reprimanded over unauthorized use of provincial logo to help sell condos.

A major condo developer has been reprimanded by the B.C. government for the unauthorized use of the provincial logo in a promotional brochure for a new development in Langley.

Quadra Homes agreed Thursday to delete all references of the government’s registered logo from its website and to destroy the remaining promotional brochures for the development, named Yorkson Creek, which carried the B.C. logo on its front and back page.

The issue came to head on Wednesday after The Province contacted the Ministry of Finance asking about the 28-page, glossy brochure, which began arriving on doorsteps in the Langley and Abbotsford areas within the last two weeks.

The Provincial Government’s first-time homebuyer’s bonus of $10,000 was detailed in the first few pages of the brochure. But the rest of the pages are dedicated to the benefits of buying at Yorkson Creek.

“It is not just misleading, it is wrong,” said Doug Bigg, who received the brochure last week. “I interpreted it as taxpayers' dollars being used to advertise condos for a multi-million dollar corporation. If I thought that, then I’m sure most other people would think that.”

But the government had nothing to do with the brochure, the Ministry of Finance said. And on Thursday, the company was ordered to remove all unauthorized references of the logo.

“This unauthorized use must cease immediately,” part of a letter sent to the company read. “Failure to do [so] in a timely manner may lead to further action on our behalf.”

Personally I think there is more to this than just misuse of the Government's logo and misrepresenting their endorsement of the development.

As Garth Turner noted this week, house buyers needing 95% financing are not allowed to borrow the last 5%, or their loans won’t be eligible for CMHC mortgage insurance.

Turner cited the story of a banking loans officer wherein the...

banking loans officer suggests that he take out a 10k line of credit, give it to his father, so his father can give it back to him with a gift letter. Voila, 5% down.

Turner proceeds to point out that this arrangement circumventing the 5% down payment is illegal.

If that is true, is the Langley brochure doing something just as illegal? 

Note this page of the pamphlet:

It suggests that first-time buyers: "Borrow the down payment from your favourite Uncle and pay him back when you get the $10,000."

Isn't that exactly the same as Turner's example? 

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The Media gets bolder in describing market conditions - now it's "Vancouver Sales PLUMMETING"

You can only imagine that media image focused types like Bob Rennie must be pulling what little hair they have out of the scalp with the on-going headlines that keep appearing.

Yesterday we told you how ScotiaBank had not only declared that Vancouver was in a housing correction, but that it was ongoing with a definite risk of a "difficult adjustment."

On the same day Scotia was declaring an on-going housing correction here, the Vancouver Province screamed:Vancouver home resales plummeting

Can the psychology of the current media stories be any worse? And it's the way they are saying it.

Vancouver's resale housing market plunged sharply in July compared with July 2011... The bigger drops in dollar volumes are owed in part to falling home prices: The average price of a home in Greater Vancouver in July was $667,462 - down 12.4 per cent from $761,673 in July 2011.

Kinda kicks the whole "but the HPI is rising" crap right in the teeth, doesn't it?

Greater Vancouver's declines were among the most dramatic and dragged down national statistics. But home prices also continued to decline across the rest of the country in July and the pace of the depreciation is picking up, according to the CREA.

The pace of depreciation is picking up?

Nah... did they really just say that?

I think Rennie might actually be bald by Spring if this nonsense keeps up.

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A few random thoughts...

Some interesting stats sent to me today.

There are currently:

1030 Detached homes for sale in the Westside of Vancouver

697 Detached homes for sale in the Eastside of Vancouver

1164 Detached homes for sale in Richmond

Wow.

Reading the newspapers on the weekend, I couldn't help but wonder how many of those detached homeowners with houses languishing on the market are seniors?

Particularly since, as the Province newspaper notes, the fastest-growing segment of society going broke in Canada is people over the age of 55. They have acquired the nickname grandpa debtors.

According to the article the number of debtors 55 and over has grown to the point where BC's largest bankruptcy trustee, who focuses exclusively on consumer and small-business insolvency, says that the number of grandpa debtors in the Lower Mainland has exploded.

Debtors aged 65 and older who are working on bankruptcy or consumer proposals has soared by 217% from 2009 to 2011.

The numbers are almost as high for those over 50: age 60 and up jumped 193%; 50 and over climbed 166%.

These people are just the tip of the grandpa debtor iceberg, the firm says. The numbers of older insolvents will continue to grow, fuelled by easy credit and misfortune.

So you have to wonder? How many are desperate to sell their house to address their financial situation?

It's an interesting backdrop to the current market.

And here's another backdrop from the weekend papers.

The Globe and Mail ran an intriguing story on Federal Defence Minister Peter MacKay's Iranian born wife.

She is frustrated with the Toronto-Dominion Bank for abruptly closing bank accounts and cutting off mortgages that belong to Iranians who live in Canada.

Apparently TD was complying with the federal Special Economic Measures (Iran) Regulations that prohibit the provision of any financial or financial-related service to or for the benefit of a person who is in Iran, or is a national of Iran who does not ordinarily reside in Canada.

Over the past few months, TD has mailed many letters to people who fit this bill – whether or not they are full Canadian citizens or residents – informing them that their accounts must be closed immediately and that their mortgages must be quickly repaid.

The item that caught me attention here is how TD was basically calling in home mortgages... demanding immediate payment in full.

Now there's a concept that should send a chill down the spine of every mortgage holder in the country.

I couldn't help but ruminate on the juxtaposition of these three separate items.

A stagnating market, waves of seniors in serious financial trouble, and evidence that banks can still - and will - turn mortgages into demand loans.

The storm clouds gather.

And the potential for catastrophe grows.

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Mon Post #2: "It's a stabilizing period"

Rationalization.

Wikipedia says rationalization, In psychology and logic, is an unconscious defense mechanism in which perceived controversial behaviors or feelings are logically justified and explained in a rational or logical manner in order to avoid any true explanation, and are made consciously tolerable – or even admirable and superior – by plausible means.

In brackets, Wiki defines rationalization as "making excuses".

Today's Vancouver Province newspaper carries a story which headlines: Housing sales in Metro Vancouver hit 10-year low in May.

Greater Vancouver housing sales hit a 10-year low in May, dragged down by plunging sales of high-priced homes in West Vancouver, Richmond, and on Vancouver’s pricey west side.

This comes as May sales figures show that detached-home sales fell 59% in West Vancouver, 46% on the west side of Vancouver, and 25% in Richmond.

Eugen Klein, president of the Real Estate Board of Greater Vancouver (REBGV), calls the negative numbers "a stabilizing period" and attempts to put a positive spin on the situation by saying fewer sales and more listings mean that buyers can look around and haggle over price.

“People are talking all the time about affordability. There’s more room to negotiate with sellers. That’s when you have better affordability.”

Ahh, yes. More "room to negotiate with sellers." Bet all those people out there with homes on the market are calmed by this assessment of the market.

Meanwhile compare that with realtor Larry Yatkowsky's take on seller's angst at the moment, a viewpoint we posted yesterday:

"Probably, on average, about a 150 or 160 homes in Vancouver are reducing their price every day in the hope of catching, getting ahead of the train and maybe get out before they can't."

Remember that... it's not concern or panic... it's a stabilizing period as people try to get out before they can't.

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Harbinger

This item has been covered on a number of local blogs, but the item is significant and will prove to be a harbinger of things to come.

The newspaper story in question (which you can read in the Province newspaper here) tells us about a real estate property which is now before the B.C. Supreme Court. The case is a potentially precedent-setting civil forfeiture that calls into question the role banks play, knowingly or unwittingly, in the province's multibillion-dollar drug trade.

But while the newspaper story focuses on the role played by banks in financing the grow-op, our focus zeros in on a revealing section within the story... one that confirms what many bloggers have suggested is going on with mortgage approvals in this country.

Every week we are reminded that the reason Canada has not suffered a housing collapse like our American cousins is that our banking system has been much more diligent with mortgage approvals and our banks have properly managed risk.

Thus, supposedly, there are no subprimer's in Canada.

Numerous posts have been made on this blog discounting this. We have subprimers. The conditions just haven't sufficiently presented themselves for their carnage to be unleashed on our market - yet.

Which takes us to the recent Vancouver Province newspaper story.

As details of the forfeiture case come out, it appears that the courts have come across several circumstances where banks have refinance mortgages on million dollar homes for lenders who, allegedly, were unable to provide proof they had the means to make the hefty monthly payments (about $4,000 a month).

That's right... million dollar mortgages approved without adequate proof of income to pay said loan.

In one case a prospective lender asked the Bank of Montreal to mortgage the property in question for its full value ($976.000) on Oct. 22, 2008. In August 2009 Vancouver police raided the home and uncovered a massive grow-op. Two days later, despite the raid, the lender sought and received an additional $70,000 mortgage on the property from the Royal Bank of Canada.

Make no mistake... this is not a 'one-off' story.

In the United States a minor drop in real estate values combined with mortgage resets at higher interest rates triggered the massive housing collapse we have witnessed over the past four years.

Those two conditions haven't come to pass in Canada, yet.

But they will.

And when they do, real estate in bubble areas of our country will suffer the same results as real estate in the bubble areas of the United States. And as the market here collapses inward upon itself, story after story will start to surface about other highly questionable loans that have been made.

This article is simply a portent of things to come.

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Email: village_whisperer@live.ca

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