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Can You Walk Away From Your Mortgage in Canada? — The TRAP Behind a Housing Crash

2,803 views · Published 12 December 2016 · 13:43 · Indexed 27 October 2026

Channel: Mike Martins · 2016 · People & Blogs

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In this video, I’m looking at something that could become extremely important if Canada’s housing market continues to weaken: what actually happens when your mortgage becomes larger than the value of your house?

A lot of people remember what happened in parts of the United States during the housing crash. Homes went underwater, borrowers stopped making payments, and we heard stories about people simply mailing their keys back to the bank—what became known as “jingle mail.” But can Canadians actually do the same thing?

The article I'm discussing looks at the difference between recourse and non-recourse mortgages and raises some serious questions about what could happen if Canadian real estate prices decline significantly. If someone owes $700,000 on a property that eventually sells for $500,000, does that missing $200,000 disappear? Or can the lender pursue the borrower for the difference?

That question becomes even more important when we're talking about Vancouver, where property values have climbed dramatically and many buyers have taken on enormous mortgages.

We're already watching Vancouver's market change following years of rapidly rising prices. If prices continue declining, what happens to highly leveraged homeowners? What happens if interest rates rise? What happens if unemployment increases? And what happens to consumer spending when homeowners become terrified of losing not only their homes but their other assets?

I'm also asking viewers around the world to participate. Australia, Ireland, the United States, Britain, Canada and everywhere else: what happens in your country when somebody defaults on a mortgage?

Can you hand the keys back?

Can the bank garnish your wages?

Can they pursue your savings and other assets?

Does bankruptcy eliminate the remaining debt?

This isn't just about whether Vancouver housing prices rise or fall. It's about understanding the financial agreement people are signing when they take on hundreds of thousands—or even millions—of dollars in mortgage debt.

Comment below and tell me how mortgage defaults work where you live.

#vancouverhousingmarket  #housingcrash  #canadahousingcrisis  #mortgagecrisis  #vancouverrealestate  #MortgageDefault #housingbubble  #realestate  #JingleMail #mikemartins

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