Apr 19 | 2017

How can you Mitigate Real Estate Fraud?

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real estate fraudMortgage fraud has quickly become the fastest growing crime in North America, most often affecting the institutions that lend money to individuals purchasing property.

The most common form of mortgage fraud involves fraudsters who acquire property and then artificially increase its value through a series of sales between themselves and an accomplice. A mortgage is then secured on the property based on the falsely inflated price.

FCT is dedicated to helping our valued lending partners protect themselves against losses inflicted by fraudsters. Since 2012, FCT has identified more than $401 million in suspicious mortgage transactions. A title insurance lender policy from FCT provides the ultimate protection and allows a financial institution:

  • the ability to protect its financial interests
  • to safeguard its reputation and business by easily mitigating risk associated with claims

We have created a list of fraud flags and tips to help you mitigate your risk of becoming a victim of mortgage fraud. Whether you are a bank branch lender, credit union lender, a mortgage broker or a mortgage specialist, these tips can help inform you of what to look for when processing a mortgage transaction.

For more information about how to protect you and your customers against mortgage fraud, please visit www.fct.ca or contact your dedicated Business Development Manager.

Nov 29 | 2016

How Jay Seabrook Co-built the Financial Literacy Revolution in Canada

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financial literacyAs you may or may not know November is Financial Literacy Month (FLM) in Canada. FLM is led by the Financial Literacy Leader, Jane Rooney, and promotes the cooperation of organizations to improve the financial literacy of all Canadians at any age. For those of you that are unfamiliar with the term, financial literacy refers to the knowledge and skills that are required to make responsible personal financial decisions.

Why is Financial Literacy Month important?

FLM aims to teach Canadians about the importance of creating and following budgets and living within your means.  According to the
Government of Canada
less than half (46%) of Canadians currently have a budget, and 42% of 35-44 year olds are not keeping up with bills and financial obligations. Only 66% of Canadians are financially prepared for retirement and 52% of Canadians admit that they could not cover at least six months’ worth of living expenses if they lost their main source of income.

These alarming trends are being passed onto Canadian youth, and inspired Jay Seabrook, the focus of this month’s EXPERT/ease feature, to create a financial literacy program for high school students.

Jay and his long-term business partner Kevin Cochran built the EnRICHed Academy content to target the comprehension of high school students “so they could really understand how to build wealth in a fun and entertaining way.” EnRICHed Academy recognizes that everyone deserves financial awareness and is dedicated to financial education, a premise that won over the business brains on Dragon’s Den in Season 7.

To learn more about Jay’s path to success with EnRICHed Academy and Dominion Lending Centres read the November edition of EXPERT/ease.

Apr 18 | 2016

An FCT leadership perspective: How lending in Canada can withstand housing shock

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housing bubbleAs spring approaches and brings all the related changes to Canada, we’re also seeing changes in the Canadian lending industry beginning to bloom. One key change is Ontario’s new $250,000 credit deposit insurance limit. By upping the limit, the credit union industry is hoping to attract more deposits and fund more mortgages at lower rates, while offering members the security they need to invest confidently in the housing market. This important development looks like just the beginning of what’s shaping up to be an interesting year ahead as the key players and pundits seek out new ways to secure Canada’s economy. If you’re a Twitter user, you may want to follow @Central1CU to for regular updates on this topic.

The resiliency of the Canadian financial system

The big banks were the focus of Bank of Canada deputy governor Larry Schembri’s remarks Feb 24, when he addressed the resiliency of the Canadian financial system in a speech with more than a few insights into the Bank’s strategic thinking for 2016 and beyond.

Schembri rated the odds of the Canadian housing market falling into a whirlpool of defaults and crashing property values as “low,” emphasizing that stricter regulatory hurdles have demonstrably raised lender resiliency when deals go sideways or die.

While not referencing any rate changes for the year ahead, Schembri did note that “the Canadian financial system is very resilient and could withstand the triggering of this vulnerability,” in household debt loads, noting that monetary policy is “a very blunt instrument to address financial stability.”

One indicator, however, did give Schembri pause: the rise in household debt has been led by highly indebted households for those under 45, with the Canadian household debt now running at 163.7% of after-tax income in Q3 2015, according to Statistics Canada. But Schembri’s speech did not seem to mirror that opinion and instead referenced falling commodity prices, especially energy prices, are a risk likely to surpass the risks of a housing bubble for 2016. In particular, Schembri urged provincial and securities regulators to assume the lead in tracking the volatility in the housing market, leaving the Bank of Canada to target stimulus, in-line with the Bank’s 2% annual inflation target.

And there seems to be more good news according to Schembri who believes that Q1 2016 results will show growth at a faster rate than the Bank’s projected annualized growth of 2%, a number he feels to be more reflective of a somewhat stalled Canadian economy in Q4 2015.

Do you think the current housing bubble is due to burst? Do you think our economy is strong enough to withstand a housing shock? I’d love to hear your opinion, so please feel free to comment below.

Mar 28 | 2016

This girl is on fire! Introducing Hali Strandlund-Noble, real estate trailblazer

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Looks like a girl, but she’s a flame
So bright, she can burn your eyes
Better look the other way
You can try but you’ll never forget her name
She’s on top of the world
Hottest of the hottest girls say

Alicia Keys

Hali Strandlund-NobleAs far as we’re concerned, Alicia Keys could be talking about Hali Strandlund-Noble, the focus of our February 2016 EXPERT/ease special feature.

As the youngest female inductee into the Canadian Mortgage Hall of Fame and recipient of the MBABC Pioneer Award, Hali sets the standard for professionals in her industry. Our special feature delves into her upbringing; the reason behind her personal success; her take on the current mortgage industry; and what advice she has for those starting out in the industry.

Hali Standlund-Noble is truly a force to be reckoned with and offers a perspective that is upbeat and empowering — especially to women in the industry — and one we think you’ll enjoy reading. You can check it out by clicking here.

Do you know anyone else trailblazing in the real estate industry? If so, we’d love to learn more them and their insight into today’s complex real estate world. Feel free to share by commenting below.

Mar 21 | 2016

Need a reason to choose FCT for commercial title insurance? Forget about one — we’ll give you 10!

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The top 10 reasons to partner with FCTAs Vice-President, Commercial Solutions, I am responsible for leading and growing the Commercial Solutions Division here at FCT. To accomplish this, my team listens to what our commercial customers are saying they need in order to succeed. We then provide them with the products and services to help them reach their goals and protect their investments.

It’s been said before, but it bears repeating: commercial title insurance offers essential protection and helps make a commercial transaction far more efficient. Plus, it has been providing Canadian lenders, lawyers and their clients with critical peace of mind since 1991, when FCT introduced the concept to the Canadian marketplace.

Today the title insurance market is a little more crowded than it was back then. Commercial customers have a choice to make and although we think that the choice is crystal clear, people still sometimes ask:

“Why would I choose to partner with FCT for commercial title insurance needs?”

I love this question, because not only do we have a good reason for you to choose FCT, we can actually give you 10 . . . and in video form, no less!

So if you’re looking for:

  • Products that meet your needs;
  • Service that makes you feel valued; and
  • Solutions that will help build your business and protect your investments

there is no need to look any further than FCT. We’ve been here since the very beginning and we will continue to innovate, well into the future.

Are you a customer of FCT? If so, tell us why you chose to partner with FCT by commenting below.

Mar 15 | 2016

COMPASSpoint 2015: The annual FCT EXPERT/ease mortgage market review

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COMPASSpointOffering brokers direction for the year ahead

Well, it’s that time of year again: time for everyone to take stock of 2015’s news, trends and learnings in an attempt to glean a few pearls of wisdom in preparation for the year ahead.

To help brokers make sense of the main happenings in the real estate world last year, we’ve put together our annual FCT EXPERT/ease mortgage market review in the COMPASSpoint 2015 report, now available in PDF form for easy reference. Essentially we delve through and consolidate the year’s news so you don’t have to.

With COMPASSpoint, we want to help you take an informed, hard look at what actually makes the market and drives its behaviours: how we form relationships of trust and value—and how those relationships create shared opportunities. In this edition you’ll find an examination of the five combinations that are being hailed as the key drivers of innovation in the Canadian mortgage marketplace for 2016, including:

  1. Possible regulatory changes under the new government in Ottawa;
  2. Digital transformations targeting the industry;
  3. Macroeconomics of capital flows and interest rate influencers;
  4. Hot and cold spots in the Canadian market and reasoning behind the fluctuation;
  5. Demographic and cultural triggers affecting not only rates, but consumer aspirations and financial capacities.

We hope you find COMPASSpoint informative as you plan for the spring season. If you have any insights about the mortgage market in 2015, feel free to share by commenting below.

Mar 4 | 2016

Lin vs. CIBC and the value of title insurance in British Columbia

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Blog_HomeOwner_Thumb_LockThe case of Lin vs. CIBC has been stirring up a fair bit of interest in the B.C. legal community recently, not only because of the precedent it set, but also due to the fact that according to the Lawyer Herald website, it has now grown into an $8 million fraud case.

This case is very important because it helps answer the question which innocent party bears the loss when mortgage funds are stolen.

According to the Herald, the trouble began in 2013 when Agatha Chung was hired by Hsui-Wen Lin and Min Sheng Tang to refinance a mortgage in the amount of $520,000. These funds were to be used to pay off their existing mortgage at a different institution as well as certain small unsecured debts, with the balance going to the borrowers. Lin and Tang applied for a loan from CIBC and the transactions were managed by CIBC’s lawyer along with Chung acting for the borrowers. However, once CIBC paid the funds to Chung, she vanished along with Lin and Tang’s money. What came next was to decide who actually held that loss: Lin and Tang or CIBC?

In the trial decision, Supreme Court Judge John Steeves ruled that CIBC’s mortgage was invalid, despite the fact that it was properly signed and registered.  The trial court decision was upheld by the B.C. Court of Appeal on December 18, 2015.  The Court of Appeal specifically upheld the ruling that CIBC’s mortgage was invalid on the basis that the borrowers received no consideration for the mortgage and that the money still belonged to CIBC at the time it was stolen.  For more on this case, you can read The Vancouver Sun article Notary fraud case causing legal waves in B.C. courts.  

The growing problem of real estate fraud

Through the course of my day as legal counsel at FCT, I see —first-hand — that fraud continues to be a growing problem in Canada. I can tell you that fraudsters come in all shapes and sizes and from all walks of life. And although it is not overly common for legal counsel to be involved in fraudulent transactions, it does happen, as in the case of Lin and Tang. While title insurance can’t protect you against becoming a victim of fraud, it can and does protect you after the fact by minimizing the financial impact and stress associated with this type of crime.  FCT’s lender policy covers, amongst other things, losses arising from “the invalidity or unenforceability of the insured mortgage upon the title” which is exactly what happened to CIBC in this case.

And it appears that the Law Society of British Columbia agrees.

A recent Practice Resource distributed by the Law Society of British Columbia in February of this year supports FCT’s view on the importance of title insurance during real estate transactions in British Columbia. In response to the Lin v. CIBC ruling, the Law Society recommends five points to safeguard lawyers and their lending clients, including point number four (4), which reads:

  1. Consider whether to recommend closing of certain transactions with title insurance or through some other mechanism, such as escrow, that will protect your client.

I can’t tell you how happy it makes me to see this in print! After years of promoting the benefits of title insurance across the country, it’s very rewarding to know that others in the Canadian legal community also see its value and are recommending it as an aid in the fight against fraud.

Speaking of fraud, as we enter Fraud Prevention Month, I invite you to take part in FCT’s fraud chat on Twitter taking place on March 31st, 2016 featuring our very own certified fraud examiner, Marie Taylor. Plus if you have any fraud tips or stories you’d like to share, please do so by commenting below.

Feb 19 | 2016

Your voice matters

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Your voice mattersHow FCT is using your feedback to improve the MMS experience

For those of you that don’t know me, my name is Colleen Reitzel and I’m the Chief Customer Officer at FCT. My role is to listen to the collective voice of FCT’s customers and ensure that it is heard. As a company, we solicit your feedback (aka “voice”) in many ways; the most common being through surveys.

Why your voice matters

Surveys are a very important tool to allow us to identify both strengths and areas for improvement. For customers, they allow you to openly express your opinion and impact the tools and services you use daily. We then use this feedback to strengthen our partnerships with you by providing real and long-lasting value through effective action-planning.

We’ve heard you, loud and clear

Your answers to our recent survey questions regarding the Managed Mortgage Solution (MMS) experience have made us take another look at how we think about our business, right across Canada.

Thank you so much — your input has been invaluable to us.

We’re taking action

Using your input, we have been able to fine-tune MMS and provide clear tactics to make it better. This has been a collaborative process with our lenders to ensure we stand by our brand promise of Experience Excellence®. Here are a few things we’ll be doing differently in Q1 2016 to improve your experience with MMS:

Enhancing our expertise for more effective interactions
  • We are investing in our Customer Service Representatives to serve you better and more efficiently at every touch point.
Eliminating redundancy to reduce paperwork
  • We have engaged a third-party law firm to review our mortgage instructions in an effort to minimize redundancy in the existing mortgage instructions.
Integrating technologies to streamline processes
  • We are focusing on the MMS and Lender Lawyer Connect® (LLC®) integration throughout 2016 to ensure an improved experience for you going forward. To do so, we will be implementing the following targeted changes:
    • The Request for Funds (RFF) and Final Report will be standardized across all MMS lenders and will be submitted electronically through LLC
    • Three new milestone updates will be introduced to keep you informed throughout the process, including when:
      • Broker conditions are satisfied;
      • Solicitor conditions are satisfied; and when
      • The deal has been funded.
    • Automated online “Confirm Closing” process will be available for completion online via LLC
    • The RFF form will automatically populate with the closing date and mortgage amount, eliminating manual paper-based updates

I’m here to hear you

As you can see, your voice makes a difference and we always want to hear from you. If you have questions, comments or concerns, feel free to contact me directly. I’m here and ready to listen.

®Registered Trademark of First American Financial Corporation.

Dec 1 | 2015

So what’s the deal with shadow mortgage lenders?

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shadow-mortgage_smallIn our last blog, we looked at the first glimmerings of disruption in Canada’s loan marketplace by peer-to-peer (P2P) lenders.

But what of disruption in the unregulated “shadow banking” mortgage marketplace?

Canada’s small but growing non-bank mortgage market hasn’t yet been disrupted, largely because so-called “shadow banking” isn’t digital to any great degree. While there are players in the P2P realm, there’s no platform in place to scale a market to meet the demand for P2P loans, certainly not compared to UK’s www.zopa.com, which accounts for some 40% of the auto loan marketplace and much more besides….

Semantics count; at around 10% of the Canadian mortgage financing, “shadow banking” has been around for decades, better known as “alternative lending” or “lenders of last resort.” True, it’s a murky world, messy and hardly transparent, but it’s growing. Moreover, Canada’s secondary mortgage marketplace is more accurately termed “subprime non-bank” mortgage lending—because that’s what it is.

It’s also likely the result of a half-dozen federal oversight regulations that pushed desperate borrowers into the world of non-bank lenders, where mortgages deals are in many cases (but not all) like the Wild,Wild West.

And while borrowers can who wisely use non-bank financing to save their homes with otherwise unavailable high-risk refinancing, the reality is that non-bank lending is often predatory. It’s also an accelerant towards bankruptcy and foreclosure for those desperate enough not to lose their homes and willing to pay upwards of 15% to 20% or even more for uninsured, short-term mortgages. (There are reputable, federally regulated lenders in the non-bank sector, to be sure, but the growth in the space is in high-risk, unregulated lending.)

It’s hardball lending, the way predatory credit card companies play the game.

Non-bank lending skirts regulatory oversight; punitive fees for late or missed payments are one ethical issue. The other is that the pre-crash US subprime market was 30% of the mortgage market nationally but far higher in the “twilight zones” of California, Nevada and southern Florida, where entire suburbs were underwater.

Here at home, some financial analysts believe that the Canadian real estate market’s steady climb has papered over some very shaky financing indeed, in markets hot and cool alike.

The fragility of these subprime loans, once a minuscule but lucrative bank sector for Wells Fargo, Citibank and HSBC before 2008, stands to increase once interest rates start to climb again.

Now this is all good news for savvy investors, because a bet on a working family refinancing to keep their home is a bet against rising property values, even to the tune of three and even four mortgages.

The Bank of Canada’s most recent Financial System Review used some pretty pointed language about the space, observing that “opacity is a particularly important vulnerability.” The Bank defines opacity as “the degree to which information is not available about institutions and markets, such as asset holdings, counterparty exposures, prices and volumes traded and (EXPERT/ease emphasis) the characteristics of financial products.” Beneath the bureaucratic language is a warning: private-label securitization is only as good as the due diligence on the “type and quality of the underlying assets.”

In other word, to quote the legendary Stephen Leacock in another context: “if you can’t see it, it probably ain’t there.”

Let the buyer beware: there are sharks lurking in those waters. And the latest reliable statistics suggest home loans from non-bank lenders are growing about 25% annually.

There’s no doubt this lending meets rising demand; in Europe, led by Ireland, Lichtenstein and the Netherlands, the non-bank investment funds are doing big business as the eurozone debt crisis shakes out. The real question—and only time will tell—is what the historic risk created by that demand truly is, Canada as well as Spain or Greece.

Even calculating that risk, as Irish market supervisors at the Irish central bank note, just defining the “non-bank lending” industry is difficult, because there’s no detailed balance sheet information, because the institutions behind the lending are often holding companies for derivatives. Canadian investigators and legislators in the non-bank lending space would do well to learn from the Irish experience.

Mapping this uncharted territory is the first task of regulators. Irish opposition politicians, for one, know that legislators are building a potential financial Frankenstein, enticing offshore “shadow banks” to Ireland even while Irish bank regulators struggle to map out the operations already in Ireland’s markets. Canada’s problems are simpler but will likely be no less toxic when rates climb back again.

Crystal ball? Expect more federal oversight, with a tough focus on and, if rates climb fast enough in 2016, crashes in housing prices in particularly creaky markets. Warren Buffet’s wry warning suffices: “You never know who’s swimming naked until the tide goes out.”

Nov 25 | 2015

FINTECH, Mr. Skinner and the future of banking

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Peertopeer_smallChris Skinner is one of EXPERT/ease’s heroes. He’s “widely considered as one of Europe’s leading thinkers in strategy, financial services, banking, business development, payments, risk management and business transformation,” is the author of such great reads as The Future of Banking (2007) and Digital Bank (2014), and has won more awards for his thinking about banks than any just about any other human being. His multi-award-winning blog, if you haven’t visited, is some of the most intelligent writing on the future of banking around.

That’s where EXPERT/ease spotted the following piece of wisdom. Everyone, Mr. Skinner notes, is blathering on about the ‘Uberization” of banking, because Uber now has its own online banking entity; likewise Visa’s investment in Stripe.

Neither a much-ballyhooed event, Uber banking or Visa’s Stripe buy-in, is disruptive: there’s no big change here; both are evolutions of the present credit card networks. Neither will change how we exchange value and how we contract processes like mortgages. And here’s where Mr. Skinner’s sharp mind is so revealing: the real white space, as he sees it, is “shared ledger structure,” for that’s where The Big Bang in financial technologies (FINTECH), where peer-to-peer connectivity, mobile networks and “shared ledger” structures come together.

Peer-to-peer connectivity and mobile networks are the soul of Facebook and Instagram. They are not the soul of banking. The soul of banking is Skinner’s “shared ledgers”—the engines that will enable payments, banking and finance as apps.

The rate of investment and tech development to empower these engines is staggering. Finovate, which tracks “FINTECH unicorns”—startups already worth more than U$1 billion—notes that there are 83 financial tech startups out there right now, with Zillow.com and Housing.com the only two real estate unicorns.

Nature—and the market—abhors a vacuum. The peer-to-peer lending platforms are the ones EXPERT/ease is watching for the first indicators of disruptive impact on mortgage lending. Lufax, the Chinese P2P lender, is worth U$9 billion, with Prosper.com, the US P2P platform which has transacted U$4 billion in personal loan, is worth approximately U$3 billion.

So what’s the opportunity Mr. Skinner has identified for these unicorns? Consider this: banks historically are inefficient at consumer and small business lending because interest rates aren’t individualized, underwriting costs are relatively high, loan decisions are far from timely and small businesses, in particular, are observers of a process that all too often fails them. Why?

Because the loans are low-value to the banks.

But here comes the tidal wave.

P2P lending’s ability to leverage the Internet’s vast connective reach and complex algorithms to compute metrics like credit scores and social media activity empowers massive scale in aligning borrowers with investors, while meeting each party’s constraints. P2P lending in the US is rocketing ahead, up 128% since December 2013. In Canada, similar growth is underway.

This connective reach and computational power of course is precisely the “shared ledger structures” our friend Mr. Skinner emphasized as the place where FINTECH disruption will occur.

It’s not just about Uber and Stripe anymore, in short. The global financial world is literally rebuilding the interconnected payment, banking and financial worlds, partly because of the fiasco of 2008, but mostly because now services can operate online at very large scale.

It will most interesting to see how fast private mortgages scale via P2P; Prosper, for instance, is capped at $35K maximum for a loan, but the explosion in “shadow lending” is already sidestepping regulatory caps. (Private mortgages are currently skyrocketing in Canada, as well: see more in our second EXPERT/ease blog this month…)

So how big does this thing get? Well, London, freshly named the world’s new financial capital, is betting its future on continuing to be the leading edge of FINTECH—just like Mr. Skinner himself, whose highly entertaining June 2014 speech at Zurich’s Finance 2.0 Conference is well worth a Youtube view.