Jul 21 | 2017

What We Can Learn From Toronto-Dominion Bank v. Currie

Posted by:

What we can learn about fraud from Toronto-Dominion Bank v. CurrieTo what extent will a private lender be bound by the actions of a mortgage broker working on its behalf?  Will Canadian courts deem the broker to be an agent of the lender?  Will this apply even to fraud committed by the broker?  Earlier this year, in the case of Toronto-Dominion Bank v. Currie, the Alberta Court of Appeal issued a decision on precisely these questions.

Currie was a private lender who used a mortgage broker, Fuoco, to handle some aspects of his mortgage lending business.  In this case, Fuoco arranged for Currie to lend $220,000 to the Craigs, and Currie provided them with a mortgage for their property.  The mortgage instructions stated that all communications regarding the mortgage were to be directed to “DAN CURRIE c/o Fuoco Holdings Ltd.”

Following a default on the mortgage, the Craigs arranged new financing with TD Canada Trust.  The bank’s lawyer wrote to Fuoco requesting a payout statement for Craig’s mortgage.  Fuoco prepared a payout statement for Currie to sign, showing a balance owing of $249,992.55.  For reasons that are not clear from the court’s judgment, Fuoco did not provide this figure to the bank’s lawyer, but instead provided a different payout statement, showing only $75,000.00 as being outstanding, and directing the payout funds be made payable to Fuoco.  Upon closing, the bank’s lawyer sent this amount to Fuoco, who escaped with the funds, never having provided a discharge of the mortgage.

The Court of Appeal had to decide which of the two innocent parties, Currie or the bank, should bear the cost of Fuoco’s fraud.  The Court concluded that, by using Fuoco’s services in his lending business, and allowing Fuoco to receive communications and prepare mortgage payout statements on his behalf, Currie had given Fuoco actual authority to act as his agent, and therefore it was Currie who had to bear the loss resulting from Fuoco’s dishonesty.

This case highlights some important considerations for mortgagees and their lawyers.  When acting for an incoming lender, lawyers should always ensure that they purchase title insurance.  What looks like a valid payout statement or discharge could later be challenged by the previous mortgagee itself. Even if, as in Currie’s case, the new mortgagee is ultimately successful, there can be considerable time and money spent on litigation.  Lawyers should also consider adopting the practice of insisting on having an executed discharge from any outgoing private lender in hand prior to closing.  This is already standard practice in some parts of Canada, and goes a long way toward reducing confusion and risk following closing.

While in this case, it was the mortgage broker who committed the fraud, there are other cases in which it was the lawyer or even the borrower. There are measures that brokers and borrowers can also take to ensure they are not involved in a fraudulent transaction.

Mortgage brokers can protect themselves from fraudsters by verifying all the information provided by their clients. For instance, it is a red flag if their salary doesn’t make sense for their stated occupation. Borrowers can ensure that they purchase title insurance so that their legal costs will be covered if they ever have to defend their title. It will also protect them from a host of other issues such as survey or title defects.

Everyone involved in a real estate transaction has the responsibility to protect themselves from fraud.

How do you make sure that you’re protected? Share it with us in the comments section!

Apr 19 | 2017

How can you Mitigate Real Estate Fraud?

Posted by:

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

Posted by:

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.

Sep 14 | 2016

How Pat Chetcuti helped write the story of Canada’s title insurance industry

Posted by:

Pat ChecutiDetermined is a good way to describe FCT’s current president and former COO, Patrick Chetcuti, who just happens to be the focus of one of the latest editions of the EXPERT/ease feature: Family comes first.

Since joining FCT in 1992, Pat’s people-first leadership style has been instrumental in launching title insurance in Canada and leading the evolution of the FCT we know today. A CAAMP Mortgage Hall of Famer, Pat’s passion for providing a customer and employee experience that exceeds expectations is what has set FCT apart as both an employer and a service provider.

Pat’s inspirational story which highlights the importance of setting precedents rather than looking back at them, is a tale generations in the making, and proof positive that with an undeterred spirit that makes the most of connections — both family and business — anything is possible.

Do you know another trailblazer thinking differently in the industry today? If so, tell us a bit of their story by commenting below.

Sep 6 | 2016

Spotlight on Kathy Gregory: President and CEO of Paradigm Quest Inc.

Posted by:

Paradigm QuestParadigm Quest is one of Canada’s leading mortgage management companies with approximately $22 billion under management since its inception in 2005. At the helm of this highly successful ship: Kathy Gregory, a tenacious graduate of the school of hard work (and sometimes, hard knocks) that believes in believing in yourself and those around you.

Kathy, a busy mother of three is both an entrepreneur and a leader . . . but with soul. Paradigm has amassed an impressive list of rewards and accolades and continues to be a company to watch, but it’s more than that. Kathy brings something beyond just numbers to her leadership. She believes that you only get what you give and makes it her mission to promote work/life balance, gender equality and most importantly for staff and clients alike, trust. Her amazing story is the subject of the August edition of the EXPERT/ease Special Feature.

Like Pat Checuti who was profiled in July’s Special Feature, Kathy believes in looking forward for inspiration, rather than backward, regardless of what life throws at you. And life has thrown quite a lot at this trailblazer. We encourage you to take a few moments to learn more about this inspiring business woman.

Has someone in your workplace inspired you with their own story of success? We’d love to hear about it so tell us more by commenting below.

May 25 | 2016

China’s real estate market

Posted by:

Are regulations cooling things off or merely inflating another bubble?

The sheer size of China’s populatio16-162_FCT_Blog_China_Sunset_Squaren trumps imagining: with nearly 1.4 billion people living within its borders, China has more people speaking English than the English-speaking populations of the United States and Canada combined (quoted by former US ambassador to China, Jon Huntsman).

China’s real estate marketplace is equally immense—and, many analysts contend, as fragile as it is vast.

Why should we care? Because if the Chinese real estate market implodes, then China’s economy may subside as well. What’s underpinning this fragility?

People: people moving.

Some 220 million Chinese have moved from rural towns and villages to one of China’s metropolitan areas, where, as unskilled labour, many work building “ghost cities”: square miles of highrise apartments with no residents. These “ghost cities” aren’t owned by the government: they’re owned by investment syndicates; should the market collapse, the evaporation of wealth would be unprecedented, with global implications.

Regulatory changes in 2013 were designed to cool off a white-hot market and for the most part, most China property market-watchers agree: the regulatory changes worked. The market consolidated, then took off again, growing by an eye-watering 14.4% in 2014, fuelled by investors departing China’s cratering equities marketplace.

There’s more: for years, China’s sky-high savings rate—over 60% for most Chinese; there’s no state pension scheme in China—has been the bedrock for the property market’s fluctuations. That and minimal Chinese household debt ratios have provided a measure of cushioning from the wildest market movements, but the huge residential inventory overhang looks to be catching up with China’s spectacular appetite for housing investment.

The subtle thing is that China’s urban market is differentiating—and that differentiation is accelerating, as first-tier, technology-driven megacities (Shenzhen, Shanghai, Beijing, with populations over 10 million) outpace smaller, more traditional urban economies (Chonqqing, Tianjin, populations 5-10 million).

Tech capital Guangdong province is catalyzing real productivity gains and job creation, inciting population inflows; that, in turn, contributed to Shenzhen’s 52 % property price gains over the past year. It’s Silicon Valley all over again, only bigger.

“China’s 60 richest cities—many of which have double-digit real estate appreciation annually—produce $8.6 trillion in economic value (half the size of the US GDP),” notes China real estate analyst Dan Steinbock “include all of the world’s 10 fastest-growing cities and represent 15% of all global growth.”

There’s a catch, of course: the very policies designed to decrease the wild market conditions of China’s overbuilt smaller cities and housing-starved megacities are just as likely to inflate yet another bubble.

With 30% down financed by easy down payment loans and 24% interest, China’s real estate market is playing with matches, with a burgeoning (and highly illegal) secondary market for down payment loans threatening to catch fire in Shenzhen and Beijing. Mobile and online platforms aren’t helping matters, adding even more modes of leverage to already over-leveraged markets. Expect to see another wave of government regulations in short order. Make no mistake, however: China’s real estate market has cracks all over it.

Do you think this bubble is ready to burst? Comment below.

Further reading:
Shanghai to monitor mortgage lending more closely: document
China’s Shenzhen raises property deposit thresholds
Why China’s Property Rally Has ‘Reached A Tipping Point’

Mar 28 | 2016

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

Posted by:

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 4 | 2016

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

Posted by:

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

Posted by:

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.

Feb 9 | 2016

The cold, hard reality of debt

Posted by:

debtThe role of a trustee in debt recovery

Although the fun-filled hustle and bustle of the holidays is long past, the reality of all those holiday bills still lingers. The creditors that helped finance all that “holiday magic” several months ago want their money and they want it now…

Promises make debt, and debt makes promises.
Dutch Proverb

When a debtor is not able to pay their debts when they become due, they may seek credit counselling to create a proposal for repayment. Or, depending on how dire the situation, the debtor may speak with a trustee in order to file a proposal or declare bankruptcy.

This is the busy season for recovery professionals and trustees in bankruptcy and it’s anything but merry for those they serve. Over the holidays, the average Canadian tends to accrue more debt, sometimes more than they can handle. But unlike January 2014, the news wasn’t all bad in January 2015.

According to the Office of the Superintendent of Bankruptcy Canada, when comparing December 2014 to January 2015:

  • The total number of insolvencies (bankruptcies and proposals) in Canada decreased by 3.0 per cent;
  • Bankruptcies decreased by 9.8 per cent; and
  • Proposals increased by 5.6 per cent.

This is a marked change from the previous year where all of the above had increased. You can view a more detailed breakdown of monthly and annual insolvency reports, here.

What is a licensed insolvency trustee?

A licensed insolvency trustee is licensed by the Office of the Superintendent of Bankruptcy to administer bankruptcies and proposals under the Bankruptcy and Insolvency Act in Canada. Considered an officer of the Court, their role is to ensure that a debtor’s rights are not abused, and that the rights of the creditors are upheld. Bankruptcy trustees serve both the debtor and creditor.

A creditor is an individual or organization that lends someone —a debtor — money. Creditors can be any of the following:

  • Banks
  • Credit unions
  • Credit card companies
  • Payday loan companies
  • Private lenders

Upholding the rights of the creditors means that a licensed insolvency trustee shall:

  • Evaluate a debtor’s behaviours and affairs before and during the bankruptcy
  • Sell a debtor’s assets, hold the money in trust and distribute to creditors
  • Ensure a creditor’s claims are legitimate
  • Process all appropriate paperwork
  • Administer the bankruptcy or proposal process from beginning to end

A trustee must also ensure the rights of the debtor are not violated at any time during the process. Examples of violations include being:

  • Forced to pay more than what is actually owed
  • Subject to additional fees added to the loan agreement
  • Threatened with physical harm or law suits
  • Physically harmed
  • Called repeatedly and/or at unreasonable times
  • Spoken to with obscene language
  • In contact with friends and family of the debtor

Making and achieving resolutions

Through moderation, co-operation and adherence to proper regulatory practices, it is possible to achieve a resolution that benefits everyone.

So what do you think was the reason for the shift in numbers when comparing January 2014 and January 2015? And how do you think this year, will compare? Have your say by commenting below.