Jul 21 | 2017

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

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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!

Jun 9 | 2017

What Can Buyers do to Avoid Surprises and Delays in Closing?

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Tips for closing successfullyWith rising prices and stricter controls on mortgages, housing affordability is getting more challenging. And once you finally obtain funding (after squeezing out every last drop of your savings for a down payment), it’s still not a done deal till the closing date. A number of unexpected issues can come up that may kill or delay a deal.

Here’s a checklist that will help you get to the finish line successfully:

  • Don’t start spending big – Now that you’ve secured funding for your house, you might think that it’s time to start buying furniture for your new home. Try not to spend large sums of money, whether cash or credit, as it will affect your standing with the lender. Your financial status will be checked a few days prior to closing and any major changes from your initial evaluation will need to be reassessed to ensure you still have the ability to pay off your mortgage.
  • Be wary of changing jobs – While it might seem like a great idea to take a higher paying job before your closing date, it may affect your lender’s decision to close as scheduled. They may want a few months of pay stubs from your new position to prove that you have stable income. While it may not be a deal breaker for your lender, it may delay the closing date.
  • Provide documents on time – Your closing date can be anywhere from 30-90 days after signing the agreement of purchase and sale. You do have some time to provide your mortgage broker and lawyer with the documents that they require, but don’t delay! The sooner you provide all the paperwork necessary, the sooner your team will be able to handle any unexpected findings or issues that may arise.
  • Try not to skip the home inspection – With the hot market and multiple offer scenarios nowadays, a lot of homes are being sold without conditions. While presenting a clean offer may win you the home of your dreams, it can also end up costing you more than you expected. When you’re mortgaged to the max, you can’t afford costly surprises like leaks or repairs that you come across when you finally move in.
  • Keep extra funds on hand – Buyers often put as much money as they can into their down payment. However, you should always keep extra money on hand to prepare for closing costs like land transfer fees, legal fees and any bills the sellers may have prepaid, such as property taxes or utilities. You may also need to put down a larger down payment if the lender appraisal values your house at a significantly lower price than you paid for it.
  • Don’t forget the title insurance – Make sure you’re protected by asking your lawyer to purchase title insurance for you. It not only allows you to close fast even in the absence of a survey and provides gap coverage, but it also protects you from paying any liens or debts the previous owners left behind.

Have you encountered unexpected issues before closing? Share your stories in the comment section below!

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.

Jan 26 | 2017

Fraud is Alive and Well in B.C.

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Fraud in B.C.I am sure by now many of you have read the Fraud alert: Notices to the Profession published by the Law Society of B.C.  And for those of you who have not, click here for the link.

So as a legal professional, what can you do to protect yourself and your clients from the devastating effects of fraud?  In addition to the tips provided in the Law Society’s publication, as an expert in detecting and deterring fraudulent real estate transactions, FCT has compiled a list of best practices to assist in avoiding fraud:

1. Whether you are acting for a vendor or borrower, always insist that the balance of the proceeds are made payable to the registered owners after payment of secured creditors, taxes, legal fees, bank loans, credit cards, etc. and not to third parties. If the borrower or vendor owes money to a third party that does not appear to be related to this transaction, they can deposit the balance of the proceeds into their bank account and cut their own cheques. In most fraudulent transactions, funds are made payable to third parties, which allow the fraudsters to quickly negotiate the funds and disappear.

2. Be wary of very quick closings where you do not know or have never acted for your clients.  Most fraudsters go to solicitors/notaries who do not know them and hope to pull off the fraud quickly.

3. Question transactions being signed under Power of Attorney.  Why is the Power of Attorney being used and can you contact the Donor?  Review the Power of Attorney carefully.

4. Read your lender client’s mortgage instructions carefully and ensure you comply with their fraud requirements.

5. Get title insurance for both your lender and purchaser clients in order to protect them from the devastating effects of title fraud.

If you didn’t have the opportunity to attend one of our fraud seminars, you can still view it online and obtain CPD credits, by clicking here.

Have you come across any fraudulent transactions recently? Please share your stories with us.

Sep 6 | 2016

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

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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.

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 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.

Sep 23 | 2015

Ask a title officer: how to complete the RSA form

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Andrea Tait has been with FCT since January 2015 as a title officer.

Andrea Tait has been with FCT since January 2015 as a title officer.

No one likes completing paperwork, we get that. But no one likes a delayed refinance deal either —especially your clients. By completing all the forms required for your Platinum Refinance Deal correctly the first time, you will minimize delays, but more importantly, you’ll improve the customer experience and stand apart from your competition.

Our latest edition of Broker’s Edge examines just how to put this advice into practice when completing the Request for Statement and Authorization (RSA) form. Andrea Tait, title officer at FCT, offers some helpful tips to avoid time-consuming errors and unnecessary back-and-forth that can annoy your clients and can potentially put your deal at risk.

Andrea explains:

“I like to think of the RSA form as the combination to a lock — get everything right and the vault will open.”

Andrea offers the following checklist for seamless processing:

  • Always use the FCT form, if available. If not, use the form provided to you by your lender.
  • Choose only one purpose for the form by identifying it as a discharge, transfer or information only.
  • Identify the financial institution and include all pertinent contact information.
  • Include the mortgage number.
  • Make sure all necessary parties sign the form.
  • Include contact information for the lawyer handling the mortgage.
  • Ensure all information is legible.
  • Give your lender enough time to process the refinance by submitting as soon as possible.

 

Additional resources

If you’re looking for more tips on completing the RSA, check out the RSA Tip Sheet. And if you still have questions, get in touch! You are invited to contact us by phone at 1.855.500.3565 or by email at brokersedge@fct.ca. Remember, your questions and comments are the key to helping us deliver a better experience for you and your peers and we’d love to hear from you.

Check back again soon for more of the inside scoop or subscribe to the FCT blog today.

Services by First Canadian Title Company Limited

Sep 15 | 2015

Midsummer Night’s Data | hello, Calgary

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It’s sundown here at EXPERT/ease HQ. We’re on the ssmall-calgary-summer-nightouth porch, on a perfect high summer evening, a beverage in one hand and a stack of housing data in the other.  Let’s see what’s bubbling up behind the numbers, shall we?

The trend lines we can parse out of CMHC data continue to suggest that the Canadian housing ‘bubble’ isn’t so much a consequence of demand but rather supply. And the old adage still rings true: It’s all about location.

Snapshots? Let’s look at how location affects different aspects of the national market.

Single detached homes

The city of Guelph has seen an eye-popping 118% increase in single-detached housing starts over 2014 but the province of Ontario overall is limping into 2016 with a serious housing startup pump-priming in order. Nationally, only PEI and Ontario show significant real start growth for detached homes. Every other province, with the exception of BC, has seen double-digit declines as resource economies continue to get hammered by the freefall in gas & oil prices.

New Market Listings

Local data often contradicts the ‘view from 30,000’ federal numbers, even in Calgary, where the ‘invisible hand of the market’ feels pretty invisible indeed. Despite the fears and doubts caused by the uncertainty of the oil patch, the sharpest worrying downturn to date in the Calgary numbers is in actual new market listings.

Where to find a little clarity? Say hello to the bellwether ‘Ab rate’. This is the burn-time for Calgary’s market inventory if no new stock comes on the market. It peaked in January 2015 (no seasonal adjustments: straight MLS data) at 4.9 months but has declined steadily to 2.2 months in June. That is, by no measure, a crisis number and may suggest that the worst of the oil crisis carnage is behind us.

So here’s the interesting thing (at least to EXPERT/ease): Markets are not mechanisms. They are living things, at the mercy of momentum, bias and perception. They don’t always act in a predictable way.

Data-rich Calgary is a solid case in point:

  • Inventories for detached homes are declining microscopically
  • Prices are up but less than 5% over the past 90 day moving average.
  • And sales are down, way down (~20%; all stats versus Calgary MLS averages since June 2012).

Logically, we’d expect the economic uncertainty in Alberta generally to cool the housing market. But the salient (but not sole) limiting factor is listings. There are simply too few detached houses offered for sale. So to come full circle, the Canadian housing ‘bubble’ isn’t so much a consequence of demand but rather supply.

Pain point? Average days on market (ADOM), the momentum measure, is on the rise in Calgary. This inverse benchmark stat—less time on market means greater turnover—infers market momentum on the demand side is definitely slowing, by a solid 32% year over year versus 2014.

That’s pure drag on an already fragile market. However, even ADOM doesn’t translate literally to life on the street. Because there is no geolocation of the various market momentums by Calgary neighbourhoods we can’t infer –

  • Which ones are hot or cold.
  • Why or how local prices respond to unemployment rates.
  • How the steady growth of emerging urban economies (such as design/build and the arts) offset (if at all) the construction slump contracting sales.

Datawise, Calgary and everywhere else could use a far more nearly transparent lens on market behaviours.

And somewhere in Silicon Valley, some 19 year-old is reading this and thinking: there should be an app for that data.  That’s the topic of our next blog—where technology is driving the real estate market.

Is The Next Big Thing where tech meets real estate? Answer: Yes—disruption isn’t far off.

If you know where to listen, you can hear the pounding hooves already…live and be well.