How to Review Your Property Report

So, you’re using Purview For Lenders and are starting to get your feet wet. One of the most popular reports generated by lenders/mortgage underwriters in Purview For Lenders is the Lender Report. This is because the report contains a diverse range of information – everything that is relevant to the process of underwriting a mortgage application.

Consider this blog your training tutorial to help you better understand the segments of the Lender Report and how they are relevant to your day-to-day task of financing mortgages.

There are 9 basic sections in the Lender Report:

Section 1 – The first section of the report provides you with the property address, homeowner’s name, legal description of the property, PIN number, aerial and street view imagery of the property and more…

Section 2 – This section provides you with the ownership and sales history information on the property. This can be a great tool when assessing all of the people on title listed on the application and also if the stated or sale value of the home is accurate.

Section 3 – In this section you can generate an estimated value of the property using the automated valuation model, which takes into consideration not only the subject property but also comparable sales in the area. Here you can see the range of sale prices in the area where the property is located as well as the average and median value of home sales in the area. This is very useful because this can help you identify if your estimated value is different than what is stated on the deal. You may also be able to identify upsell opportunities if the value ends up being more than anticipated.

Section 4 – The equity estimate in this section of the report balances the estimated value of the property against mortgages registered against the property to give you an idea of the equity available and existing encumbrances which may or may not influence your lending decision.

Section 5 and 6 – Here you can view comparable sales. Before even engaging an appraiser or submitting a deal to your insurer, these sections of the report provide even more insight into whether or not the property value is accurate. 

Section 7 and 8 – Aerial imagery helps you identify if there are issues or factors within close proximity to the property being financed – issues or factors that may change the amount of your lending decision or if you want to lend at all. You can view aerial imagery of the subject property, the neighbourhood and also comparable properties, not to mention the fact that this feature greatly helps to mitigate mortgage fraud because you can validate if in fact there is/are structures as stated on the land in question.

Section 9 – This is one of the most unique report features. Fraud Check will automatically assess the property in question and flag anything that requires further investigation.

We hope that this training blog has been valuable in helping you see how you can leverage the different sections within the Lender Report when underwriting a deal.

For more information about how to use Purview For Lenders or training please visit www.purview.ca/lenders/resources. If you would like to view a sample Property Report please click here.

Tips for Identifying Mortgage Fraud

Unfortunately mortgage fraud is rampant and lenders lose hundreds of millions of dollars each year to mortgage defaults where there was an element of fraud that was not discovered through the underwriting process.

Canadianmortgagetrends.com reported that according to Equifax Canada mortgage fraud has increased 50% in recent years. 

Whether you are responsible for an underwriting department within a financial institution or you yourself are an underwriter, being able to identify mortgage fraud is your first step to combatting this very serious problem that hurts the entire industry.

The best way to combat mortgage fraud is to identify when fraud is present on a deal. Digging deeper and looking for specific indicators when underwriting will reduce the number of fraud deals that end up being funded.

Fraud can be committed by many different participants on a mortgage application, in many different ways, with many different intentions. Here are some examples:

·        Individuals – homeowners or buyers of a property

·        Group – mortgage or real estate agent or broker, real estate lawyer, etc…

Individuals, groups and criminals commit mortgage fraud for different reasons:

·        Information being innocently omitted:

o   An individual forgets that a parent is on title.

o   An individual doesn’t disclose that their home is under construction or that they have a tenant because they don’t realize it is relevant, etc.

·        Information being intentionally omitted:

o   An individual intentionally overstates the value or condition of a home to secure more financing.

o   An individual intentionally fails to disclose a material fact.

o   A real estate or mortgage broker fails to disclose a material fact and assists the borrower in presenting false documents or facts to the lender.

·        Through extensive pre-planning and sophisticated or technical means:

o   Financing properties and individuals that don’t exist.

The most common forms of these types of mortgage fraud are fraud for shelter, fraud for title or fraud for criminal enterprise.

Here are some tips/red flags that can help you identify if fraud is prevalent on a deal:

·        Income data is difficult to verify, paystub numbers don’t match up with other data

·        The employment letter is not on letterhead, has grammatical mistakes or the income or information does not match with other sources

·        Numbers on paystub, employment letter, T4, NOA or other income document are rounded off

·        Pay deposits don’t match bank statements

·        Down payment is in cash

·        Significantly more value is being claimed for the property while the current owner recently purchased it for much less

·        Applicants listed on the deal are different from those listed as the owner of the property

·        The property appears different than described on the application

The easiest way to identify mortgage fraud is to have access to the technology and tools available to run searches, reports and access data that can help you uncover problematic deals, or worse, a problematic referral source. Sometimes bad news is good news and taking the extra steps when underwriting will ensure that fraud deals don’t slip through the cracks.

For more information about how to identify mortgage fraud and the tools you can use to do it please visit www.purview.ca/lenders or call 1-855-787-8439.  If you are already a Purview For Lenders client and want to learn more about how to use Fraud Check please watch this brief video.

7 Ways to Identify if a Deal May be High Risk

When underwriting a mortgage application, the quality of your underwriting process and policies directly dictate the proportion of high risk deals that go on the books. Sometimes you can do your basic underwriting and a deal seems to check out, but there could be information that you are unaware of because of non-disclosure or innocent oversight on the part of a broker/agent or client.

As an underwriter you have access to different tools and systems to support you through the process of underwriting your applications. If you have access to Purview For Lenders, there is a report called the Lender Report that summarizes property information that can enable you to quickly look beyond your mortgage application and identify if a deal you are working on is high risk.

Here is a short list of ways that you can use the information in the Lender Report when underwriting a deal and assessing the potential risk - both as it relates to the client and the property being financed:

1.      View property details and visually inspect the outside of a property and its surrounding neighbourhood – What if the property is under construction? Does it actually exist?

2.      Confirm who the homeowners are – What if other people are on title?

3.      View the sales history on the property – For example, if the property was purchased last year for $300,000 and now the owner thinks it is worth $450,000, there may be an issue.

4.      Estimate property value using an AVM (automated valuation model) – What if the applicant thinks the property is worth way more than it is actually worth?

5.      Learn the history of mortgages registered against a property – If the applicant wants to refinance there could be other mortgages on title that weren’t disclosed.

6.      View comparable sales in a particular neighbourhood – This can help you to identify if the value is off.

7.      Identify potential fraud – What if the application is for a mortgage on a house that is paid off free and clear but then later you learn that there is no house and the property is just land?

These are some of the many examples of why it’s important to scratch below the surface and take advantage of all the tools available to you when assessing risk on an application. If you don’t have access to these types of tools at your financial institution, champion having them. The more information you have when underwriting your application, the faster and more efficient you can be when underwriting.

For more information about real estate tools that are available to lenders and underwriters of mortgage applications that help to identify high risk deals please visit www.purview.ca/lenders or call 1-855-787-8439.

Do You Need a Property Title Search to Validate Homeowner Information?

The question of property title searches is something that comes up on every real estate transaction. It used to be that, on a closing, the real estate lawyer would perform a full property title search which would include validating who the homeowners were and uncovering any encumbrances against the property. These days, the real estate lawyer will often review the property’s Parcel Register, which contains this information, and require the buyer to purchase title insurance to protect them from any future issues that could come up as it relates to a property’s title.

Applications typically come to lenders one of three ways: the client applies directly because the lender has a retail presence, through a mortgage broker or agent, or through a real estate broker or agent. While some mortgage and real estate brokers and agents do the due diligence to validate homeowner information, others do not.

In all cases, while the client or broker/agent may tell the lender that the client owns the property, there could be other people on title or some other information that may change the lender’s decision to lend.

In the extreme example, if this non- or incorrect disclosure was intentional, this is a form of mortgage fraud. If it was an innocent oversight, this may simply mean that more deals will be canceled at some point in the underwriting process once it is identified that the home ownership information is not what was disclosed on the application.

Some lenders don’t take the steps in the underwriting process to validate homeowner information and leave it up to the real estate lawyer to do so. This is usually because lenders don’t realize they can do it themselves, or think that to do it they need a property title search which is perceived by some to be costly. This can then lead to increased bad debt as a result of fraud deals that leak through, reduced closure rates and an increased cost to underwrite applications.

It saves lenders both directly financially and indirectly financially to give their underwriting teams the capability to validate home ownership information. So the question is: do you need a real estate lawyer or a property title search to validate home ownership information? The answer is no.

There are real estate tools available to lenders that enable them to validate homeowner information. Doing so early in the transaction will mean higher closure rates, happier partners (lawyers, appraisals etc…), reduced cost of underwriting and more…

Thanks to technology, you no longer need to have a property title search performed to validate homeowner information. Taking advantage of technology that can enable you to be more agile will make you more competitive and put you in a position to book more business and better business!

For more information about how you can validate homeowner information please visit www.purview.ca/lenders or call 1-855-787-8439.  If you are already a Purview for Lenders client and are interested in learning more about how to validate homeowner information please click here to watch a brief training video.