Mortgage Fraud in Canada and What Brokers Have to Say!

We recently concluded our first Fraud Awareness Month during which we dedicated our social media to fraud awareness and increasing the dialogue between lenders and brokers about types of mortgage fraud in Canada that are prevalent in the industry. It was a huge success!

So many financial professionals chimed in with amazing insights and feedback that we wanted to highlight some of those dialogues.

Brokers acknowledge that lender/broker relationships are incredibly important. Lenders who receive business primarily from brokers count on brokers as a first line of defense. This is one thing that is very attractive about accepting mortgages from brokers – they do so much of the legwork. One thing that came out of Fraud Awareness Month was that brokers across the board really care about the quality of the deals they bring forward to their lenders and are summarily committed to deploying whatever tools they have in their arsenal to combating mortgage fraud in Canada.

Many are even leveraging the most current technology, incurring personal expense to take extra measures when performing due diligence including verifying:

·         Home ownership information

·         Registered mortgage information

·         Sales history information

·         Value of the property and more

Many are using much of the same technology that you use – like AVMs, running property searches, even independently picking up the phone to verify employment. Mortgage fraud in Canada and as a whole has been acknowledged across the board as a major issue and it seems financial professionals on every level are realizing that we all play a valuable role in the process of spotting fraud.

Working with brokers the likes of whom were vocal during Fraud Awareness Month can give you peace of mind that you are going to receive deals that close and are unlikely to have issues later. How can you know if you’re dealing with one of these types of brokers?

When interviewing new brokers – ask lots of questions. What is their position on mortgage fraud? Do they see mitigating mortgage fraud as one of their roles in the mortgage process? What tools do they deploy to combat mortgage fraud?

Also, sharing with brokers the tools you use to mitigate mortgage fraud (like Purviews fraud check as one example) is a great way for brokers to seek out broker versions of these tools so that your information is aligned with their information.

Increased alignment, dialogue and sharing on issues surrounding mortgage fraud in Canada lead to strong relationships and a healthier Canadian financial industry.

When it comes to conquering mortgage fraud, we all play a roll, and working together makes it that much easier. Check out how Purview For Lenders contributes to the challenge: http://lenders.purview.ca/. 

HPI Monthly Report: Home Prices up 1% in August

In August the Teranet–National Bank National Composite House Price Index™ was up 1.0% from the previous month, an eighth consecutive monthly increase. The rise exceeded the 11-year August average of 0.9%. Prices were up on the month in six of the 11 metropolitan markets surveyed – 3.9% in Calgary, 2.4% in Hamilton, 1.6% in Toronto, 0.6% in Vancouver, Ottawa-Gatineau and Winnipeg. Prices were down on the month in Victoria (-0.3%), Halifax ( 0.4%), Edmonton and Montreal (−0.5%) and Quebec City (−1.1%). The composite index was at an all-time high in August for a sixth consecutive month, though only the Vancouver, Hamilton and Toronto component indexes were at an historical high in August. The resale market in those three centres is a seller’s market according to the Canadian Real Estate Association criterion of sales relative to new listings.

Teranet-National Bank National Composite House Price Index™

In August the composite index was up 5.4% from a year earlier, the highest 12-month increase since November 2014. The 12-month gain was well above the countrywide average in Vancouver (9.7%), Hamilton (8.8%) and Toronto (8.7%). It was below the average in Victoria (3.2%), Edmonton (0.8%) and Calgary (0.7%). Prices were down from a year earlier in Winnipeg and Ottawa-Gatineau (-0.4%), Montreal (-0,5%), Quebec City (-0.7%) and Halifax ( 1.4%).

For the full report including historical data, please visit: www.housepriceindex.ca.

What Could Average Canadian Debt Mean to FIs Across the Board?

It can’t be denied that Canadian debt levels continue to skyrocket. Just about every news outlet from the CBC to Global has reported on this trend. Economists and even the Prime Minister has chimed.

Take a look at the infographic below produced by Equifax, according to an article released by Global News last, consumer debt is up in every single province: year http://globalnews.ca/news/1544506/infographic-debt-levels-jump-sharply-east-of-ontario/.  With the exception of Manitoba and Quebec, all provinces are seeing an average over $20,000.00.

The CBC released an article earlier this past summer that suggests that Canadians are continuing to rack up their household debt. The article looks at household debt which includes mortgages, lines of credit and credit card debt vs. consumer debt which is highlighted in the above infographic. The article sites a BMO annual debt report that resulted in the average debt of those surveyed as sitting at a staggering $92,699 which is $4,000 higher than the previous 4 year average: http://www.cbc.ca/news/business/canadian-households-are-racking-up-more-debt-poll-suggests-1.3146766.

What does this skyrocketing household debt mean to FIs across Canada? This in itself is a very complicated question with many variables that include performance in the capital markets (oil), interest rates, job growth, performance of the dollar and much, much more.

Economists from both BMO and RBC this last quarter called for rate cuts from the Bank of Canada citing signs of a faltering recovery http://www.bnn.ca/News/2015/7/8/Bank-of-Montreal-and-RBC-join-Bank-of-Canada-rate-cut-call.aspx. This occurred while an economist at TDCT went as far as to proclaim that Canada is in recession territory.

The top TD economist wasn’t alone in his sentiment according to this article in the BNN: http://www.bnn.ca/News/2015/7/6/TD-Bank-flip-flopped-on-Canadas-economic-outlook-over-the-weekeend.aspx. Apparently Bank of America Merrill Lynch has said Canada ‘appears’ to have slumped into a recession. According to the article, CIBC called it “a real possibility.”

Add to this the fact that, while economists have mixed emotions on the state of the economy and Canadians are carrying more debt than ever, this past summer the Huffington Post also reported that, according to Stats Canada, while the economy grew – incomes stagnated: http://www.huffingtonpost.ca/2015/07/08/canadian-income-survey-2013_n_7754884.html. The report noted “The median after-tax income of Canadian households was $53,500 in 2013, up by just $100 from 2012, according to StatsCan’s Canadian IncomeSurvey.”

Interest rates continue to be a hot topic when it comes to lending - and continuous changes mean constantly having to stay on top with current trends. Purview For Lenders can help - visit lenders.purview.ca today.

Training Time – How to Use the AVM Component in Purview

Did you know that when you generate a Purview Report the component that provides the value range is in fact the Automated Valuation Model for your subject property?

You can even change your parameters to include a customized valuation model for the Province of Ontario. If a customized model does exist, by default, each estimate value for a subject property located in the Province of Ontario will be generated using your company’s customized model.

This step by step video tutorial will help you learn the ABCs of generating AVMs using Purview

Real Estate Investing in Canada – Top Places to Invest

Real estate investing in Canada can take many forms and a mortgage is one of them. Every mortgage financed in Canada is in itself a real estate investment. Your portfolio is as strong as the properties you hold as security. It is important to be on top of what is taking place in the Canadian housing market to be able to identify hot areas and also not so hot areas.

MoneySense Magazine recently released a report highlighting the top 35 places in Canada. The article measured average home price in 2014, time to buy in years, 5 year price appreciation, average 5 year rent increase and previous year’s unemployment rate (2013).

Here are the numbers organized into a table:

What tools are you using to determine what makes a solid investment? This is some great info that you can use to determine your most effective strategy. 

Contact Purview For Lenders today for more info: 1.855.787.8439.

Trust Playing a Major Role in Real Estate Investing in Canada

Investment in the real estate market continues to be a vital component of a healthy housing market in Canada – but what happens when trust in real estate investing begins to wane?

Our attention was drawn to a recent Globe and Mail article that points out that a widespread lack of trust in the financial services industry may be what is keeping Canadians from achieving their financial goals. According to Ms. Hamilton-Keen, director of private client management for Mawer Investment Management Ltd., a recent study, “Investor Trust Study,” done by the CFA Institute & Edelman, found that financial services sit at the bottom of industries most trusted among clients. Only 52% of investors stated they trust the financial services industry.

Apparently, the number one reason that investors said they are losing trust and confidence in the financial services sector was the lack of ethical culture within global financial firms.

Improving investor trust as it relates to ethics is something that the financial community as a whole has to look at. The only solution for this is ongoing dialogue – dialogue in training, amongst colleagues, and in the industry as a whole. We now know that there is such a thing as “to big to fail” and ethics can mean the difference between a recession and a healthy market. Once something as monumental as this occurs that calls ethics into question it can be a very long road back, as we can clearly see in the afore mentioned study.

How about the mounting issue of trust in the economy? In the last BOC rate announcement, economists from across the board, including the big banks, are calling for further Bank of Canada interest rate cuts, some even going as far to say that Canada is in/headed for a recession.

In the Toronto Star – top TD Canada Trust economist Randall Bartlett stated “It is likely the economy was in recession in the first half of the year, thanks to the damage from a collapse in oil and commodity prices that has persisted since 2014.” http://www.thestar.com/business/economy/2015/07/06/canada-in-recession-rate-cut-likely-td.html

Other bank economists have come out calling for the Bank of Canada to cut its rate another quarter point, this leading up to the July 15^th Bank of Canada rate announcement that passed this past month. In a recent article posted on BNN, “Doug Porter of Bank of Montreal and Mark Chandler of Royal Bank of Canada joined a growing list of economists calling for Canada’s central bank to cut interest rates next week on signs of a faltering recovery,” wrote Greg Quinn and Erik Hertzberg, Bloomberg. http://www.bnn.ca/News/2015/7/8/Bank-of-Montreal-and-RBC-join-Bank-of-Canada-rate-cut-call.aspx

Ask and you shall receive? Well, the BOC did cut Canada’s interest rate another .5% this past July.

If trust in the Canadian housing and financial markets is unpredictable, this will make it hard to have trust and confidence to invest. Trust is everything when it comes to the financial markets! The best that we can do to stay on top of how trust is impacting investors and make predictions is to have access to the data needed to look at short and long term trends.

When looking at the housing market in Canada – aside from looking at factors that impact the interest rate, also pay attention to housing trends and sales, if the economists at all of the major banks look at house indices like the Teranet – National Bank House Price Index™ when making predictions, you should too.

Get the up-to-date data and information when you needed, and stay informed. Visit Purview For Lenders at lenders.purview.ca today.

Mortgage Rates Canada - Where Will Canadian Mortgage Interest Rates Go? 2016 Predictions

2015 has been an interesting year with respect to the economy. We began 2015 with a .25% interest rate reduction, bringing the BOC’s lending rate down to .75%. We also began the year with oil prices hitting lows we haven’t seen for a very long time. The Canadian dollar has softened and just a month ago the BOC announced another rate change, slashing the key interest rate by a further .25%. This makes the BOC’s current interest rate .5%!

Mortgage rates in Canada are so low that really, where the interest rates are concerned, the BOC only has .5% left and the key interest rate will be 0% meaning that latest interest rate drop will have to make a big impact or the Canadian economy could be in for some turbulence. Generally the interest rate is reduced to protect the economy but with rates so low it doesn’t leave much wiggle room.

Following the BOC’s announcement, it was reported in the Globe and Mail that the major Canadian Banks followed suit and also cut their lending rates:/http://www.theglobeandmail.com/report-on-business/economy/interest-rates/td-cuts-prime-rate-in-wake-of-bank-of-canada-move/article25515826.

The article reports that:

·         Toronto-Dominion Bank initially decreased its prime rate – the benchmark for creditworthy borrowers – to 2.75 per cent, down 0.10 percentage points.

·         Royal Bank of Canada, Bank of Montreal, Bank of Nova Scotia and Canadian Imperial Bank of Commerce responded, reducing theirs by 0.15 points to 2.70 per cent from 2.85 per cent.

While the key lending rate has less wiggle room, the banks inching down their rates has left them far more room to breathe.

This year and coming into 2016 is the hardest ever when it comes to predicting where interest rates will go. So many factors are contributing to the performance of the Canadian economy: the dollar, employment rates, income rates, household debt, oil prices, the housing market and much, much more…

The Bank of Canada key interest rate - this page provides both the current rate but also a 12 month history of past rate announcements and a schedule of future rate announcements. Check it out: http://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/.

Want to follow interest rates? Here is a table from the BOC website outlining 2015’s rate announcements and adjustments as well as the schedule for Canadian interest rate announcements for the rest of the year.

·         January 21, 2015 – interest rate was reduced by .25% making the lending rate .75%

·         March 4, 2015 – no change was made to the interest rate

·         April 15, 2015 – no change was made to the interest rate

·         May 27, 2015 – no change was made to the interest rate

·         July 15, 2015 – Interest rate was reduced by .25% making the lending rate .5%

·         September 2015 – Interest rate announcement

·         October 21, 2015 – Interest rate announcement and Monetary Policy Report

·         December 2, 2015 – Interest rate announcement

If you could predict where interest rates will go coming into 2016 – what would your prediction be? Let us know on Twitter: @purview4lenders.