Deloitte report on Mortgage Brokers.. 38% use brokers

October 28, 2010 — Steve Garganis

Here’s a great report that was put out by Deloitte. The report shows that Canadians rely on Mortgage Brokers more than ever… but not as a last resort.

Unlike the U.S., where mortgage brokers used to account for 65% of all mortgages arranged prior to the October 2008 mortgage crisis, U.S. broker now account for less than 20% of mortgage business.

Here in Canada, 38% of all mortgage originations went through a mortgage broker…. including  44% of First Time home buyers.

With national and provincial organizations like CAAMP (Canadian Association of Accredited Mortgage Professionals) and IMBA (Independent Mortgage Brokers Association), Mortgage Brokers play a vital role in informing and educating borrowers.    Mortgage Brokers aren’t just a last resort, they are now viewed as a first choice for getting unbiased and professional advice.

Dare we say it, a mortgage broker helps to create competition….and isn’t competition good for the consumer?

Posted in Case study, Mortgage News, Mortgage Trends. Tags: , , . Leave a Comment »

CREA and Competition Bureau reach agreement on MLS

October 26, 2010 — Steve Garganis

A deal was struck earlier this week that will make it easier for seller’s to list their homes on MLS… The Competition Bureau hopes we will see some changes in real estate commissions….click here for the CBC article.

Currently, a seller pays 5% or 6% to sell their home… and that’s been the standard for many years… But with new technology and the internet, we have seen For Sale By Owner companies popping up everywhere.    These companies have not been able to access MLS without employing a realtor.

We all want to save money and pay less… but there is a saying…’you get what you pay for’..    For some, paying a reduced flat fee, and handling viewings, the negotiations, etc, could be worth savings…. but others may not have the expertise, the knowledge or the time to deal with this….

In the end, I think choice is good.   It remains to be seen how many people will move away from the traditional real estate agent and handle things on their own…   Just beware of something that sounds too good to be true…

 

Posted in Real Estate Trends. Tags: , , . 5 Comments »

Update on TD Collateral mortgage rules

October 21, 2010 — Steve Garganis

A few weeks ago, we heard from a source that  TD Canada Trust was making a major change in their Mortgage Lending policy.    ALL  new mortgages would be registered as a collateral mortgage instead of as a conventional mortgage…. previously, only secured lines of credit were registered as collateral mortgages.

By the way, here is a great article from Gail Vax-Oxlade, a well known personal money manager…..she would never take one of these new mortgages with TD… I think she is right on the money with her comments and analysis.

Since the original article, TD has put out a few information sheets for their internal Retail Staff and for Mortgage Brokers.. Here are the highlights of those releases… and my thoughts:

  • Interest rate will continue to be compounded semi-annually….(that’s good)
  • mortgages will be reported to equifax in the same way… (this point isn’t really clear… currently, secured lines of credit are reported and appear on a personal equifax report… and this can and does affect your credit score.. so does that mean all collateral mortgages will appear on a personal credit report…?  Yes, I believe they will)
  • (A collateral mortgage charge is registered under the Personal Property Security Act (PPSA) like a car loan and can only be only be registered or discharged, not transferred.)
  • the collateral mortgage can be registered for up to 125% of the borrower’s home allowing the client to borrow more money at a future date subject to TD Bank qualifications.  (the theory behind this is that it will allow the borrower to refinance at a future date without having to pay new legal fees… saving the client $650 to $900..but once again, we ask the question…will the TD Banker offer you the absolute best deal if they know it will cost you $650 to $900 to leave the Bank?……we think your negotiating position is weaker, not stronger)
  • the collateral mortgage is assignable, meaning the TD mortgage allows you to transfer this mortgage to another lender at maturity…  (ok, but there is no lender, at this time, that will accept a collateral mortgage for a mortgage transfer…these mortgages DO NOT currently qualify for NO-FEE Switch programs….so this feature is useless…a borrower will have to incur legal fees to move their mortgage to another Bank….which brings us back to our previous point….your negotiating position is weaker)
  • TD will not accept other financial institution’s collateral mortgage charges for transfer…. (this pretty much says it all…TD won’t accept this type of mortgage for transfer from another Lender and no other Lender will accept them either)

In short, if you lose leverage to negotiate, it could cost you dearly….. Let’s assume you end up paying 0.25% more on your mortgage at renewal time or at the time of refinance…. On a $250,000 mortgage, a 0.25% difference in rate will cost you $2,977 in lost savings… and a 0.50% difference will cost you $5,950.

Buyer beware…. borrower, be even more aware!

Posted in Mortgage News, Mortgage Trends. Tags: , . Leave a Comment »

Bank of Canada takes a pause with rate hikes

October 19, 2010 — Steve Garganis

Bank of Canada governor, Mark Carney, held the Target Rate steady today…as expected…  Concerns about the U.S. economic recovery stalling, the Global economy and our own domestic economy were mentioned in the Press Release.

In the press release, the Bank said inflation was not a concern as it is under the 2% target.  Take all this data and it spells UNCERTAINTY.

What’s also interesting is that the Bank has adjusted it’s forecast for growth downward for the next 2 years…Great news for those in a Variable rate… Variable rates are hovering around 2.30% these days.

This makes the Variable Rate product that much more attractive…even with 5 year fixed rates in the 3.59% range.

Experts believe the rate will remain steady throughout next Spring and possibly into Fall depending on inflation and Global and domestic economic data….

Click here for the Press Release.

Posted in Interest rates, Mortgage Rates, Rate forecast. Tags: , . Leave a Comment »

Mortgage Fraud statistics are a mystery in Canada

October 19, 2010 — Steve Garganis

Here is a good article from McLean’s Magazine that talks about more Mortgage Fraud taking place in Mississauga and other parts of Canada.

But before you read any further, just make sure you understand something… during an economic downturn, we will hear and see more crime related reports…. I’m not sure fraud has increased more or if the fraud can no longer hide behind rising house prices and stable employment…

One of the big mysteries is that we don’t know how much mortgage fraud really takes place in Canada.  That’s because no statistics are available…or at least are not made public.

The McLean’s article said the Canadian Bankers Association says they have no stats on mortgage fraud… and CMHC said that ‘it wasn’t able to provide that data prior to the article being published’…..  Come on…  no one has these statistics???  Then how do we know fraud is a problem??   Clearly, the Bank’s obligation is to it’s shareholders… and reporting any type of fraud could affect the value of the shares….discretion is always exercised when talking about taboo subjects like fraud.  Some have suggested it’s an acceptable cost of the mortgage business… after all, there are over $940 billion in outstanding mortgages in Canada.

Earlier this year, we saw a high profile case with BMO filing charges of mortgage fraud naming hundreds of people… the fraud was for $140 million and could cost the bank $30 million in losses.

Then in June, a report came out from the BC govt that slammed RBC and BMO for loose lending practices….  what made this report somewhat funny is that during this same week, RBC received an award for Creditor of  the Year… one of the reasons for winning the aware was that RBC was ‘thinking outside the box’.….  yeah, I guess they were..!

I don’t know if there is any correlation but the Big Six Banks (TD, BMO, CIBC, Scotia, RBC, National Bank) have been on a massive hiring blitz… hiring record number of so-called Mobile Mortgage ‘Specialists’ ….  These banks have doubled and tripled their commissioned sales force in the past few years…. That’s right, COMMISSIONED sales force… Makes you wonder…..

By the way, Bank employed ‘Mortgage Specialists’ are not registered with the Ministry of Finance like Mortgage Brokers are…no license to lose…

Posted in Mortgage News. Tags: , , , , , , . Leave a Comment »
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