Skip to content

Tagcollateral mortgage

Stop Mortgage Fraud

Beware of mortgage fraudsters….

Stop Mortgage Fraud

I wrote that back in 2006.  Since then we have seen some provincial governments step in with laws to help protect unsuspecting homeowners.  You can also purchase Title insurance or an alternative method of protection.

A couple of years ago, Toronto police said a woman used fake ID to get a $300,000 mortgage.  The unsuspecting homeowner only discovered a mortgage had been fraudulently registered on their home when they received mortgage documents in the mail.

This is not a new scam. It’s happened many times in the past. Here’s a big one from 2010 that involved $140million and hundreds of people.  This one was huge.  Most are not this big or elaborate.  It’s the smaller ones, like the recent one for $300,000, that are more common place.

HOW IT’S DONE

Continue reading “Beware of mortgage fraudsters….”

Federal govt finally takes action on Collateral mortgages.

handcuffsTD Almost 4 years ago, I reported that TD was about to make one of the biggest changes in mortgage history.   They were about to register all their mortgages as a collateral charge.    Consumer advocates spoke out against the collateral charge as they recognized it would limit a borrower’s future options.

A collateral charge is always used for secured lines of credit products.   The charge does not require an amortization which allows the credit balance to go up and down.   Using a collateral charge for ALL mortgage products gives the Banks more power.   It allows them to attach other unsecured debt to your mortgage…  Unsecured credit products such as loans, credit cards, unsecured lines of credit or other unsecured Bank debt.  I bet most people don’t know that?    Continue reading “Federal govt finally takes action on Collateral mortgages.”

CBC Marketplace exposes TD’s collateral mortgage

TDhandcuffs FINALLY!!!!!   A major TV news program calls out TD Canada Trust’s collateral mortgage.  CBC Marketplace aired an episode called ‘Busting the Banks’ on January 25th.  Hey, it’s only taken 2 years but who’s counting??… Lol!    If you want to skip to the video link, just click here and scroll to the 8:00 min mark. (by the way, I should point out my contributions to this episode. I was contacted by the producers of CBC Marketplace for my opinions and advice during the filming of this episode….over the past 3 months, I assisted with some of the research. Hope you find the info useful).

During the program, CBC took a hidden camera into a TD branch….the reporter posed as a potential mortgage borrower….   Only when questioned for the 4th time did the TD banker disclose their mortgage was a collateral charge….  but they didn’t seem to explain the difference between a conventional mortgage and a collateral mortgage… The Banker only agreed that the collateral charge was a disadvantage. Continue reading “CBC Marketplace exposes TD’s collateral mortgage”

Scotiabank closes ING Direct mortgage broker division… but who cares?

Scotia and ING In an email sent to Mortgage Brokers today, ING announced they will close the Mortgage Broker division February 16, 2013.   My first reaction was one of sadness.  In the mid 2000’s, ING was a strong Lender and partner with Mortgage Brokers.   They offered some great products, competitive pricing, a fair prepayment penalty calculation and had an excellent team of employees, including their senior management.

Yes, I was sad to hear they would close the Broker division… But then I asked myself how much would this affect me?  my clients? How much business was I referring to ING these days?  The answer soon made me realize that there isn’t any reason for sadness.    I soon realized that since they made the switch to registering all their mortgages as a collateral mortgage charge, back in December 2011, I all but completely stopped recommending them to my clients. Continue reading “Scotiabank closes ING Direct mortgage broker division… but who cares?”

Fed govt, BIG SIX BANK’s pushed us into Fixed rates!…part 1 of 2.

Mark CarneyVARIABLE RATE MORTGAGES WERE THE BEST OPTION

For years, I’ve promoted the merits of Variable rate greedy bankermortgages vs Fixed rates.   To me, it was a no-brainer.  Historical stats showed that you would save over 1.00% on your mortgage, per year, every year (some years had savings of over 3.00%!).   Do the math…  That works out to $1,000 to $3,000 per year for every $100,000 of mortgage.

And for years, the BIG SIX BANKS, the Bank of Canada, the Federal govt and other fear-mongers pointed out that Variable rates fluctuated and your rates would change and possibly go up…

If  you were able to block out these warnings, do a little research, then you may have been lucky enough to enjoy the huge savings that Variable rates gave us over the last 15 years…  Fortunately, over 80% of my clients listened to my advice and chose Variable rate.  But even at the height of Variable rate popularity,  just 45% of Canadians were ever in a Variable rate product at any one time. Today, it’s less than 15%.

In 2008, the U.S. sub-prime mortgage crisis hit.   Financial markets were in turmoil.  New Variable rate mortgages were either pulled from the shelf or were priced so high as to make them an unattractive option (prime plus 1.00% with some Banks).

BEGINNING OF THE BANKS HIGHER PROFITS

The Banks actually liked this.   After all, the most profitable mortgage product is the 5 year Fixed rate.  Not hard to figure out.   The lower the interest rate, the less the Bank’s make.   This became a great opportunity for the Banks to reduce their Variable rate exposure…  And so began the great campaign to force us into 5 year fixed rate mortgages.  (by the way, these inflated Variable rate prices only lasted around 6 months…we’re not back to the good old days of Prime less 0.90% but anything at Prime less 0.50% or better is worth a look….it’s worth noting for the record that I still didn’t recommend 5 year fixed rates to my clients during this time… I recommended shorter term fixed rates ranging from 6 months to 3 years and then went back to Variable rate… history has shown that this was the right strategy).

Flaherty and HarperStarting in late 2008, and continuing today, Bankers would call, email or write letters to their Variable rate mortgage clients to warn against higher rates coming…  and they should consider locking into a 5 year fixed rate mortgage.   There were many reasons given… a bad economy… uncertainty in the financial markets… or my favorite, a special rate offer (it was special alright! Lol!!)… And the media jumped in too.  TV, radio, newspapers, major news websites…how many times have you have heard the warnings about rising mortgage rates??…or record personal debt levels??   This created an even higher level of uncertainty and fear… Mr. Potter would be proud!

Think about it… The Banks were strongly recommending that Variable rate clients go from a rate of 3.25% or better, and into a 5 year fixed rate of 5.50%!!? (November 2008).   And the worst part about all this is that hundreds of borrowers listened and did it… and have regretted it ever since!!!  Where’s your Banker now?…

watch for part 2 of 2… FED GOVT, BIG SIX BANK’S pushed us into Fixed rates!… tomorrow!

Getting a mortgage today?  Speak with a Mortgage Broker…and think twice about sticking with your BANK…. you could just save yourself $thousands.

As always, I welcome your comments and questions.  Let me know if I can help.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Scotiabank to buy ING….how will this affect you?

Earlier this month, ING Groep, the Dutch financial services giant, announced they were looking to sell their Canadian and UK operations in order to raise cash.   ING received a $10billion euro bailout from the Dutch govt during the 2008 Financial crisis and they want to start paying it back.

It didn’t take long to find a buyer for the Canadian operations.  Scotiabank will buy the Canadian division of ING for around $3billion.   The press release hinted at some good news for the Canadian public.  Scotiabank will continue to run ING as a separate entity.  For mortgage clients, this is mainly good news…. but we do have some concerns… Continue reading “Scotiabank to buy ING….how will this affect you?”

ING collateral charge in 2012.. hand-cuffs included

You’ve seen the ads…  That fellow with the Dutch accent and the orange background, telling us to ‘save your money’.  Since 1997, when they first entered Canada, they have grown to 1.7 million clients and $37billion in assets.  ING spends millions in marketing… They’ve created a brand that is synonymous with saving or discounts.

Today, I just heard they will be counting on that trust.  It is rumoured ING Direct will begin registering ALL mortgages as collateral charges.   They join TD Bank as the second major lender to make this bold change.    A move that has great implications for the Canadian consumer.

It was almost one year ago when TD Bank announced they would register all their mortgages as a collateral charge.  (click here for the details of what a collateral mortgage is and some reactions).   Consumer advocates spoke up and warned against getting a mortgage like this…. Strangely, the media was silent.  (hmm, I wonder how much TD spends in media advertising???).

In short, the benefit is that you will be able to increase your mortgage without having to spend money on new legal fees….ok, that saves you around $800 to $1,000.  That’s your benefit.  (but even this has changed as there are some programs that will offer a discounted legal fee).

Here’s what you lose….you give up your leverage to negotiate the best rate… and that’s because if you want to leave ING, you cannot simply transfer your mortgage… Collateral mortgages cannot be transferred.     You still have to qualify for any increase… you must trust that the Bank has your best interest at heart….   Hey, remember when all the banks raised their lines of credit rates in 2008-09 without warning?

ING has been a great Lender, but this new move will drive away most advisors, mortgage brokers and clients that want options and flexibility..

I’ll continue to report more as this story breaks..

Your mortgage is paid? Beware of mortgage fraudsters….

“You’ve worked hard all your life… your house is finally paid off.  You decide to it’s time to get a smaller house, maybe a condo or you just want travel.  Does this sound like someone you know?  You sell your home but discover that someone has registered a mortgage on your house without you knowing it.  Sound impossible?  Guess again… this is Mortgage Fraud and it’s happening now.”

I wrote that back in 2006.  Since then we have seen some provincial governments step in with laws to protect unsuspecting homeowners….  You can also purchase Title insurance to protect you as well.    But once you have been victimized by the crooks, you still need to make a claim and go through the hassle of clearing things up…. Who wants to go through making a claim? This takes time and can be a big paid in the rear. 

What if there was a way to make yourself less of a target?   The good news is there is a better way to protect yourself….. The criminals go after homes that have no mortgage.  This is PUBLIC information.  Anyone can find out if you have a mortgage just by going to the Land Registry Office and doing a search.   So what should you do?

The solution is to register a mortgage on your home.  This doesn’t mean you need to borrow money.  By getting a secured line of credit you will have a collateral mortgage registered.  The criminals will not know if you have a balance on that mortgage or if it’s $0.   And they will probably go searching for the next home that has no mortgage.

What makes this product unique is that it is available to both salaried and self-employed individuals that cannot prove their income.  If you don’t use it, it doesn’t cost you anything.  

Let me know if you would like more details about this.

TD is not able to accept collateral mortgage transfers.

Last October, we reported one of the biggest changes by a major bank in recent history…. TD Canada Trust changed how they would register mortgages…  Quietly, TD announced they would now register all mortgages as a collateral charge…  Most borrowers won’t know what the difference is, but for us in the financial industry, we know this will have huge ramifications and limitations and could end up costing the average borrower $$thousands.   Click here to read what the experts say.

And then in December, we heard a rumor that TD was looking at ways to transfer in collateral mortgages…. They wanted to give us the impression that there were few limitations to taking a TD mortgage… uh, let me say that again… that’s TD collateral mortgage.

We just heard that this has been put on the shelf.   They just can’t figure out a way to transfer in collateral mortgages…  If this doesn’t make you think twice about taking a TD mortgage, then I don’t know what will.   I’ve never heard of any bank accepting a collateral mortgage for transfer……Just isn’t possible with today’s real estate and mortgage laws.

Oh and by the way, if you’re wondering.. TD will allow you to transfer in your mortgage from any other financial institution…  But be warned, once you are there, I think you’ll have a hard time getting out.

TD taking action with new collateral mortgage

No, the hand-cuffs are still on if you took a TD Mortgage recently.. yes, they are still being registered as a collateral charge and not the normal, conventional charge…

But I heard from a good source that TD is working on changing their policies to allow for the transfer-in of collateral mortgages.  That would mean that TD would accept collateral mortgages from other financial institutions should new clients wants to bring their mortgage to TD.

But how does this help a TD client that is up for negotiation with their mortgage when TD knows they cannot transfer that mortgage out without having to pay new legal fees to move that mortgage?   The borrower loses their leverage to negotiate…it’s really that simple…  here’s a great article from Gail Vax-Oxlade telling us what she thinks about TD’s new collateral mortgage.  Remember, collateral mortgages are not accepted by other financial institutions for transfers….

This subject isn’t going away… we will see if other Banks will follow TD’s lead and go with a collateral mortgage charge or whether they will accept collateral mortgages for transfers.  Stay tuned for more on this major shift in mortgage registration.

And who will pay that extra cost to transfer mortgages in and convert them to TD’s collateral charge?   For now, it’s TD picking up the cost, but does anyone really expect that to continue?   At some point, that cost will most likely be passed to the consumer.

TD is taking a big risk.. maybe it’s a calculated risk… they certainly have the deep pockets to pay for this.. at least for a little while…. I’m sorry to say it looks like the TD borrower is going to lose out in the end.

Update on TD Collateral mortgage rules

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. Continue reading “Update on TD Collateral mortgage rules”

Introducing the new TD mortgage…hand-cuffs included

The rumors are true…TD Canada Trust will begin registering all mortgages as collateral charges after October 18.    (No official release from TD yet but a source inside TD has confirmed this to us).

What does this mean for the consumer?  Well, there is some good but mainly it’s bad..

  • a collateral mortgage is normally registered for floating or revolving debt such as a secured line of credit.  It allows for the balance to float up or down.
  • TD will register a collateral charge for 125% of the loan amount… this will allow the client to come back at a later date and apply to increase their mortgage if needed….
  • in theory, it sounds great…no legal fees required in the future if you need to refinance… and easy approval…

BUT HOLD ON…

  • a COLLATERAL MORTGAGE is NOT really portable…meaning you cannot transfer to another institution…that’s because no other Bank or Lender is accepting collateral mortgages for transfer… including TD…you will lose some leverage to negotiate the rate when your mortgage matures…
  • and if you wanted to increase your mortgage in the future, you would need to reapply for approval…let’s suppose you don’t qualify in the future..not because your situation changed but because the Bank’s lending policy changes…this happens regularly….you would now have to seek out an entirely  new 1st mortgage as no other lender would register a 2nd mortgage in behind a collateral first mortgage (at least none that I am aware of)…  that could mean penalties, definitely legal fees and other costs….
  • It’s obvious that a big reason TD would be doing this is to improve mortgage retention.. this makes it less appealing to leave TD because of the costs….
  • BOTTOM LINE…this type of mortgage limits your options..it doesn’t expand them.. you MAY save on legal fees..but that’s not a big enough reason to go with this product..

My advise to anyone looking at a TD mortgage is to be careful…make sure you understand all the terms, conditions, the differences and the limitations…you be the judge… is this a good thing for the client or is it a good thing for the Bank??  Will other Banks follow?  Some might say this is like putting handcuffs on the client… I tend to agree…

%d bloggers like this: