Tag Archives: stated income mortgages

A deeper look at millennial homebuyers

Get to know one of the largest cohorts of future home buyers – and what these clients want in a home.

“When looking for a home, 53% of peak millennial purchasers across Canada are willing to spend up to $350,000, which would typically buy them a 2.5 bedroom, 1.5 bathroom property nationwide, with 1,272 square feet of living space,” Royal LePage said in its latest report. “Yet, with 58% of respondents having a annual household income of less than $69,000, and only 34% currently tracking to have a sufficient down payment of over 20% to qualify for a mortgage in this price range, the actual logistics of homeownership can be quite difficult.”

The report, entitled Largest Cohort of Millennials Changing Canadian Real Estate, Despite Constraints of Affordability and Mortgage Regulation, was based on a cross-Canada survey about Millennials’ sentiments around real estate.

It found only 35% of millennials currently own a home, 50% rent, and 14% live with parents.

The desire to own a home is strong among these Canadians, with Royal LePage’s  survey finding 87% of Canadians aged 25-30 believe home ownerships is a good investment.

However, slightly fewer –69% — hope to own a home in the next five years and only 57% of those surveyed believe they will be able to afford one.

Of those interested in buying a home, 75% would use savings for a down payment; 37% would seek alternative funding as well and 25% plan to rely on family support.

When it comes to housing preference, 61% of respondents prefer to buy a detached home, while a mere 36% believe that is realistic, financially.

The majority (52%) would look to the suburbs when purchasing due to affordability constraints.

“When asked, 64% of peak millennials currently believe that homes in their area are unaffordable, with a significant proportion of respondents in both British Columbia (83%) and Ontario (72%) asserting that prices are simply too high,” Royal LePage said. “Of those that do not believe they will be able to own a home in the next five years, 69% stated that they cannot afford a home in their region or the type of home they want, while roughly a quarter (24%) are unable to qualify for a mortgage.”

Source: Canadian Real Estate Wealth – by Justin da Rosa

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Braving the Wilds as a Self-Employed Borrower


Self-employed – The fastest growing group of alternative borrowers, business for self-clients sometimes struggle to provide income verification that meets the conditions required by prime lenders. With 1 in 5 working Canadians now in business for themselves, this is an important segment that deserves extra consideration for your marketing efforts.

Amy De La Hunt, a writer and editor in St. Louis, gathered mountains of documentation last year to apply for a mortgage as a self-employed borrower.

She had several years of tax filings and contracts to establish a track record for her income. Then, midway through the process of buying a home in suburban Crestwood, she started a full-time job.

“Once I had only one pay stub from my full-time employer, then everything was like magic,” De La Hunt said. “It opened my eyes to how much easier it is.”

For all the benefits that being self-employed imparts, getting a mortgage is not among them.

Self-employed borrowers receive six loan quotes for every 10 received by people pulling down W-2s, according to a Zillow Mortgages analysis.

Lower credit scores are one of the primary factors, according to the analysis, which used a database that logs nearly 2 million loan requests a month.

Among self-employed workers, 47 percent have self-reported credit scores below 720, compared with 23 percent among those who are not self-employed. That’s despite the fact that self-employed borrowers report household incomes that are 81 percent higher and make larger down payments than those who are not self-employed.

Business vs. personal debt

The lower credit scores might not always be a reflection of a self-employed borrower’s ability to pay, said Staci Titsworth, regional mortgage sales manager for PNC Mortgage in Pittsburgh.

Some business owners take out car loans and open credit card accounts in their own names, even though these are strictly for company use. That boosts the business owners’ debt volume, which can count against their credit score, Titsworth said.

Lenders can sort through situations like this, but it takes paperwork — on top of copious filings already required of self-employed borrowers (two years of personal tax returns with all schedules attached, plus two years of business tax returns for each business).

Loyal customers with a solid history of making loan payments are often incredulous at how much paperwork is required — and how inflexible the rules are, Titsworth said.

“It can be overwhelming for someone who’s successfully self-employed, who owns all these businesses and is a loyal bank customer, to hear us say we’re missing this one schedule from 2013. They’re like, ‘Are you kidding me?’” she said.

Some people will respond, “You can see I have enough cash to pay for this house; isn’t that good enough? And we have to say, ‘No, we need that paperwork,’” she added.

Keep calm & gather documents

The good news is that, at the other end, it’s entirely possible for many people who are self-employed to qualify for a mortgage.

“A lot of people think artists can’t ever buy homes, or that if you’re self-employed, you can’t buy a home — but we’re here and we each have our own studio and a weekend house,” said Linda Hesh, an artist in Hollin Hills, VA, who lives in a mid-century modern home with her husband, hand engraver Eric Margry.

They’ve been through the home financing and refinancing process many times. They found at the start that lenders wanted a larger down payment from them than from people who weren’t self-employed.

And then there’s the paperwork.

“You just have to do it; it’s going to be a lot of pages,” Hesh said.

She recommends finding a real estate agent who’s comfortable working with self-employed borrowers, because “they can be really helpful.”

So can staying calm, she said.

Source: Zillow.com – BY ON 19 DEC 2014

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Mortgage rates, charges decisive factors for consumers

A combination of reasonable mortgage rates, no unexpected charges, and special features were the most important factors in consumers’ choice of mortgage originator, according to a recent survey conducted by financial services firm D+H.

The study’s results accompanied the increased popularity of the internet as a valuable resource for would-be borrowers, giving them more confidence in their transactions as well as making them more wary of hidden fees.

“People are asking the right questions. Even a caveman could find the lowest mortgage rates online within seconds. What you can’t learn as easily are the hidden costs, including mind-blowing penalties, inflated blend and increase rates (the rates lenders charge on any new money you add to your mortgage), ridiculous rates to convert from a variable mortgage to a fixed, aggravating fees to switch lenders, restrictions when porting your mortgage, and so on,” mortgage columnist and RateSpy.com founder Robert McLister wrote in a February 28 piece for The Globe and Mail.

McLister stated that the results pointed at the growing importance of a second informed opinion, apart from online information, in determining the best mortgage rates available.
“It’s no surprise, then, that two out of three borrowers value the person arranging their mortgage more than the lender itself. And they should. Lender reputation is immaterial compared to proper guidance and mortgage flexibility,” McLister said.

The survey also revealed that the largest contributor to consumer satisfaction is the absence of time pressure, which can be achieved by the broker going the “extra mile” to assist with the details.

“Besides time pressure, the survey found the biggest headaches for borrowers were paperwork, uncertainty about getting the best rate and finding the time to meet with a banker or broker,” McLister noted.

Source: MortgageBrokerNews.ca – by Ephraim Vecina | 02 Mar 2016 

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…mortgages made simple…



The Ray McMillan Mortgage Team  is licensed through Northwood Mortgage Ltd. We deal with major banks, trust, life insurance, finance companies and private lenders. We are licensed to provide the most competitive mortgage rates and terms available for your real estate financing needs throughout Ontario.



  • First and second mortgages
  • Transfers
  • Condominium/Townhouse purchases
  • Home Improvement Loans
  • Construction Loans
  • Debt Consolidation
  • Refinancing
  • Power of Sale
  • Multi-residential
  • Vacant land
  • Cottages and recreational properties
  • Rural and farm properties




When we arrange a prime residential first mortgage the lender pays us a finder’s fee.This does not affect the rate our terms of the mortgage in any way.

When we arrange any other type of mortgage that does not qualify as a prime residential mortgage then the lender does not pay us. We must then charge a brokerage fee*. The fee is based on the complexity involved to arrange the mortgage.


You have mortgage questions, the Ray McMillan Mortgage Team has answers.

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Self-employed? Prepare for a long conversation with your mortgage broker

Getting financing isn’t as easy as it used to be, say mortgage brokers — and for the 15% of Canadians who earn money for themselves without a steady employer’s salary, it’s harder still.

If you’re self-employed and about to apply for a mortgage, be prepared for some serious form-filling. Getting financing isn’t as easy as it used to be, say mortgage brokers — and for the 15% of Canadians who earn money for themselves without a steady employer’s salary, it’s harder still.

“Back in the day, five years ago you could hold up three fingers and say ‘I promise I earn $100,000, and many lenders would take your word for it,” says Claire Drage, a senior mortgage agent with Mortgage Alliance in Greater Toronto. But things have changed, she warns. “It will take more paperwork, more documentation, more justification from the borrower on why they should be approved.”

Since 2008, the government has lowered the maximum amortization period from 40 to 25 years, and reduced the maximum gross and total debt service ratios to 39% and 44% respectively. Then, last October, the Office of the Superintendent of Financial Institutions’ B-20 rules put the underwriting practices of federally regulated financial institutions under scrutiny.

“Generally these changes have made for more rigorous review of documentation which does impact the self-employed borrower programs to a greater extent than salaried borrowers,” says Gary Siegle, Alberta-based VP of the Prairies for mortgage services firm Invis.

The self-employed often hinder themselves with creative accounting to lower their income. “They may have a different way of reporting all their income, reducing all their taxes as much as possible. Those are the ones that are more challenging,” says Daryl Harris, a broker at Verico One Link Mortgage & Financial in Winnipeg, and chair of the Canadian Association of Accredited Mortgage Professionals. Those not reporting cash jobs also reduce their provable income, making it harder to get a mortgage.


“Even though you’re self-employed and you benefit from amazing tax breaks, and your personal income tax return is incredibly low, you still have to prove to the lender that you can afford to pay this mortgage back,” adds Ms. Drage.

For those that find it hard to prove their income, stated income programs are an option. Designed for those with less than three years’ business operation, it requires at least a 10% downpayment, and not all lenders support it. TD Canada Trust, for example, looks instead at documented income such as T1 financials, business financials, and notices of assessments.

Changing attitudes among lenders makes it more difficult for the self-employed to deal with top-tier banks, says Don Barr, president of Verico Select Mortgage in Victoria. “It is forcing a lot of stuff out of the ‘A’ business and into the alternative business,” he says. Alternative lenders, some of which are not federally regulated, may take a less rigid approach when assessing self-employed applicants. However, the trade-off is often a higher interest rate.

There are several things to remember when applying for financing:

• Loan-to-value matters. Offering a 10% downpayment will make the process far more difficult. They care more than ever about up-front equity.
• Keep up with your payments. Make sure that you are up to date with the CRA before applying to a lender.
• Be organized. Ensure that all your accounting and tax documentation is up to date, and that you are reporting
• Pay off your credit. Get those outstanding cards and lines of credit paid down before you let your lender score you.
• Be prepared to adjust your expectations. You may have to adjust your target price after talking to a lender.
• See if your lender will ‘gross up’ your income. Some lenders may add a percentage when assessing your taxable and/or non-taxable income to allow for business expenses you incur.

And above all, start early in the process, preferably with a pre-approval before you look for a home, because one thing’s for sure: you’ll be doing more hoop-jumping than you think.

Source: Danny Bradbury, Special to Financial Post |September 19, 2013 

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How mortgage fraud is thriving in Canada’s hot housing market

Houses are seen in Mississauga on Thursday, Oct. 29, 2015. In an online presentation on fraud and identity theft from 2012, mortgage insurer Canada Guaranty notes that “one in 10 mortgage applications will have some element of fraud.” (Mark Blinch For The Globe and Mail)

In early 2013, Kelly Vandenham and her boyfriend were preparing to put an offer on a charming Craftsman-style house in West Kelowna, B.C. They had been preapproved for a mortgage with Canadian Imperial Bank of Commerce, but the couple’s realtor suggested they could get a lower interest rate at Toronto-Dominion Bank, where their realtor’s boyfriend, Kulwinder Dhaliwal, worked as a mobile mortgage specialist. What happened next is a problem that continues to plague the financial industry despite steady changes to mortgage lending rules, a dilemma that some warn threatens to undermine faith in the country’s robust housing market.

Shortly before the deal was set to close, according to court and regulatory tribunal documents, Mr. Dhaliwal e-mailed to say there was a problem with their application. Ms. Vandenham’s job letter from Interior Health Authority was missing some information, prompting the bank to take a closer look and potentially putting the deal at risk. In a statement she filed with a B.C. court later that year, Ms. Vandenham wrote that she offered to get a new letter the next day. Mr. Dhaliwhal responded that he “would figure something out.”

Although TD was still reviewing the application, Mr. Dhaliwal instead cut out the Interior Health letterhead along with the signature of the agency’s human resources worker from the couple’s application and pasted them onto a fake new letter, which he submitted as part of a different application to Bank of Nova Scotia.

When Scotiabank called Interior Health to confirm some of the details of the letter, Ms. Vandenham was placed on unpaid leave and barred from setting foot on Interior Health property while it investigated her for fraud. “I was told my job was in jeopardy and I was worried I would lose my house I had just bought,” she wrote in a lawsuit against Mr. Dhaliwal that was eventually settled out of court. “I cried every day.”

According to court documents, Mr. Dhaliwal eventually admitted to what he had done and resigned from his job at the bank. TD ultimately approved Ms. Vandenham’s mortgage using her original – legitimate – employment letter. (Ms. Vandenham did not respond to requests for comment.)

Earlier this year, B.C.’s financial services regulator approved Mr. Dhaliwal’s application to become a mortgage sub-broker, someone who works as a broker but doesn’t own a brokerage.

In granting Mr. Dhaliwal a conditional licence, Carolyn Rogers, head of the provincial Financial Institutions Commission, put the blame on Mr. Dhaliwal’s former employer, TD Bank, for putting intense pressure on Mr. Dhaliwal, whom she described as poorly trained and financially naive.

What little coaching Mr. Dhaliwal received on how to properly conduct business, she wrote, “was overwhelmed by a focus on the volume of mortgage business Mr. Dhaliwal was bringing to the bank and relentless pressure to sell creditor protection insurance to as many borrowers as possible.”

Reached by phone last week, Mr. Dhaliwal said he needed to consult with his brokerage before making a comment. “I went through quite a bit of an ordeal with this whole situation,” he said. “I don’t want to get in any extra trouble for saying anything.” He did not respond to subsequent attempts to reach him.

Cases such as this represent what many in the mortgage industry say is the growing, yet under-reported, problem of mortgage fraud, perpetrated not by criminals looking to scam a bank, but by mortgage industry professionals looking to help their clients qualify to buy a home.

It’s an issue that has been exacerbated in recent years by soaring home prices, stagnating incomes, fierce competition among brokers, lenders and real estate agents, and tighter federal mortgage lending rules that have made it harder than ever for many Canadians to afford home ownership.

“The people who are salaried and altering their income for the most part are probably just facing into some of the affordability pressures because of the level of house prices today and are trying to buy a home that’s out of their reach,” says Stuart Levings, chief executive officer of mortgage insurer Genworth MI Financial Inc. “You know how it is these days, folks just want that home. They could qualify if they looked at a lower-priced home.”

Earlier this year, Home Capital Group Inc., the country’s largest alternative mortgage lender, revealed it had cut ties with 45 mortgage brokers after an anonymous letter to the company’s board of directors sparked an investigation into forged documents, such as fake employment letters and income statements. Collectively, the brokers who were fired generated nearly $1-billion worth of mortgages for the company last year.

While scandals such as the one at Home Capital occasionally shed light on the dark side of Canada’s $1.3-trillion mortgage industry, much of the problem of mortgage fraud remains hidden from public view.

In an online presentation on fraud and identity theft from 2012, mortgage insurer Canada Guaranty notes that “one in 10 mortgage applications will have some element of fraud.” Credit bureau Equifax says it had been able to flag nearly $1-billion worth of attempted mortgage fraud among its lender clients since 2013.

“It’s happening on such a level that the consumer is aware that this is something that can be done,” says an Ontario mortgage broker who didn’t want his name used and who once complained to federal and provincial regulators after being referred a deal that involved a family looking to buy three homes without any reportable income. “It’s happening on such a level that some bank reps, mobile mortgage reps, have said: Call a mortgage broker, they can probably find a way to make your income higher.”

‘Soft fraud’

Those in the industry agree that much of what constitutes mortgage fraud in Canada is what’s known as “soft fraud” or “fraud for shelter” and usually involves people who are genuinely looking to buy a home and pay their mortgage, but can’t quite qualify for a conventional loan.

In some cases borrowers are simply trying to buy a home that is out of their reach financially. In others, the borrowers could qualify if they had a bigger down payment and paid a higher interest rate, but instead alter pay stubs and bank statements in order to qualify for the cheapest possible mortgage. Still, more involve people like Mr. Dhaliwal, who forge documents in order to save a deal that is up against a tight deadline.

One of the “red flags” that makes Toronto-area mortgage broker Mark Cashin suspect a deal may involve fraud is when a client comes in asking how much he charges. Brokers typically don’t charge clients fees up front, instead collecting commissions from lenders when a deal closes. Some, however, charge fees into the thousands to create fake pay stubs, bank statements and tax documents and will often hit clients with steep charges when they go to renew a mortgage that was funded based on forged documents.

“When I first started in the business, I thought this is the greatest business ever, people are willing to pay you money up front,” Mr. Cashin says. “And then my broker told me: ‘They want you to create documents.’ I figured that one out pretty quick.”

Others come in clutching suspiciously perfect mortgage applications complete with all the required documents. Most legitimate clients have to be hounded for ages to submit all the necessary paperwork, Mr. Cashin says.

Montreal mortgage broker Walid Hammami once turned down a client because the copy of his Canada Revenue Agency notice of assessment looked too good. “The quality of the paper this thing was printed on was so classy,” he says. “It’s impossible the government would have the means to do that for every person.” In another instance, he called a client to verify documents given to him by a realtor that said the client worked as a butcher, only to find out he was actually a truck driver on disability.

Equifax has noticed the trend of people coming into its offices looking to upgrade their credit score with new employment details using fake job letters. “They’ll use the same template which has the same words spelled incorrectly,” says John Russo, Equifax’s legal counsel and chief privacy officer. Such attempts at “soft fraud” are up 15 to 20 per cent this year, he says. “We’ve seen many instances, in the thousands, come across our desks.”

In August, researchers at Veritas Investment Research visited 10 Toronto-area mortgage brokers, posing as buyers who were employed full-time and had a good credit rating, but were looking to take on more mortgage debt than they would qualify for under current rules. They offered to get fake employment letters from a relative who owned a business saying they also worked for him part-time.

Three brokers suggested they could get the deal approved through a “B lender,” or one specializing in subprime borrowers, including one broker who suggested the family member process a fake pay stub to include with the application. “This, of course, would only be acceptable for an upfront fee to the broker,” wrote investment analyst Mike Rizvanovic.

‘Project Cut and Paste’

While much of the focus on mortgage fraud is directed toward alternative mortgage lenders and independent mortgage brokers, a review of court files and provincial financial regulators’ disciplinary records paints a picture of a problem that is far more widespread. Major banks, private lenders, credit unions, monoline lenders – non-bank financial institutions that only deal in mortgages– have all been victims of both soft and hard fraud, perpetrated by mortgage brokers, lawyers, government workers and even the bank’s own employees.

The Ontario Ministry of Community and Social Services uncovered an unauthorized mortgage brokerage operating out of the Family Responsibility Office, a provincial agency that enforces family court judgments for child and spousal support payments. It fired at least one employee after searching his computer and finding fake pay stubs for companies with names like Express Law Services and the Ontario Dental Institute.

One of the pay stubs was for an employee of the Family Responsibility Office who made $57,000 at her government job, but claimed to make $75,000 working for a company called Freedom Mortgage Financial Solutions, which was the name of a brokerage being run by one of the office’s managers. Investigators confirmed that a lender had given her a mortgage on a $320,000 townhouse based on the fake documents.

Last year, Frank Wong, a Scotiabank employee at a branch in Brampton, Ont., was convicted of fraud for altering details such as credit scores on more than 110 mortgage applications totalling $46-million. He was sentenced to a year in jail, as was his partner in the scheme, Praimraj Chansingh, an unlicensed, self-professed mortgage broker who paid Mr. Wong from $500 to $1,500 to process the fraudulent applications.

As part of the investigation, police also charged a Toronto police constable whom investigators alleged had received an inflated mortgage on a rental property he owned, an employee of a local law firm that did work on the mortgage applications, and a supervisor at CIBC who allegedly provided copies of her pay stubs to be used in at least five other mortgage applications as a favour for getting a large mortgage through Scotiabank. (Charges against everyone except Mr. Wong and Mr. Chansingh were eventually dropped.)

A Canada Post employee was fired after the postal service discovered he and his wife had been given a mortgage for nearly $800,000 on their Mississauga home as part of the Scotiabank scam using a forged job letter that claimed he was a supervisor making $90,000, when he was actually a letter carrier who made $48,000. (He was later reinstated by a labour arbitrator.)

While it went on for years, the Scotiabank fraud was not particularly sophisticated. Police dubbed their investigation “Project Cut and Paste” for the method Mr. Wong used to lift credit scores and other details from legitimate mortgage applications and paste them onto fraudulent ones. The broker, Mr. Chansingh, used Adobe software to alter other financial documents.

Many of the borrowers were struggling financially and eventually defaulted. By last year, according to court records, the bank had lost at least $12-million.

“This offence has the potential to seriously damage the value of all homes in the Brampton and Mississauga area,” Crown prosecutors wrote in a court brief. “With a potential forecasted increase of 1 to 2 per cent on the mortgage interest rate, foreclosures will happen to some of these mortgage holders who can’t even afford the current mortgage rates. Many of these homes could be foreclosed upon and whole communities will suffer from a fall in home values. This scenario occurred in the United States with the subprime mortgages.”

Others play down the risks to the overall housing market from mortgage fraud, arguing that home buyers are merely responding to an overheated housing market that forces buyers to waive financing conditions to win a bidding war, meaning they’ll lose hefty deposits if they can’t get approved for a mortgage quickly.

An environment to cheat

Broker Mr. Cashin blames overly stringent federal rules governing insured mortgages, such as shorter amortization periods and higher mortgage insurance premiums, for making it harder for average Canadians to get a mortgage, especially in expensive markets like Toronto or Vancouver.

Such policies are aimed at ensuring the housing market didn’t experience a catastrophic U.S.-style meltdown. Mr. Cashin argues that they have had the opposite effect, pushing otherwise creditworthy borrowers who would have qualified for a conventional mortgage in the past into riskier areas of the market, including to industry professionals willing to commit fraud to get a deal done at all costs.

“They’re creating an environment for people to cheat because they want those low rates,” he says. “A lot of times it’s because they need it. House prices are going up. Everything is going up except people’s wages, but policy is keeping the cheap money away from the people who need it the most.”

Others say the driving force behind mortgage fraud is to help clients who have the means to afford the mortgage, but who work for cash or otherwise aren’t declaring all their income. That might make them tax cheats, but it doesn’t necessarily put them at higher risk of defaulting on a mortgage.

“If I feel a client can afford it, I’ll help them and guide them,” says one Toronto mortgage broker who spoke on condition of anonymity because he admits he helps clients fake job letters, income documents and employer phone references.

“Yes it’s fraud. But we are looking out for the bank. We are looking out for the economy in that we’re not giving the mortgages we know are going to screw up,” he says. “I will stop clients and deals that I know are headed for trouble because it’s not healthy for anybody.”

Home Trust CEO Gerald Soloway told an analyst conference call earlier this year that the mortgages it had flagged for fraud were actually performing better than the company-wide average.

Genworth’s Mr. Levings says the mortgage industry has gotten better at spotting fraud attempts through collaboration and new technology that makes it easier to identify suspicious applications, such as those that use job letters from the same non-existent employer, or applications that are being shopped around to several lenders with slightly different documentation each time.

Lenders don’t usually send Genworth the paper documents, but the insurer gets a set of about 160 data fields from each application that it feeds into a software system that scores every deal based on details such as the borrower’s age, income, the industry they work in, the type of home they’re buying and where they live. Applications that score high often get approved with little follow-up, while those that score low are sent for a more detailed review. Since the 2008 global financial crisis, the rate of mortgages that Genworth sees defaulting within the first year – a sign of fraud or borrowers in over their heads – has dropped by half, he says.

The industry also improved after the Office of the Superintendent of Financial Institutions, the federal regulator, brought in new underwriting standards requiring both lenders and insurers to make reasonable attempts to verify employment letters and other financial documents. Mr. Levings says the “gold standard” for underwriting in the industry today, which most lenders are meeting, is to ask for two pieces of documentation and then back it up with independent research, such as checking a borrower’s credit score or looking up an employer on Google to see if it exists.

“You don’t need to go beyond that,” he says. “There’s a diminishing return. The more you get doesn’t necessarily mean you’re going to catch more.”

Yet just as technology has given the financial industry new tools to spot fraud, it has also given fraudsters better tools to avoid detection. Almost any document can be forged these days, the Toronto broker says. The only step that will guarantee that a deal will fail is if a lender asks for permission to call the Canada Revenue Agency to independently verify income details. “If you ever get to that point, you’ve got to drop the deal,” he says.

Vetting every application with a call to the CRA is not a realistic solution, Mr. Levings contends. “Frankly, I very much doubt that the CRA would ever be willing to give that up,” he says. “The privacy risk is so huge with that.”

However, many say more thorough due diligence by lenders will only go so far in solving the problem and that the mortgage industry has to do more to curb the incentives for home buyers and mortgage professionals to want to commit fraud in the first place.

Regulators need to threaten stiff penalties for even minor fraudulent activity, mortgage broker Mr. Hammami says. Banks and mortgage brokerages, many of which have been aggressively hiring, have to do a better job of checking into the backgrounds of new employees. “Some of these mortgage reps working for the banks move from one bank to another because they got caught,” he says. “And after doing it to a few banks, they move to the brokerage industry.”

Mr. Hammami is among those pushing for national industry standards and a Canada-wide regulatory body for brokers, who are now regulated at the provincial level. New brokers need help coming up with a business and marketing plan, he says. Unless they have a steady pipeline of new clients, brokers can go months without closing a deal and getting paid, so he thinks brokerages may need to rethink the commission-only business and start paying new employees a salary for the first several months until they get a feel for the industry.

“We need to speak up about these things,” he says. “People are treating the mortgage industry like a free ride.”

With a new Liberal federal government professing to tackle the country’s affordable housing crisis, Mr. Cashin believes Ottawa may need to take a second look at all of the regulations put in place in recent years to safeguard the housing market if it really wants to curb the demand for fraud.

“The mortgage business has become more complicated than it needs to be, all in the optics of protecting and stabilizing the economy,” he says. “People in general are just trying to provide the best place they can for their family to be raised. They’re trying to get to that cheap money like everyone else. If you create a situation that would motivate behaviour like that, well then shame on the government, shame on us.”

Source :TAMSIN MCMAHON – REAL ESTATE REPORTER The Globe and Mail Published Friday, Oct. 30, 2015 5:05PM EDT

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The Liberal Effect

The Liberals’ new majority gives them all the power they need to influence Canada’s mortgage market. Interest rates, mortgage policy and affordable housing initiatives will all be affected.

Here’s some of what the mortgage market can expect from Mr. Trudeau’s new government:

  1. Higher bond yields: Balancing the budget is not a priority for the Liberals until 2019. Trudeau is expected to go on a spending spree and bond traders aren’t keen about it. It suggests a greater supply of government debt and potentially higher long-term yields to come. That, of course, could mean at least slightly higher fixed mortgage rates than we’d otherwise see.
  2. A More Hawkish Poloz: The odds just dropped for a cut in prime rate. More spending by Ottawa puts less pressure on governor Stephen Poloz to stimulate the economy with rate cuts. The implied probability of a rate hike by next October has almost doubled, from 8% yesterday to 15% as we speak.
  3. Wider RRSP Access: The Liberals say they’ll open access to the RRSP Home Buyer’s Plan, particularly for homebuyers coping with significant life changes (divorce, death of a spouse, a sick or elderly family member, etc.). More access to down payment funds will prop up housing sales and home ownership slightly, and support home prices.
  4. More “Affordability”: The Liberal platform includes a review of housing policy in high-priced markets. The new government will “consider all policy tools that could keep home ownership within reach.” What that means, we’ll have to wait and see. It could definitely be positive for renters and income property investors, given the Liberals have promised to “direct CMHC…to provide financing to support the construction” of new rental housing.
  5. First-timer Support: Trudeau’s government will add more flexible programs for first-time homebuyers. This could mean any number of things, potentially even higher amortization limits for new buyers.
  6. New Blood at the DoF: The Liberals will be installing a new Minister of Finance, who has enormous power over housing regulation. Will he or she be as hands-off on mortgage policy as the outgoing Joe Oliver? We’re guessing not. We’ll likely have an answer by the time the Liberals release their first budget next spring.

Here’s more on the Liberal housing platform.

Source: Canadian Mortgage Trends by Robert McLister October 20, 2015

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8 Behaviors That Will Kill Your Mortgage Approval — After You’ve Already Been Approved

8 ways to accidentally un-approve your approved mortgage loan application

Current mortgage rates are down nearly 100 basis points (1.00%) since September 2013 and have approached their lowest levels of all-time.

The drop in rates has contributed to a rise in U.S. home sales and has sparked a home refinance boomlet, led by homeowners jumping on new, lower interest rates.

Even better — it’s getting easier to get approved for a mortgage.

In February, mortgage lenders approved 67% of all purchase loans applications, which is four percentage points higher as compared to last year’s average. More than half of all refinances applications went to closing, too.

For many applicants, though, it’s not the mortgage approval that’s the hard part — it’s keeping it.

There are plenty of land mines in the mortgage approval process. You’ll want to stay clear of them.


Mortgage approvals take time. In a typical home loan market, 45 days is normal time frame.

The time to get an approval, though, can change based on the market environment or how “complicated” a loan might be. For example, when mortgage rates are low and there’s a refi boom on-going, closing on a loan take as long as two months. Loans for the 5-10 Properties Program, which require additional paperwork, may delay the process further.

Sometimes, banks just can’t work that fast.

Closing times can also be delayed for buyers of short sales and foreclosures. Loans for distressed sales and REO can take 6 months or longer to get to settlement.

Thing is, during that “extra time” it takes to close — whether it’s 3 weeks, 3 months or longer — your life is subject to unexpected change. When your life changes, your loan can change, too.

For example, if lose your job, become ill, or have your home damaged by storms, your lender can rightfully revoke your mortgage approval — even if your loan was previously cleared-to-close.

Some life events are beyond your control. You can’t control sickness any more than you can control Mother Nature. But some events are within your control.

In the world of mortgages, good behavior does matter.


Keeping “good behavior” in mind, here are 8 things you should absolutely not do between your date of application and your date of funding. Any one of them could force a revocation of your mortgage approval.

Ignore these rules at your own peril.

  1. Don’t buy a new car or trade-up to a bigger lease
  2. Don’t quit your job to change industries or start a new company
  3. Don’t switch from a salaried job to a heavily-commissioned job
  4. Don’t transfer large sums of money between bank accounts
  5. Don’t forget to pay your bills — even the ones in dispute
  6. Don’t open new credit cards — even if you’re getting 20% off
  7. Don’t accept a cash gift without filing the proper “gift” paperwork
  8. Don’t make random, undocumented deposits into your bank account

And that’s it.

Now, you may find it 100% impractical to have follow these rules to the letter. I know that.

For example, if your car lease is expiring, you have to do what you have to do. Renew the lease. Before doing it, though, check with your loan officer — spreading your lease over 60 or 72 months may be better for your debt-to-income (DTI) ratio.

The same goes for accepting cash gifts from parents.

There’s a right way and a wrong way to accept a cash gift for a purchase and if you do it the “wrong way”, your lender may disallow the gift and deny the loan.

These are just 8 of the behaviors which could sabotage your loan. There are more, of course, and your lender will help you identify them.


Today’s mortgage rates are low. Demand from home buyers and refinancing households is strong. As a result, the number of days required to close a loan is increasing. This leaves more opportunity for “things to go wrong”.

Don’t get your mortgage get un-approved. Take steps to protect your approval. Avoid the bad behaviors which can cost you time and money and that great, low rate.

Source: The Mortgage Reports: By Dan Green October 15, 2013

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It’s time for many Canadians to abandon the 20% down-payment rule

The convention of 20-per-cent down payments is right on the money ... but not if you’re set on buying in a hot market. (BNN Video)

This one’s for the housing true believers out there.

You’re the buyers who keep pushing house prices higher in cities such as Vancouver, Toronto and Hamilton. Incomes are edging higher in these cities, prices are surging. If you’re primed to buy anyway, then listen up. Stop trying to save a 20-per-cent down payment and get into the market now.

A popular and sensible bit of financial advice is that you should ideally wait to buy a house until you have a down payment of at least 20 per cent and thus are excused from buying mortgage default insurance. But if it takes a few years to save that much, you may find that soaring prices more than offset the savings on mortgage insurance.

This insurance got a little more expensive in some cases this summer, so it’s time for a fresh look at the case for avoiding the cost of buying it.

Background for housing rookies: If you have a down payment of less than 20 per cent, you have to pay a hefty premium to insure your lender in case you default on your payments. The amount is usually added to your mortgage principal, which means it’s out of sight and out of mind. But it still costs you.

With a down payment of less than 10 per cent (5 per cent is the minimum), the cost of mortgage insurance rose in June to 3.6 per cent of the purchase price from 3.15 per cent. Larger down payments short of 20 per cent were unaffected and range from 2.4 per cent down to 1.8 per cent. You’ll pay provincial sales tax on those amounts in Manitoba, Ontario and Quebec. More importantly, you’ll incur extra interest charges by adding these amounts to your mortgage balance.

Let’s use the average resale house price in Canada to illustrate how much mortgage insurance adds to your costs when buying a first home. The average price in August was $433,367 – a calculator from Canada Mortgage and Housing Corp., a supplier of mortgage insurance, shows that a 10-per-cent down payment would trigger a mortgage insurance premium of $9,361. With that amount added to the mortgage, monthly payments on a five-year fixed mortgage at 2.59 per cent would be $1,807 per month.

With a 20-per-cent down payment, monthly costs on this mortgage fall to $1,569. Total interest over the five-year term of the mortgage falls to $41,390 from $47,681, a difference of $6,291. But would it really be worth postponing your purchase by three years to put 20 per cent down? With the market rising at 5 per cent annually (less than recent increases in Vancouver, Toronto and Hamilton), the chart that goes with this column shows you’d actually end up paying more per month.

Mortgage rates also have to figure into your thinking on whether to buy now or wait and save more. If we assume 4 per cent average annual price increases over three years and a rise in mortgage rates of one percentage point, you’d have to pay substantially more than if you bought now and paid for mortgage insurance (see chart).

If you live in a city with a slow real estate market, it pays to wait and save more. If you waited three years to double your down payment to 20 per cent on the average-priced house and prices rose 2 per cent annually, you’d come out ahead by more than $140 per month.

A June study issued by the Canadian Association of Accredited Mortgage Professionals said the average house down payment for first-time buyers was $67,000. That represents a 21 per cent down payment on the average $318,000 spent by first-timers, and a 15.5-per-cent down payment on the overall average price of $433,367.

The CAAMP study found that 18 per cent of first-time buyers received gifts or loans from family. A thought for parents who want to help their kids get into the market: Try topping up their down payment to reach the 20 per cent threshold. Warning: Parents should avoid this type of financial help if they have to go into debt to provide it, or if it greases the way for their kids to buy a house they can’t properly afford to carry.

Down payments are one of the least strategized parts of home buying, and yet they can have a big impact on your total long-term cost of owning a house. The conventional wisdom about 20-per-cent down payments is right on the money, but not if you’re set on buying in a hot market. Either jump in now or resolve to wait and save indefinitely for sanity to return.

Source; ROB CARRICK The Globe and Mail Published Thursday, Sep. 24, 2015 7:06PM EDT

To have your mortgage questions answered visit www.RayMcMillan.com

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6 reasons to use a mortgage broker

6 reasons to use a mortgage broker

1. Choice: If you go directly to your bank, you will only be offered products from that financial institution. Mortgage brokers have relationships with several different lenders and are knowledgeable across each lender’s range of products.

2. Works for you: As small business owners, word-of-mouth makes or breaks mortgage brokers. Hence they are motivated to act in the clients’ best interests.

3. Skilled negotiators: Mortgage brokers’ skill and experience, combined with their relationships with lenders, help them negotiate rates that are often better than what borrowers could achieve on their own. That remains true even in this competitive environment.

4. Goal-orientated: Are you looking for the cheapest rate? Are you interested in paying off your loan sooner? Are you planning on buying another investment property? A mortgage broker will interview you to find out what you want out of your home loan and work to find the best product to suit your needs and home ownership goals.

5. Paperwork: Mortgage brokers help their clients complete and submit the mortgage application, as well as gather the documentation required by the lender.

6. Read the fine print: After you’ve received your loan approval, the mortgage broker can help you understand the document and conditions of the contract. As well, the broker can walk you through the next steps leading up to the closing of the mortgage transaction.



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