Real Estate Lawyer an Expensive Due Diligence Department

Real estate lawyers: what is their role in your transaction? Well, one represents the buyer, one represents the seller and when there is a mortgage, the buyer’s lawyer will also likely represent the bank.

Most deals that fail to close go down at different stages:

• At the point of appraisal
• At the point where all documents are submitted to satisfy mortgage conditions
• On closing

The question is – when a broker originates the deal, whose responsibility is it to ensure that all conditions have been met and information verified?

While the real estate lawyer does have to perform due diligence to protect their clients, much of this due diligence should have been performed by the broker.

Let’s look at some of the real estate lawyer responsibilities:

• To ensure title is clear by performing necessary searches  
• To ensure mortgage conditions have been met  
• Pay off existing mortgages
• Transfer mortgage documents, etc…

At the point where the real estate sales professional performs the above: should new or different information come up? Should there be a reason for surprises? We think not. Not only should you be gathering information from your client but you should be verifying the information presented too – and it is not difficult.

Clients make mistakes all the time. Some are deceptive, some confused, some may have just forgotten to mention something. It’s not in your best interest to take a client’s word at face value and you should be performing some level of due diligence. While you can’t find online what someone’s current tax bill is or the status of their water bill, you do have access to a lot of the land title data that lawyers have access to.

As you know, Teranet automated the land registry system for the Province of Ontario and offer solutions such as Teraview that lawyers use when performing property title searches and land transfers. While you cannot use Teraview as a broker, there is a solution offered by Teranet to mortgage agents and brokers that offers a lot of the same information as Teraview.

No – you cannot perform a full title search, register and discharge mortgages or transfer titles – but you can still investigate who is on title to a house, sales history, sales comps, registered mortgages and other encumbrances and more…

As a broker it makes no sense for you to wait for a real estate lawyer to discover on closing that someone else is on title to a property that wasn’t disclosed to you; or worse that there are undisclosed mortgages against the property. Nor should you wait for an appraiser or CMHC to tell you that the value on your application simply isn’t there.

By simply performing some preliminary searches you can learn all of this information and more.

Don’t leave anything to chance. Check out http://brokers.purview.ca/index.php to find out all you need to know about Purview For Mortgage Brokers.

HPI Monthly Report: Home Prices Down 0.3% in November

In November, the Teranet–National Bank National Composite House Price Index™ was down 0.3% from the previous month. It was the first monthly decline in a year. Moreover, it was very broad-based: prices were down in eight of the 11 metropolitan markets surveyed, flat in two and up in only one. Prices fell 1.6% in Halifax, 1.5% in Quebec City, 1.0% in Montreal, 0.7% in Winnipeg, 0.6 % in Ottawa-Gatineau, 0.3% in Toronto and Victoria and 0.2% in Calgary. Prices were flat from the month before in Vancouver and Hamilton and rose 1.1% in Edmonton. It was the first time in two years that prices were up on the month in only one of the markets surveyed.

Since in November 2013 the composite index declined only 0.1%, this November’s 0.3% decline meant that 12‑month home price inflation decelerated from 5.4% in October to 5.2% in November. That countrywide average was largely exceeded in Calgary (9.2%), Toronto (7.3%), Hamilton (7.0%), Edmonton (6.2%) and Vancouver (5.9%). Unsurprisingly, the resale market in these five urban areas is balanced or even tight. The 12-month increase was more moderate in Winnipeg (1.5%), Victoria (1.4%) and Montreal (0.6%). Prices were down from a year earlier in Ottawa-Gatineau (−0.2%), in Quebec City (-0.3%) and Halifax (−1.8%). The composite index has been up from a year earlier for 62 months now, since October 2009. The only one of the 11 markets to match that run is Toronto, though Hamilton comes close with 60 months.

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

Happy Holidays from the Purview Team at Teranet!

From the entire team at Teranet we wish you and your families all the health and happiness through this holiday season and prosperity in 2015.

Trusted Advisor Series P2 – Protecting Your Client, Lender, Insurer and You!

In part two of our Trusted Advisor series we are delving into your role as a protector. As a broker you are in a unique position because you are negotiating a transaction both for your client, the borrower, and your partner, the lender.

The advice that you give and measures you take when underwriting your applications can make all the difference when it comes to protecting your client, your lender, the insured and in case we forgot to mention – you too!

Picture a parrot: due diligence, due diligence, due diligence!

The steps you take at the very begging of the application process help to prevent fraud, reduce the number of deals that fail to close and result in stronger relationships with your clients and lenders.

Why does your client come to you? Just to get the best rate? Or do they come to you because you know what the best products are and because you will negotiate with the bank – or because they trust you to help them with all of their financial planning needs as it relates to their home?

Remember the rule: a happy customer tells a couple of people of their experience while an unhappy one tells 10. This is a business that thrives on repeat business and referrals – you cannot afford to have unhappy customers.

Every deal that fails to close can potentially result in:

·       A frustrated referral source – if the deal came from a real estate sales professional or other referral source.

·       An upset client – there is nothing worse than finding out your plans fell through after trusting what you perceive to be an expert.

·       A disgruntled lender – lenders will only underwrite so many deals that fail to close before they reconsider accepting your applications – not to mention that your deals that don’t close impact the lender’s closing rates with their insurers.

Uncovering potential problems on closing doesn’t even necessarily mean the deal will be lost. It actually prepares you and your partners to find solutions for challenges before they begin to present problems – like registered mortgages on title and issues with equity.

Simple things like validating who is on title to the home, what the home is worth and current encumbrances are minimum due diligence measures that you can perform to reduce a large proportion of deals that may face problems on closing.

This will not only better protect all parties to the transaction but will also make you more profitable and maintain your reputation as your client’s trusted advisor!

For more tips about how to protect yourself and your partners when it comes to due diligence, please visit http://brokers.purview.ca/index.php.

Don’t Watch Your Deal Turn into a Pumpkin at Midnight

Mortgages fail to close for many different reasons. Most deals that fail to close occur because of innocent mis-disclosure on the part of the clients – and this can vary depending on whether you are working on a purchase or refinance mortgage – but this can be prevented.

Just as Cinderella’s carriage turned into a pumpkin at midnight – so can your deal!

The question is, what is your time worth? On occasion we meet brokers who don’t feel that it is their responsibility to perform due diligence – instead this should be left to the lawyer. However, we think that is a very costly proposition. When things pop up on closing that stop a deal, weeks, if not months, of your time and money are wasted - not to mention the time and expense of the real estate lawyer and insurer.

If you measure the small time investment to perform additional due diligence at the application stage, identifying problem deals early on – that time you would have spent on those problem deals can be dedicated to landing good deals. Seems like a fairly obvious calculation, but it is one that many brokers have still not wrapped their heads around.

Just by validating property ownership, the approximate value and encumbrances, you can:

• Identify properties where there may not be enough equity to pay closing costs – the real estate sales professional may not know
• You may identify all current mortgages on title
• You can identify other people on title to the home
• You can identify homes that are being sold in close proximity to their purchases which can pose a problem with some insurers
• You can identify undisclosed non-arm’s length transactions which can prevent mortgage fraud
• You can estimate equity to ensure that the information stated in the application is accurate and more…

The challenges listed above represent many of the most common reasons that deals fail to close. If you want to prevent your deals from turning into pumpkins – that little bit of extra due diligence can not only help you avoid deals but also save deals before you get to the 11th hour. Learning about potential issues early on empowers you to find solutions – and after all, your client does count on you as their trusted advisor.

For more about the benefits of conducting due diligence at the very beginning, stopping bad deals before they even get off the ground, please contact Purview For Mortgage Brokers today by calling 1.855.787.8439.

Identify Sales Opportunities – A Sales Tool That You Didn’t Know You Had!

As a mortgage broker you have a number of tools in your arsenal. Filogix, Equifax, Purview and more… In an age of technology where everything is literally a click away, you have to be dynamic if you want to compete.

Filogix

Filogix has a wide array of sales tools but one of the most important which many brokers don’t take advantage of is the ability to set reminders when second mortgages are opening up. Many brokers will track regular renewals of firsts but forget about those lucrative seconds!! A second mortgage that opens up presents an amazing opportunity to up-sell your client from 2 payments to 1 by having them combine their mortgages.

Social Media

Social media is a powerful marketing tool. Many brokers make the mistake of just using it to announcement promotions and share rates. Social media is a platform meant to engage. When logging into your social media pay attention to what is happening in your networks. Pay attention to contacts who may be discussing plans to buy or sell a home or maybe a large scale renovation or vacation --- these are all opportunities for you to re-engage your contact and see if there is something you can do to help them achieve their goal.

Equifax

Anytime you do a mortgage you have to request an Equifax Credit Report. As you know, the credit report reveals any outstanding debt and credit products. Don’t throw out those old credit reports – your client of today may be your refinance of tomorrow! You can reference the credit report from the last deal you did for your client and identify debts that could be consolidated.

Purview

This is a tool that many brokers use for due diligence and it’s a sales tool too! Using this tool you can run a report and determine who the owner of the home is, the sales history on the home, mortgages registered against title and more. This gives you the opportunity to estimate equity and look for refinance opportunities.

Using the tools that you likely already have access to, you not only identify those new sales opportunities but also show your clients that you are invested in them and on top of what is happening with their finances – always caring, always being one step ahead of the game!

Take advantage of every resource available – it only benefits you to do so. For more about any of these tools, or to find out how you can take advantage of everything Purview For Mortgage Brokers has to offer, please call us today at 1.855.787.8439.

Trusted Advisor Series P1 – The Flawless Interview

Wouldn’t you agree that an important part of being a trusted advisor is ensuring a smooth mortgage closing by conducting an airtight interview at the outset of the mortgage application?

When you are first interviewing a client for a mortgage, the more that you can learn from them about their short and long term financial goals, the better positioned you will be to establish your role as their trusted advisor.

Of course, when a client submits a mortgage application you ask the standard questions to see if they qualify for a mortgage as a borrower – but what about questions that relate to the property being financed? A home, for most people, is the single largest investment that they will ever make and having a mortgage fall apart is not only expensive to all involved in the transaction, it can also be a crushing blow to someone who was about to purchase the home of their dreams or use home equity to finance something important.

In the example of a refinance mortgage, some questions to consider:

• When did you buy your home and what did you pay for it? This can help you identify discrepancies in value.
• When did you take out your mortgage and what was the amount financed? This can help you to identify discrepancies in mortgage balances.

Many times your customer omits information because they simply don’t know or don’t remember. You can impress your client by leveraging tools that provide you with information on demand. You may decide to avoid some personal questions and simply run some searches at the point of application to identify correct home ownership information, accurate mortgage balances and property value. This can be a win-win-win for you and your client:

• If there is a problem with a deal you and your client avoid the time and expense of going through the whole mortgage process only to have the deal not close.
• You may determine that you have a good deal as presented and be positioned to present your client with final numbers.
• You may identify that there is more equity than you initially thought and be positioned to offer the client more money or other financial products.

What about their mortgage terms: how fast do they want to be out of debt? If the client is getting a second mortgage is there a vision to see it combined with a first mortgage in the future – and what does the client need to do as it relates to their credit and finances to get there?

Any way you look at it, the tighter your interview the better the advisor that you can be because you can position your client to arrange the right type of financing for them, at the right terms, and most importantly, set the right expectations at the outset so that the client gets the mortgage they are promised.

Leveraging the right questions with specific tools makes you more competitive, raising your competitive advantage.

For more about how Purview For Mortgage Brokers can help you conduct a flawless interview, please call us today at 1.855.787.8439.

CAAMP 2014 Mortgage Forum – Will You Be There? We Will!

Ok folks, we are only a short time away from this year’s CAAMP Mortgage Forum, which is being held in Montreal. We will be there!! Will you?

We are looking forward to meeting customers from the financial industry and also other mortgage professionals. We are also super excited about some of this year’s speakers which include heavyweights like:

• Arlene Dickenson, CEO of Venture Communications and Co-Judge on Dragons Den
• Malcolm Gladwell – Best-selling author

Be sure to come by and see us at our booth for demos and prizes!!

To find out more about the CAAMP Mortgage Forum, or for more information about Purview For Mortgage Brokers, please contact us today at 1.855.787.8439.

Teranet announces changes to Quebec data Acquisition

Over the past several months we have been working hard to improve your overall PURVIEW experience and would like to take this opportunity to share some recent developments regarding our Quebec data acquisition strategy.

Historically, Teranet has relied on 3^rd party relationships to provide the majority of Quebec data used to calculate regional property valuations (AVM’s) as well as power the Teranet-National Bank House Price Index.  To ensure we continue to provide quality data to our valued customers, we are currently implementing a direct sourcing option that will improve the timeliness of our Quebec data in particular. 

As we transition to this direct sourcing option and repatriate our data in Quebec, the short term supply of Quebec AVM’s may be impacted.  Over time, the supply will continuously improve.  The Teranet-National Bank House Price Index will however not be impacted by this change and will continue to provide leading insight into the dynamics of a highly varied Canadian market. 

As we further integrate this approach, we will continue to communicate any updates with you as they become available. 

If you have any questions regarding these recent developments, please speak with your Account Executive or contact us at 1.877.787.8439 or purview@teranet.ca.

Thank you for the continued confidence you have placed in Teranet as your risk management solution provider.

What’s Happening? Canadian Housing Market

Since 2008, the federal government has made several changes to the rules for mortgages insured through the Canada Mortgage and Housing Corporation (CMHC) to cool the housing market. This is good because it protects our economy but can prove very challenging for independent mortgage brokers and agents as it can limit and even eliminate top selling mortgage products.

We saw 30 year amortizations disappear and loan to values on high ratio refinances reduce significantly.

Well, this last month the news sites were abuzz about what could be in store in the future for the Canadian housing market.

In October the National Post reported that the IMF reportedly warned that there may be a need for even tougher housing rules to further slow what was described as an “overvalued housing market”: http://business.financialpost.com/2014/10/07/canada-may-need-tougher-rules-to-slow-overvalued-housing-market-imf-warns.

In October, the BNN reported on how a housing slump would impact retirees; within this article were some interesting facts. Consumer debt in Canada has risen for 87% of disposable income in 1990 to 164% today! If the housing market did wain, some of your clients may find themselves in a troublesome financial predicament: http://www.bnn.ca/News/2014/10/8/How-a-housing-market-decline-could-put-Canadian-retirement-savings-at-risk.aspx.

In October the Huffington Post reported on a Royal LePage House Price Survey that found that while the average price of real estate rose, the market is showing signs of slowing down. In the article the Huffington Post quotes Phil Soper, president and CEO of Royal LePage:

“In the seven years since the Canadian housing market began its recovery from the worldwide recession, home price growth has been robust, often greater than the long-term average. We are now experiencing a natural slowing in the rate of year-over-year price appreciation, with real estate markets moderating in most parts of the country, a transition to what our agents refer to as a ‘Goldilocks market,’ one that is neither too hot, nor too cold.” 

With constant speculation over what may or may not happen in the market it can be hard to know how to adjust your plans accordingly.

You can’t plan for what you don’t know, like when the BOC will raise rates or CMHC will change their lending guidelines, but you can plan for what you do know.

Canadians are in debt – this is a reality. To help prepare your clients to be on the firmest financial footing, you can help them understand the ways that they can leverage their home equity to consolidate debt, reduce monthly payments and interest.

By leveraging tools like Purview, you can look at past clients and identify where there have been increases in property value and reductions in mortgage value to identify upsell opportunities. You can also help new clients identify accurately exactly how much equity they have which may change their re-financing plan.

No one can really predict what will happen in the Canadian Housing Market but what you can do is be prepared to adapt and work with your clients so that they are not negatively impacted by future changes.

To stay updated on recent housing trends or mortgage changes, or to find out more about everything Purview has to offer, please contact us today at 1.855.787.8439.