Mortgage Fraud in Canada: Have Electronic Mortgage Documents Resulted in More Fraud?

This past month it became legal to for you to sign the following legal agreements electronically: Agreements of Purchase and Sale, Deeds, Transfers of Land and mortgage documents. This is because of a recent amendment to the Electronic Commerce Act. This amendment will make the buying and selling of land that much easier, leaving some to wonder if electronic signing of documents will lead to more mortgage fraud in Canada.

One key to mitigating mortgage fraud in Canada after this change is to ensure that, at the beginning of the process, you obtain identification from the applicant and verify it. Once this has occurred you may establish a comfort level to sign the balance of the mortgage documents electronically.

In the case of mortgage brokering, the signing of electronic mortgage documents will mean that you don’t have to make clients come into the office at every stage in the mortgage financing process. You will be able to email clients electronic mortgage documents where they can electronically sign and deliver back to you.

This change in the law is going to take some brokers that much closer to having a completely digital/paperless process.

·        Paperless: Application stage – application is entered into Filogix, credit report is requested digitally. Many brokers at this point will also pull a report and request a property report that verifies home ownership information, sales history, registered mortgages and an AVM that confirms the value range for the subject property.

·        Paperless: Lender receives deal from the broker, and while assessing the deal for approval, requests an AVM to validate value. Once everything checks out, the approval will be sent back to the broker.

·        Document Signing - Will now be paperless: this was the one administration heavy part of the mortgage closing process that now will also be digitalized.

To be prepared to make the switch to negotiating more of your documents electronically you will need to look at different tools that enable electronic signing such as DocuSign. You will also need a plan to deal with how documents will be stored.

Creating client folders is always a good idea because it gives you an organized place to store applications, AVMs, approvals, signed mortgage documents and supporting documents by the client.

Overall, this change in the law has proven to be a welcome one for the real estate and mortgage industry. As long as real estate sale representatives and mortgage agents and brokers do their due diligence to validate the identities of their customers, electronic document signing brings positive change.

For more information please visit Purview For Mortgage Brokers today at www.purviewforbrokers.ca

HPI Monthly Report: Home Prices up 1% in August

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

Teranet-National Bank National Composite House Price Index™

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

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

Mortgage Broker News: Is an Automated Valuation Model Even Accurate?

We thought the topic of the accuracy of an automated valuation model (AVM) was worthy of coverage for this week’s blog as it is a discussion that comes up from time-to-time when agents and brokers are deciding which tools they are going to deploy in the process of underwriting their deals.

Often brokers and agents compare the use of AVMs against the use 

of appraisals which is actually like comparing apples and oranges. However, as much as the approach is different, the end result is similar –both try to determine an accurate market value of the property in question - they often complement one another and can 

be used to validate the other. In many cases, lenders and brokers alike use an AVM often as a precursor to deciding if ordering an appraisal even makes sense. 

AVM Accuracy

• Purview AVM data in Ontario is sourced from The Province of Ontario's Land Registry Information System (POLARIS) which contains the most current and accurate land information available.

• Our AVM produces a statistically derived estimate of value based on analysis of public record data,   property location, market conditions and real estate characteristics at a specific point in time.  

• Our AVM uses actual sales data in our calculations.  We do not used assessed, appraised or list prices which can be over or under-inflated compared to actual market driven sale prices.

• AVMs are objective. AVMs are quite accurate as the data doesn’t lie – data is data and sales are sales. Appraisals can actually vary in accuracy because they depend on a human’s opinion/feeling/view on what they see. One appraiser may view condition differently from another.

• AVM reports are generated in real time. Property information within the report is available within 10 days of submission to the Land Registry Office.

The role of valuations in the lending process

• Valuations play a significant role in the lending process by assisting financial institutions throughout the life of a mortgage and have been implemented across major lending institutions. 

• Based on the accuracy of AVMs, there is widespread usage amongst mortgage insurance providers to evaluate their ability to insure new deals.

Lenders have, for many years, relied on AVMs as a front line component of the underwriting process. Lenders save considerably by determining if a property value is in range before wasting underwriting resources and submitting deals to insurers who end up disagreeing with value. This is one reason a deal may be submitted to a lender and come back when there is a disagreement over value – even before the deal is submitted to the insurer or before an appraisal is ordered - because when you submit your deal many lenders will run an automated valuation model to validate the value stated in your application.

Depending on the AVM provider, the data used will come from different sources. We consider our product, Purview For Mortgage Brokers, which is a web based application using the same tools that many lenders who use Purview For Lenders deploy, to be premium. 

For more about Purview’s AVM and where our information comes from, please visit www.purviewforbrokers.ca today. 

Essential Training, Professional Development and the Mortgage Broker Course

So you completed the mortgage agent course and you have worked in the business, now what? What is the next step in the evolution of your career? Some might say to take it to the next level and get your full mortgage broker license. Some agents take the mortgage broker course with the goal to open their own brokerages while others take it to enhance their credibility by having the title ‘Mortgage Broker’.

So, thinking about becoming a mortgage broker? Your next step is to register in a mortgage broker course. We highly recommend CAAMP for their mortgage broker course which can finished relatively quickly.

Here is the process:

1.    First complete the first part of the mortgage broker course (Phase 1) online. You have 6 months to complete it but you can also complete it as quickly as you want to. If you put your nose to the grind it could be completed in mere weeks! You must complete Phase 1 in order to move on to Phase 2.

2.    The next phase in the CAAMP mortgage broker course is the in class portion. This is a 5 day class and you must have a perfect attendance record. At the end of the 5 days of classes you will complete an in class exam and Bob’s your uncle.

3.    Finally, once you have completed your accreditations you will need to visit the FSCO website to determine how you will go about applying for your mortgage broker license. This process will vary depending on whether you are registering your own business or if you work on behalf of a brokerage. If working for a brokerage, your broker may need to make the application on your behalf through Licensing Link.

Ready to take the plunge? Here are all the links you need:

·         CAAMP mortgage broker course outline: http://www.caamp.org/meloncms/media/Broker%20Program%20Brochure%20FINAL.pdf

·         Policies and FAQs provided by CAAMP: http://www.caamp.org/meloncms/media/Bkr%20Education%20Program%20-%20FAQ_2.pdf

·         Want to register for the CAAMP mortgage broker course? Here is the link: http://www.mortgagecampus.org/Licensing.aspx

Here are FSCO’s requirements for becoming a mortgage broker in Ontario:

·         Minimum Age – you must be 18 years of age or older

·         Location – you must be a resident of Canada and have a mailing address in Ontario that can receive registered mail (it cannot be a post office box)

·         Work history – You must be authorized by a mortgage brokerage to deal or trade mortgages on its behalf and must work for only one mortgage brokerage, have successfully completed an approved education program for mortgage agents and have been licensed as a mortgage agent for at least 24 months, during the 36 month period before applying for the mortgage broker licence

·         Education – You must have successfully completed the approved educational course and exam for mortgage brokers, up to three years before applying for a mortgage broker licence.  

Want to register to become a mortgage broker with FSCO? Here is the link: https://www.fsco.gov.on.ca/en/mortgage/Pages/mbgettinglicd.aspx

The total cost of taking the full mortgage broker program is only $345, which is not much considering the enhanced credibility and career potential that the title holds.

We hope that you have found this information helpful. Are you a Purview For Mortgage Brokers agent or broker? If not, find out more about our revolutionary mortgage underwriting and property valuation tool by visiting www.purviewforbrokers.ca