CMT – Bank Mortgages: Disclosure and Suitability

There are so many things the Average Joe doesn’t know about the mortgage business.disclosure-of-mortgages

One is that bank mortgage reps often get paid more for selling higher rates—as do many brokers.

Another is that banks sometimes direct borrowers to outside lenders that the bank has financial relationships with. This happens when the bank chooses not to service the applicant directly (due to qualification issues or an inability to meet the customer’s expectations).

Both of these issues entail potential conflicts and disclosure problems, but banking regulators don’t monitor these matters as closely as you’d think. That was the topic in this week’s Globe column: That story

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CMT – TD Takes Heat for its Collateral Mortgages

Collateral charge mortgages got more bad press on Friday after CBC’s Marketplace ranthis report.Collateral-Mortgage

The gist of it is thatcollateral mortgages“effectively trap you at the bank,” says the CBC (which is not entirely true…more on that below).

TD Canada Trust, which sells only collateral charge mortgages, was caught in CBC’s crosshairs. An undercover reporter went into a TD branch with a hiddencamera, asking the mortgage rep what made TD mortgages different than those at other banks.

After being questioned in four different ways, the TD rep finally disclosed that TD’s mortgage was a collateral charge, saying:

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The Homebuyers’ Road Map

The Homebuyers’ Road Map

The Homebuyers’ Road Map is a public information toolkit to help homebuyers make informed decisions and planning when choosing a home. This project is a collaboration between The Canadian Real Estate Association and the Financial Consumer Agency of Canada.


Click this image for more info:

CMT – Variables Still Play Second Fiddle

Will we ever stop writing about which rate is better: fixed or variable?Fixed-Variable-Mortgages

It’s doubtful.

And the answer will probably always be: “It depends.”

Yesterday, Rob Carrick from the Globe & Mail ran this story on why variable-rate mortgages should not be written off. Its main arguments are that rate risk has declined and historical studies support variable rates.

Well, in our books, Carrick is one of the best tell-it-like-it-is writers in personal finance. But this particular story needs at least a teaspoon of perspective.

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The O’Leary Mortgage Story – Excess Drama (CMT)

Pressure from a vocal group of mortgage brokers has contributed to the cancellation of Kevin O’Leary’s keynote addressMortgages at this weekend’s annual CAAMP Forum.

O’Leary took the news in stride. “Who knew the mortgage industry could be this exciting!” he told us today.

But this news was a major disappointment to those who paid CAAMP to hear Kevin speak. And more than that, it showed the hazard of misinformation and reflected an unproductive attitude among certain industry participants.

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CMT – Kevin O’Leary on O’Leary Mortgages

Canada’s most candid business personality has a strong view about what’s wrong with mortgages. It’s so strong that he decided to startkevin_oleary his own mortgage company.

On Friday, I spoke withCBC commentator, multi-millionaire, Dragon andShark, Kevin O’Leary. I asked him what makes his new “O’Leary Mortgages” so unique. He outlined a two-pronged strategy: to add transparency to the mortgage process and to help Canadians pay down their biggest debt faster.

Kevin has been scoping out the mortgage business for almost two years. He was kind enough to share his mortgage philosophy and business plan with CMT in his first interview about O’Leary Mortgages.

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5 Smart moves for first-time homebuyers

As a first-time real estate buyer, you probably have no idea how the overall purchasing process works or how to make sure you’re making a smart decision to purchase. And you’ll probably be very surprised to learn how much work it really is just to buy a home. To get you started in the right direction, and this is just a start, here are a few tips that you should consider.

Get lender-qualified and find a good real estate agent

To start off, you should get qualified by a lender to see what price range you can realistically afford and interview some real estate agents to find the right person to represent you in your transaction.

Once you’re qualified and have your price range estimate in hand, you’ll be able to spend your time shopping in neighborhoods that you can afford. But remember: Just because the bank says you can qualify for a certain amount, that doesn’t mean you should spend that amount. Make sure you can actually afford the monthly payment, along with all your other bills.

For real estate sales professionals, you should get referrals for a full-time agent or broker who sells at least five or more properties per year and is well-educated on the process and location where you plan to live. You should call references, check that the agent’s state sales license is up to date and interview them to make sure you’ll be comfortable working with them.

Read more:

REM – Royal LePage Advance Realty honoured by Campbell River Chamber of Commerce

Recently Royal LePage Advance Realty in Campbell River, B.C. was honoured as the intermediate-sized Business of the Year by the Campbell River Chamber of Commerce.

“Half the city seemed to be in attendance and it was very well publicized due to this being the Chamber’s 80th anniversary,” says managing broker Bryan Watkins. “During our acceptance speech it was noted that it is Advance’s 30th, the Chamber’s 80th and Royal LePage’s 100th anniversary and so it would appear to be the perfect confluence of positive events.”

Watkins says, “In a time when it seems our reputation and skills are seemingly under attack from every direction, it is nice to find a city where the community not only recognizes Realtors’ value and supports Realtors but also recognizes all the extras we do for and in the community…We are all quite proud.”

CMT – Factory Lending

Some of the new mortgage policies decreed by Ottawa are bad for credit unions and their customers.Factory-Lending

That’s the gist ofthis report recently issued by Canada’s credit union system.

Among other things, the Credit Union Central of Canada (CUCC) says the federal government’s rules promote “commoditization” of mortgages and fail to allow for low-risk lending that falls outside of regulators’ defined guidelines. The paper—one of the more publicly critical essays on federal mortgage regulations—suggests Ottawa’s rules essentially result in “factory lending.”

CUCC floats some compelling ideas on a wide swath of mortgage topics. These are the highlights (our comments in italics):

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CMT – Ottawa May Get What it Wants…and More

Back in the spring, the feds were wishing that housing wasn’t so hot. They wished that mortgage growth wasn’t so robust.Print And now, CIBC chief economist Avery Shenfeld is telling us: “Ottawa has to be careful what it wishes for.”

Shenfeld issued that warning in this report released last week. He was, of course, referencing federal mortgage policies aimed at slowing residential real estate.

Some believe the extent of those policy changes (new high-ratio mortgage rules, new OSFI restrictions, new securitization and insurance limitsBASEL IIIIFRS and so on) reflect a federal government playing with fire in the housing market. Others feel the measures are necessary to put out the fire, and prevent future ones.

Either way, stricter mortgage lending will take a bite out of economic growth. The country has just seen GDP fallfor the first time since February (not a trend yet), in addition to posting a 15% drop in YoY home sales. There is certainly no reason to panic, but at the same time, no one knows where the housing slowdown, or its economic ramifications, will end.

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