Keeping you up to date with the rate shifts at the Bank of Canada for this week:

Essentially, there are ‘four corners’ to every mortgage application that we process:

- Downpayment

- Income/Employment

- Credit

- The Subject Property

Today, we’re going to investigate the ins and outs  of that lenders look for in a mortgage application with relation to Downpayment.

Simply enough, the funds that you use as a downpayment serve as your equity into the transaction; it is your personal investment into a property when purchasing or refinancing.  Lenders perceive this to be your ‘skin in the game’ and your commitment to follow through with the purchase and maintenance of the property: in a picture-perfect world, because you’ve invested “X” money, you are less likely to default on the payments and let the property go into foreclosure.   Because of this risk-assessment analysis, The 0%-down mortgages of 2008 and earlier have disappeared.  There are a few cash-back options that allow for downpayments lower than 5%, but it is important to note that these programs don’t make a heck of a lot of financial sense for most people considering that they’re based off of the higher posted rates and they have sizeable CMHC fees which make them less attratcive.

If you’re a new home buyer that does have at least 5% of the your home’s purchase price, there are several ways that you can source your downpayment for your new home purchase:

1) Your own resources: savings that you have accumulated through your own means, such as Savings, Mutual Funds, and Stocks.  In the case of  RRSP investments, you can withdraw your RRSP savings tax-free through the Government of Canada’s Home-Buyer’s Plan (HBP). If you are making periodical deposits to your RRSP investment accounts, please note that the money has to be “in” the plan for at least 90 days to be eligible for the HBP withdrawal program.

2) Family resources: a gift from an arm’s length family member (parent, sibling, spouse).  Lenders will want to see a gift letter to prove the gift’s origin and will follow up two-fold: by calling the gifting relative to confirm the letter and by asking to see the funds deposited to the recipient’s bank account.

3) Borrowed funds: loans, lines of credit, family gifts with repayment terms required.  The monthly payments for the borrowed money will be used in your debt-serviceability ratios: effectively, if you have many payments or large payments, these could hold you back from purchasing the home that you want.

4) Sweat equity: very uncommon for a lender to use this as a downpayment option, but in some rare cases, it will be considered.

For the most part, the vast majority of mortgage seekers that we work across Canada have a clear understanding of what is required to meet the downpayment requirements to make the gears turn and successfully complete their mortgage application and obtain a complete approval from lenders.  Having said this, from time to time, we see some headaches pop up from borrowers’ inability to clearly prove where their downpayment money is coming from.  Some of the most common ‘speedbumps’ that we run into are:

- the downpayment is coming from a friend or a non-arm’s length source.  This is not acceptable.

- the downpayment is coming from cash with no 90-day bank account history of the accumulation of the funds over the past 90 days.  This looks like money laundering and is unacceptable.

- in the case of an estate settlement, business dissolution or if the funds are coming from the proceeds of a divorce, lenders will always ask for written proof that there isn’t any form of outside influence, reciprocity, interest or potential for a clawback of the downpayment funds being used: no one – especially the lender – wants to be put offside (legally) by a third party claiming rights to the funds or the property.

- The “good deal” scenario: Just because a home buyer  finds a good deal – maybe a distress sale or a foreclosed proeprty – ‘A’ or ‘best rates and terms’ lenders make it their policy to lend on the purchase price, not the market value.  If the market value  happens to be greater than the purchase price, the ‘excess’ is basically seen by lenders as ‘congratulations, you got a good deal’ and not as ‘let’s use that as equity’ because it’s a speculative gain.  In this case, borrowers will have to still come up with at least 5% on the purchase price of the property and run the numbers that way.  Sweat equity is seen from a similar perspective in many ways, as are homebuilder price reductions or price-adjustment incentives: they’re truly not ‘added value’ or ‘free money’ until you sell the property.

Do you have any questions or concerns related to your own circumstances when it comes to downpayment?  Leave a comment here on this post, send us a message via our Contact Us page or send me an email at james(a)trimormoney.com and I”ll be happy to help you walk through the ins and outs of your unique situation.

Helping increase your financial fluency to make your next purchase or refinance transaction run smoothly,

James C. Tworek and the Trimor team!

www.TrimorMoney.com and www.CalgaryMortgageBlog.ca

How does this apply to the Real Estate Market, or even better, the Economy as a whole?

Over the past few weeks, we’ve been fed several conflicting messages, from the “chicken little-esque” sky-is-falling messages of “Alberta MLS sales forecast marked down for 2010” and “Calgary’s building permit values plunge in May” all the way to “Economy to grow briskly: RBC”  and this morning’s ”House prices likely to rise 5-7% – Conference Board“.  So… what’s it going to be?

For one thing, the headlines are the catchy/sexy/scary that attract the eye and spurs some of our most powerful emotions: increasing pleasure and avoiding pain. Realistically, are we an awesome, bullet-proof economy on Monday, but by Tuesday we’re falling apart and then somehow manage duct-tape everything back together to ‘sustainable norms’ by Friday again?  Some weeks, perhaps, but certainly not every week!  Something that we should also keep in mind: many reports released by more local or regional publications are re-printed from their ‘cousin news wires’ that are more Nationally-focused and therefore oftentimes preach the word from a pulpit that doesn’t necessarily apply directly to our local markets.

Constant education from reliable sources helps to keep a more level-headed perspective on the markets and helps to prevent from a short-term emotional meltdown from the day-to-day news media flare-ups.  With this concept in mind, I’d recommend reviewing the long-term forecasts, such as those offered by CMHC Annual Forecasts and Analysis.  Case in point: Strangely enough, this year’s CMHC Q1 2010 Housing Forecast actually outlined the overall expected pace of things to be ‘hotter’ in the first six months of the year while it would slow in the later months as rates rose and the economy was likely to be reined in to keep pace with the rest of the global economy’s rebuilding as we all come out of the post-2008/2009 slump.  What’s neater than that?  You can read the National version or even break it down into region-specific publications as well. They also release quarterly updates that track their projections and amend their general perspectives as the year goes by.

SO… with this in mind, which way are we going?  I guess that this depends on your personal ‘gut’ more than anything, but using the forecasts as a compass, 2010 looks pretty stable for a year-over-year gain in new home builds, new multi-family starts and a stable resale market.  Taken directly from CMHC’s Spring 2010 Housing Outlook for the Calgary CMA: “Despite the moderation in demand, resale activity is anticipated to inch past 2009 levels and move closer toward the 2000-2009 average of 26,305 transactions.”

In all, despite Mother Nature’s best efforts at keeping us indoors during ‘summertime’ (over the last few weeks) – and then her smartening up this week to hit us all with sunburn and scalding car seats – homebuyers are buying, refinancing for renovations and debt consolidation are funding and rates are holding steady.  As always, through the busy times and the slow, to our mutual benefit I’m here to help keep you in the loop as to the latest financial news and updates in the lending market!

Helping you navigate the sometimes-confusing media messages about the Canadian Real Estate Market,

James C. Tworek and the Trimor team!

www.TrimorMoney.com and www.CalgaryMortgageBlog.ca

Step 5: Finding your way home – how to actually FIND the home of your dreams!

So. Now you know how much you can afford, what type of property you think best serves your needs and roughly where you want to live.

Good!

But wait… HOW do you actually go about FINDING it?

Although your search may automatically go to the most traditional methods of searching for a new home, there are many channels that you can leverage in terms of finding the best place that truly meets your needs. Some suggestions that we came up with:

Working with a Realtor:
Many first-time homebuyers enlist the help of these key Real Estate professionals to facilitate the search, negotiate a solid price and value for the home, help troubleshoot and weigh the many variables between varying properties and also help protect and advise you against many frustrations, dangers and possible legal issues that could occur during the carrying out of your purchase transaction. It is important that if you’re buying, for all the work that they do for you, a Realtor’s commission is paid for by the vendor of the property. Based on the property criteria that you are looking for, your Realtor can compliment your efforts by setting you up on an email service that will send you notice of current and new listings in the neighborhood, price range and property style that you’re looking for. This can speed up and simplify the home-hunting process for you.

Walking up to a homebuilder’s new development or showroom:
Wearing out your own shoeleather! Most people will first view properties and plan the logistics of checking out certain areas online or in print media to learn about specific properties, but if properly planned, you could check out quite a few different projects or developments in a day or weekend.

Online:
This has very quickly become the staple of home-hunters in recent years. Not only realty brokerages but individual Realtors also set up their own personal websites to help advertise their listed properties. It is also increasingly common for properties to be sold via For Sale By Owner (FSBO, often pronounced Fizz-Bo) websites as well (www.welist.com and www.comfree.com to name a few). Add to this developer sites, condo tower advertising, personal websites, and online classified ad sites like www.kijiji.ca and there is a HUGE opportunity to save time, vehicle fuel and your shoe leather. From the comfort of your computer desk, you can compare different homes and learn about property style, availability of product, research neighborhoods, read consumer reviews about properties and developers’ track records, coming and past market trends, general pricing for similar properties and the like. This type of research will definitely help you have a more educated conversation and process with your chosen team of industry professionals, the home vendors and overall increase your comfort level as you grow your acumen on the topic.

Friends and family, word-of-mouth:
A very low-tech but effective way to compliment other processes is to simply ask friends, family and work colleagues about their opinions. Do you have a friend that lives in a cool home? Who was their builder? Maybe you have some colleagues from work that own a rental property that they need to sell? Family members moving? There are tons of low-cost, high-reward ideas that you can leverage and opinions that can prove quite valuable in the overall home-hunting process.

Now you know of some ways to research properties! Although there is a TONNE of research to be completed by your means as well as with industry professionals, nothing beats doing a walkthrough of some properties to really get a feel for the surrounding neighbourhood, size of the property, its features and perhaps even some of the things that will need to be repaired or avoided altogether.

Tomorrow, we’ll walk through the process choosing your “team” of industry professionals to help you through the process as well as some general steps to placing an offer on a home. On the horizon, day 5 will walk through the last steps of buying your home: completing property inspections, property appraisals and signing with your lawyer.

As always, please feel free to contact us with any further questions and concerns that we can help you with. We have a great team of home financing experts as well as an extended network of professionals to help simplify the home-hunting and purchasing process.

Thank you,

James C. Tworek and the Trimor team!
james@trimormoney.com
www.trimormoney.com

and

www.CalgaryMortgageBlog.ca

Over the weekend I caught up with some good friends that are currently renting and thinking about taking the plunge to purchase a new home. As first-time homebuyers, they had the foresight to request a mortgage preapproval. This quick process provided them with the peace of mind that they were seeking: they now know what price range of home they hunt for based on their current income, the downpayment funds that they had saved up and their monthly budgeting.

Great! “Now what? We don’t know where to go next!”

Wow. I’ve been working in the financial services sector for 11 years and have purchased properties in the past – it seems second-nature from my perspective. In thinking about it, it dawned on me: From the outside, purchasing a home seems so simple… at first blush it’s as simple as do a few walkthroughs of some properties, negotiate an offer on the home that you can’t live without, go to your lawyer and sign off, get your keys and move in, right? Well, sort of. This really IS the process – with a whole LOT of smaller steps and things to think about in between! When boiled down to the nitty-gritty, there are at least ten major steps and a heck of a lot of planning that has to take place between the house-hunting phase and moving in.

In today’s post, I’ll start to help walk first-timers and pros alike through first two of the 10 main steps towards purchasing a new home. Although my friends had already completed today’s steps before and part of the preapproval process, we’ll still review them here:

Step one: Are you at the stage of your life where buying a home for the first time makes sense?

Let’s analyze where you sit in your life cycle – are you stationary in the same place for the foreseeable future? Will your career or lifestyle move you about? Have you recently changed jobs or been laid off from your current employer? Are you single but soon to be married? How far away is retirement? Can your monthly budget of income vs. expenses afford the monthly and annual costs of owning a home? When you compare the monthly costs of owning a home versus renting, which “makes more sense” to you at this point in time? There are plenty of questions that need to be digested before taking the leap into home ownership – the answers are different for everyone and change over time!

Step Two: Are you financially ready to purchase a home?

When we compare current income rates (and savings rates) against current property values in Canada, it is quite common for homebuyers to require financing to complete the first-time homebuyer transaction. This is most commonly in the form of a mortgage from a financial institution.

Three of the main cornerstones of a mortgage application involve analyzing your unique personal financial “big picture” are your credit score, your employment and income, and finally, your down payment funds. These main factors help lenders assess your stability and personal ‘risk quotient’ in the sense that you are vouching your overall stability and likelihood of repaying the mortgage loan to the lender in order to obtain the loan.

Credit: Have you ever seen your credit bureau?

If so, where does your beacon score sit? In general, this ‘historical track record’ of credit management will help lenders on these reports to gauge your personal track record of repaying your loans and credit accounts over time. Speaking of beacon scores, the general rule of thumb is: the higher, the better. Click HERE to learn more about your beacon score and HERE to get some ideas about how to accelerate paying off your credit accounts faster!

If you don’t have a long credit history, or if you’ve missed a few payments here and there (or more rather than less), you may require a family member to cosign with you. Cosigning is a process where your file is reinforced and vouched for by the stronger financial situation that your cosigner has. In many cases, lenders allow your cosigner to be ‘released’ from the file after a full year of consecutive payments and as your credit rating strengthens.

Downpayment: Where is yours coming from?

For the most part, the 0%-down mortgages of 2008 and earlier have disappeared; the programs that currently exist don’t really make a heck of a lot of financial sense to carry forward with (higher rates and fees make it a redundant option). Having said this, in today’s marketplace, there are several ways that you can source your downpayment for your mortgage:
- Your own resources: Savings, Mutual Funds, Stocks
- RRSP investments: you can withdraw your RRSP savings tax-free through the Government’s Home-Buyer’s Plan (HBP). To learn more about this, please click here. If you are making periodical deposits to your RRSP investment accounts, please note that the money has to be “in” the plan for at least 90 days to be eligible for the HBP withdrawal program.
- Loans: If you have a beacon score of at least 680 (that’s quite strong), you can actually borrow the funds from bank loans, credit cards, lines of credit or family loans. Please note that the payment relative to these borrowed funds would be included in the debt-servicing calculations as your “mortgage math” is computed.
- Family Gifts: Your direct family members (Husband/Wife, Parents, Children, Siblings, next-of-kin) can give you money for your down payments in the form of a non-repayable gift. Lenders will request a signed gift letter and proof of the funds having arrived in your account to prove this.

Employment and Income: Is your employment stable?

Lenders and mortgage insurers (CMHC, Genworth Financial) like to see that you have at least three months’ history of employment with your current employer; it’s no small wonder that this figure coincides with most companies’ probation policies with relation to new hires. This helps to provide confidence that you are full-time employed and that you have stable income flows.
Have you recently changed jobs or shifted to being self-employed from a previous work history of working as an employee? This isn’t necessarily a deal-killer! A main point of the mortgage underwriting process is consistency in your income and occupation. If you’ve been working for a solid amount of time (3-4 years) and you have now shifted to a similar role in the same or a related industry, this reinforces consistency and helps to instill an image of ‘growth’ as well as ‘specializing’. Although these are rough guidelines, everyone’s situation is unique: If you would like to review your own situation with one of our Mortgage Specialists, please contact us with any questions!

Over the next few days, I will complete the 10-steps to homebuying series. Tomorrow: How much does home ownership really cost? … and more!

James C. Tworek and the Trimor team!
www.trimormoney.com

Trimor Home Finance – providing Canadians with solutions to meet their mortgage needs

How do you pay yours?

Depending on the loan-to-value of your mortgage and your lender’s requirements, you may be paying your annual property taxes in one of three main ways:

Option 1: paying along with your monthly mortgage payments – IE: your lender pays them for you

With this form of payment, your lender has been collecting your municipal taxes and is holding your monthly installments in a ‘savings account’ of sorts where once a year they’ll pay your taxes for you.  This method of payment may have been mandated by your mortgage lender or the insurer (CMHC, Genworth) due to the fact that you had very little downpayment when you purchased the home.   Does this sound familiar to you?  If so, once you receive your property tax bill in the mail, forward it on to your lender and they’ll take care of the rest.

Depending on your lender and what time of the year that you purchased your home, this method could be somewhat disadvantageous to you in your first year of ownership.  Why?  We’ve seen some cases where the lender doesn’t pro-rate your tax payments for the partial year that remains once you take possession of your home.  What does that mean? Let’s imagine that your annual property taxes are $1200 and that they’re due June 30th of every calendar year.  When you purcahase a property, it is your lawyers’ duty to ensure that the seller has the property taxes paid up to date as a condition of the sale of the home.  In the case that you take possession of your new home in November – leaving 7 months of taxes to be paid – your lender may lop-sidedly start taking a full 12 months of payments in a condensed 7 month period.  Instead of paying only $100 per month for your taxes, you’d actually be paying $171.43 per month instead. This negatively affects your cash flow and is somewhat wasteful.  How can you get around this headache? By option 2 below:

Option 2: Installment Plans set up by the municipality

In Calgary, this is called the Calgary TIPP (Tax Installment Payment Plan) system. Similar to the method above, this is an auto-debit process wherein your property taxes are paid on a monthly basis (usually on the 1st of the month).  If you live in Calgary and would like to enroll in the TIPP program, you can do one of four things:

• Request for TIPP Application
• Send an e-mail to property.tax@calgary.ca
• Fax your request to 403-268-3550
• Phone 3-1-1

What we note with paying your property taxes via the TIPP system here in Calgary is that the payments are made on a monthly basis and are pro-rated for only the amount that you owe, not the lop-sided scenario like in Option 1 above.

Option 3: Annual lump-sums

Sometimes, homeowners prefer to pay lump-sum for their property tax payments.  This can be done as well; all you have to do is mail in a cheque/draft/money order or pay the bill electronically at your bank.

What happens if you don’t pay your taxes?

Initially, the municipality will likely bill you an interest rate (7% in Calgary this year) on the sum outstanding.  Eventually, after a period of time (varies by municipality), they may lien your property for the outstanding amount.  This means that if you sell your home, you’ll be required to not only pay out the remainder of your mortgage and associated breaking fees/pre-payment penalties but also the total outstanding property taxes plus interest before your lawyer can transfer the title of the property over to the new owner. In most cases, your mortgage lender won’t like having a separate lien on the property for the taxes outstanding; it may be in direct contradiction to your mortgage agreement and they could foreclose on you for the infraction.  Obviously, it’s best to avoid this extreme situation and pay your taxes.

Do you have any questions or concerns about paying your property taxes from this year or previous years? We’re happy to help field your questions to the best of our ability or at least put you on the right path toward clearing the issues up: contact us today!

Helping you with the ins and outs of keeping your your mortgage, property and taxes up to date!

James C. Tworek and the Trimor team!

www.trimormoney.com

As you’ve probably heard by now, the Bank of Canada has raised its overnight lending rate – the rate at which it lends funds to banks – to 0.50% this morning.  This quarter-percent jump was widely anticipated over the past few months as the Canadian economy picked up steam and grew by 6.1% in Q1 2010.

Although the rate has risen – and the general public understanding is that the banks will reciprocate by raising their ‘street prime’ rates in the following days and weeks – it has been raised in an environment of caution where the Bank of Canada’s governor steadily reinforces that due to the major external global factors (ie: the rest of the G7 and world economies have not grown at the same pace of Canada), we as Canadian businesses and consumers should NOT expect a rapid series of subsequent rate hikes in coming months.

For now, this is widely seen as a measure to gradually and lightly ‘rein in’ the Canadian economy’s rapid growth and keep one eye looking forward into a higher-rate future while keeping one taking care of home and scanning the periphery of the other G7 countries’ recovery at the same time.  If you’re interested in learning more about what goes into a rate decision, The Globe and Mail  has put together a great walkthrough for you.

Keeping you up to date with the most up-to-date mortgage and interest rate news,

James C. Tworek and the Trimor team!

www.trimormoney.com

www.CalgaryMortgageBlog.ca

A quick summary of how they’re faring in terms of quarterly profits reported this week:

A few things to keep in mind about bank earnings:

-      Banks are multi-faceted conglomerates that sprawl internationally in various fields, primarily in four main categories:

• Capital markets (stock brokerage, bond trading, investment banking, mutual funds, international branches of the bank)
• Insurance (Personal, commercial, etc…)
• Retail (chequing, day to day, etc..)
• Lending (commercial, residential, vehicle, personal)

-      If Banks have their fingers into all of these pies (and have for decades), the earnings that are coming on a quarterly basis are both a result of:

• Decades of past performance coming to a culmination in this quarter
• Current performance based on previous initiatives that have paid off in this quarter.

Either way, their money is working for them and they’re both conservative with their risk-taking as well as really good at making their money work for them. Over the past two years – through the recession and global downturn – our Canadian Banking System has been touted several times as the ‘safest banking system’ on the planet.

So. How does bank reporting reflect in to the mortgage market? Directly, it doesn’t.  The quarterly profits are really made up of all of the banks’ numerous income streams that have come due or funded in the past three months.  Indirectly, you could draw that because we have a healthy banking system and the banks are reporting solid quarterly profits, they’ll be more apt to want to lend money.

Do we see this in today’s mortgage market?  We sure do! Of course, the lending climate is somewhat tighter than in previous times (circa 2005-early 2008) with certain products having been taken off of the shelves and others being ‘hemmed in’.  Having mentioned this however, there are some great products that have come back into the market and we’re happily seeing lender appetites increase for certain products like:

-      Niche programs for professionals (Engineers, doctors, etc…)

-      New to Canada programs (helping those recently immigrated to purchase a home)

-      Equity lending (large enough downpayment that it’s statistically illogical for a borrower to just cut and run if times get hard)

-      B-level lending (bruised credit, self-employed but with larger downpayment)

-      Long-term cash-flow investing in Real Estate (buy and hold versus flipping)

In all, things are humming along at a solid clip with the busy Spring/Summer season upon us! Lending volumes are up with lenders are definitely interested in processing mortgage applications and helping Canadians purchase and refinance their homes.  Rates are still solid in the mid 4%-range, helping to keep housing affordability up and motivate buyers.   As always, through the busy times and the slow, to our mutual benefit we;re here to help keep you in the loop as to the latest financial news and updates in the lending market!

Helping increase your financial fluency,
James C. Tworek and the Trimor team!

www.trimormoney.com

www.CalgaryMortgageBlog.ca

From the CBC.ca article published May 5, 2010

You don’t need to use a gun to rob a bank. Criminals can do the same with some falsified documents and a little know-how.

In the United States, the government says crooks pocket $4 billion to $6 billion a year through mortgage fraud. The FBI says 80 per cent of the cases they investigate involve industry insiders. Much of the rest falls to organized criminals.

There is no comparable data for Canada. However, industry analysts estimate hundreds of millions of dollars disappear every year through mortgage fraud.

A report issued by Criminal Intelligence Service Canada (CISC) in November 2007, suggested strong housing markets and a heavy reliance on computer-automated underwriting and property-valuation systems to conduct mortgage transactions leave financial institutions vulnerable to mortgage fraud.

Straw buyers

You could be committing mortgage fraud without even knowing it. Perhaps an acquaintance of yours tells you he’s in a financial pickle. He’s found a house he really wants to buy but the bank will turn him down because of a couple of unfortunate credit card incidents. He offers you a few thousand dollars to lend your good name and credit to act as the buyer of the property. He assures you he will make the mortgage payments.

The mortgage is issued and your friend moves into the house and — you assume — makes the mortgage payments.

Months go by. You lose touch with your friend. And then, one day, you are served with legal papers because you are in default of the mortgage you took out. The bank wants its money.

You can’t find your “friend” — who actually may have skipped with the proceeds of the sale of the house. He may have been the “seller” of the house that you didn’t realize you bought.

According to CISC, a straw buyer is “an individual who pretends to be a legitimate buyer for a property but in reality is in collusion with another criminally inclined individual to further a mortgage scam.”

A straw buyer may have no idea that they are involved in fraud — or they may be an active part of a conspiracy to defraud a financial institution. They might be in it from the beginning.

Signs you may be getting involved in mortgage fraud

* Someone offers you a fee to use your name and credit information to obtain a mortgage.
* You are encouraged to include false information on a loan application.
* You are asked to leave signature lines or other important areas on a loan application blank.
* The loan amount on the mortgage is significantly higher than the value of the property.

Criminals use straw buyers in property transactions for several reasons, including:

* Fraud, such as constantly flipping a home to falsely appreciate the value.
* Hiding the property from the government for tax reasons.
* Using the home for illegal activities, such as marijuana grow-ops or meth labs.

A report issued in 2001 listed several ways fraudsters can taint real estate transactions.

Property

* Overvaluation: sale documents list the selling price artificially high.
* Flip, condo conversion: property is sold several times over a short period at progressively higher prices.
* Inflated appraisal.
* Misrepresentation of property characteristics or purpose.
* Forged or altered MLS listing to increase valuation.
* Commercial property is represented as residential.
* Property with multiple units is represented as fewer units or a single dwelling.
* Intent to reside: misrepresenting a buyer’s intention to live in the property.
* Rental property represented as owner-occupied.
* Conditions not released at closing.

Employment

* Forged or altered employment letter or employment reference.
* Forged or altered pay stub, T4, Notice of Assessment.
* Inflated income or tenure.
* Misrepresentation regarding self-employment.

Identification

* Providing forged or altered identification.
* Non-existent individual, or alteration of personal information to avoid credit bureau.
* Multiple unrelated borrowers.

Equity

* Bogus gift letter: You present a letter saying you received a monetary gift that you did not receive.
* Borrower presents account statements that do not belong to the borrower.
* Equity is withdrawn prior to the closing of the real estate transaction.
* Down payment is promised or paid outside of escrow.
* Down payment is provided by an undisclosed third party as part of a rebate, kickback or purchase.
* Full or partial down payment is paid directly to the vendor instead of being paid in trust to a lawyer.

Title

* Fraudulent title transfer/ fraudulent mortgage discharge.
* Property is not in the name of the person trying to sell it.

Source: Canadian Association of Accredited Mortgage Professionals

______________________________________________________________________________

Adding value to the above article with our own perspective:
As identified in the above article from CBC.ca (fuelled by data from CAAMP), mortgage fraud is unfortunately more common than most people would believe.

A reality that we face as Mortgage Professionals – just as much as any Realtor, Appraiser or other Real Estate Professional – is that fraud exists, fraudsters are out there and we have to help prevent it. As Mortgage Professionals licensed by the Real Estate Council of Alberta and overseen by AMBA and CAAMP, we’re held to stringent ethical duties and responsibilities when working with homebuyers and mortgage borrowers across Canada. Through interaction and the interview process, we review a client’s situation and every transaction in order to properly assess their needs, borrowing capacity and overall ‘fit’ or ‘makes sense’ quotient. In the vast majority of cases, clients are honest and genuine people trying to improve their personal financial position through the acquisition of Real Estate. In the few – yet unfortunately common – situations where something ‘doesn’t quite make sense’, it is our ethical responsibility to take every reasonable step to help identify potential gray areas in purchase transactions and to recommend that if there’s something fishy, the clients avoid involvement with the questionable ‘deal’.

The best one-off piece of advice that we could offer to you if you’re concerned about a ‘deal’ that has come your way? Trust your gut and ask questions. There’s a good chance that something that seems ‘too good to be true’ likely is. The more questions that you ask, the more truth will surface itself (for better or worse). Not satisfied? Ask licensed Real Estate and Financial professionals around you – they can help you make heads or tails of it. With this in mind, we’re always happy to help answer your questions or concerns and walk through the ins and outs a deal that may come across your plate. Drop us a line at 1(403) 538-9376 or 877-507-9293 or by email and we’ll happily provide sound, ethical professional advice to give you peace of mind and save you money.

Helping you gain peace of mind and make solid financial choices,

James C. Tworek and the Trimor team!
www.trimormoney.com