Market perceptions weigh heavy on brokers

 _{http://www.mortgagebrokernews.ca/news/breaking-news/market-perceptions-weigh-heavy-on-brokers/171164/}

_{Vernon Clement Jones | 09/01/2013 8:00:00 AM | 0 comments}

The perception that now’s just not the time to buy – regardless of low interest rates – may be the biggest hurdle facing brokers this year, suggests new research.

“These metrics paint a picture of a nervous Canadian public who does not know what to expect from the economy or the housing markets,” reads last month’s MortgageInsights from CAAMP and based on its Fall 2012 Consumer and Industry Surveys."For mortgage professionals, it is important to understand this dynamic as you engage with your customers."

That's likely to challenge some brokers.

While the survey suggests 88 per cent of industry insiders endorse the idea that "now is a good time to buy," only 61 per cent of consumers do. That last figure actually representsa decline from the 64 per cent who voiced that sentiment in 2011, a year marked by even more economic uncertainty.
The waning public confidence comes despite rock-bottom interest rates and the secure financial footing of many consumers.

Assuaging client concerns and coaking fencesitters into the market has increasingly preoccupied mortgage professionals as they see preapprovals languish and expire.

That isn't likely to change as consumers digest what if any impact new mortgage rules and lending guidelines have on their own eligibilty.

But even the very eligible may represent a tough sell.

"Even though their individual financial situations may be strong, it is likely that given their economic concerns, your clients are also looking to you to provide them with reassurance that the mortgage option you are recommending to them will fit all of their needs," concludes the report, "and will remain a good fit for five years (or the term of the mortgage),"

Let's revisit Credit Bureaus and it's impact!

_{The following excerpt is borrowed from the following article:} 

_{http://www.mortgagebrokernews.ca/news/newsletter/171172/} 

A September 2012 Harris/Decima survey asked Canadians how confident they were about being able to raise $2,000 within a month if an unexpected need arose. Some 92 per cent said they’d have to consider borrowing to come up with some of the cash, and only 45 per cent said they’d never faced a debt problem. The poll results come as Canadian debt-to-income ratios sit at a record 152 per cent and officials issue warnings to start paying down debt before interest rates rise. But those survey findings suggest consumers have been unmoved by warnings and that the resulting financial burden could sink some households.
This is the third part of a CMP series regarding debt solutions. Based upon discussions our team has had with mortgage professionals across Canada, there are many myths regarding how debt solutions affect Canadians’ finances and their credit profiles. We hope to clarify these myths so as a trusted adviser you are better prepared to assist your clients.



Debt Management Plans  

Impact on credit bureaus: Enrolled debts are reported by lenders to credit reporting agencies as R-7 or I-7.  As per their purge rules, Equifax will remove a debt in a DMP three years after completion and TransUnion will remove it two years after completion.

The truth on Debt Settlement  

Impact on credit bureaus: If successful, a debt is reported by lender as “settled” and rated as R-9 or I-9. As per Equifax’s and TransUnion’s purge rules, the debt will remain as a trade line for six years from the date that the final payment is reported as “received,” whether settled or not.

The truth on Consumer Proposals

Impact on credit bureaus: Debts included in a proposal are rated R-7 or I-7 and remain on credit reports for 3 years after completion per Equifax and TransUnion’s purge rules.  
The truth on Bankruptcy

Since September 2009, a first bankruptcy with surplus income as defined by the OSB guidelines is not discharged for 21 months.  Canadians filing bankruptcy can keep assets exempt from seizure as set by the resident province or territory. Since 2008, RRSP contributions more than 12 month prior to filing any insolvency are exempt from seizure.  Many are able to keep “non-exempt” assets by paying the trustee the asset value on a payment plan. A second-time bankruptcy will not be discharged for at least 36 months.
Impact on credit bureaus: Per Equifax and TransUnion’s purge rules, first-time bankruptcy remains on credit reports for six years from the date of discharge and a second bankruptcy remains for 14 years.

The truth on Statute of limitations:

Each province’s statute of limitation determines how long a lender has to take legal action to collect consumer debt.  For example, in Ontario and Alberta lenders cannot obtain judgment where nothing has been paid within 24 months prior. Other provinces vary from three to six years.  Note the debt remains on credit reports for six years from date of last payment or activity per Equifax and TransUnion collection purge rules.

Student Loans

Do you know someone with Student Loans?

Please note the following important information, as per Rumanek Blog - Student Loans

Student loans are provided by the Government to encourage persons interested in pursuing a post-secondary education. Federal and Provincial Governments work with each other under a contractual framework for receipt and disbursement of funds by the Province for this purpose.

Re-payment of Student loans

The repayment period for the OSAP loan is 10 years. This can be extended for a period of 15 years by application and by demonstrating sufficient cause by the applicant. The student loan however, will become due and payable only after the student becomes a graduate. This is a key feature that makes Government programs such as OSAP more appealing to students as compared to loans from a private institution, where at the minimum, interest portions on the loan amounts become due immediately.

Students who take OSAP are provided with a grace period of 6(six) months after the time they cease to be students. The Loan becomes payable after this period.

Nevertheless, re-payment of student loans remains mandatory. Stringent measures are adopted by the Government to ensure re-payment of student loans, as failure to repay student loans jeopardizes the loan system resulting in large deficit of government funds. This hinders the ability of future students to benefit from government financial aid.

Non-repayment of student loans can cause severe financial consequences and legal consequences such as garnishment of wages, and bad credit rating to defaulting individuals.
  
View of the Courts
Obtaining a post-secondary education is considered a long term asset as it will continue to generate income. The integrity of the Bankruptcy and Insolvency system would be undermined if the debtor were to retain the entire benefit of the asset without the creditors having a share. This was held in a decision of the Court of Queens Bench of Alberta Re Dolgetta at para. 45 (2008 ABQB 556 Canlii).[1] This view is usually followed in cases where the debtor evades repaying the student loan, despite having received employment as a result of the education.

Please contact the offices Of Rumanek & Company Ltd, for further information.

DISCLAIMER: THIS ARTICLE IS ONLY FOR INFORMATIONAL PURPOSES ON THE GENERAL APPLICATION OF BANKRUPTCY LAW. THIS ARTICLE IS NOT MEANT TO BE LEGAL ADVICE AND SHOULD NOT BE TREATED AS SUCH. Please contact a licensed bankruptcy trustee or a licensed bankruptcy lawyer in Ontario for any advice.

Manulife and brokers officially partner

_{By | 06/01/2013 3:00:00 PM | 0 comments}

Manulife has now completed acquisition of the channel’s largest creditor insurance provider, at the same time restating plans to expand broker business.

"We look forward to continuing to deliver excellent solutions to both the mortgage industry and Canadian borrowers and to further building a leadership position in the mortgage creditor marketplace, particularly among mortgage brokers," said Wally Thompson, Manulife’s VP of business development. “Strategically, this transaction positions us well for growth in a highly-stable, key Canadian market.”

The assessment follows the insurance giant’s completed purchase of Benesure Canada, a transaction positioning Manulife as Canada's largest provider of mortgage insurance solutions for mortgage brokers, “with revenue premiums in excess of $65 million.”

The deal initially raised some broker eyebrows, chiefly concerns about the potential poaching of clients.

Manulife was quick to answer that speculation.

“We want to reassure those who have such concerns that they have nothing to worry about,” said Elizabeth Elliot, VP of marketing for Benesure, now under the insurance and mortgage giant’s umbrella. “It is in Manulife’s and Benesure’s interest to ensure the channel continues to flourish with MPP.”

Elliot also points to Manulife’s strong track record of working closely with advisors and intermediaries.

“They are governed by privacy rules and have always abided by these,” she said. “In doing so, they understand, respect and honour business relationships and client information that Benesure has developed.”

Still, Manulife has suggested it is open to exploring the idea of mortgage origination by brokers, a move many within the channel welcome.

A 2013 forecast for brokers

A 2013 forecast for brokers

http://www.mortgagebrokernews.ca/news/newsletter/171136/

_{By CRE | 02/01/2013 6:00:00 PM | 0 comments}

 

The verdict is in: 2013 may not be a great year for brokers, but it won’t be the worst.

The RE/MAX Housing Market Outlook 2013 touts “moderation, not correction” ahead for 2013, a unsurprising projection given the impact lending rules had on the latter half of 2012.

“Despite all the negativity surrounding residential real estate, the sky is not falling,” said Gurinder Sandhu, executive VP and regional director of RE/MAX Ontario-Atlantic Canada. “Home sales have moderated, but remain within healthy levels.”

The report forecasts that 454,000 homes will change hands in 2013, falling one per cent from the 2012 national performance. Of less concern for brokers is that the average house price is by one percent, rising to $366,500.

Many markets are expected to remain on par with 2012 statistics, with particular strength noted in the West. The Greater Vancouver Area is expected to see the biggest pull back, after waning foreign investor interest crippled sales in late 2012.

Brokers can expect the most business from move-up buyers, with first-time homeowners moved to the sidelines for much of the year. That reflects late 2012.

 "By mid-year," reads the report., "the third round of CMHC mortgage tightening had a noticeable impact on housing markets, pushing homeownership beyond the grasp of many first-time buyers.”
Still, brokers shouldn't despair.

According to RE/MAX Regional Executive VP for Western Canada Elton Ash, homeownership is still at the forefront of Canadian’s minds.

“There’s no denying the universal appeal of bricks and mortar," he said. "Canadians believe in homeownership. The stability of real estate over the long-term continues to fuel its appeal.”

 

http://www.bloomberg.com/news/2012-12-31/nanos-poll-finds-canada-consumer-confidence-rises-on-real-estate.html 

Canada Consumer Confidence Rises on Real Estate: Nanos

By Theophilos Argitis - Dec 31, 2012

Canadian consumer confidence rose for the first time in three months in December as homeowners became more certain about the value of their properties, according to a Nanos Research poll. 

The Nanos Economic Mood Index -- an aggregate of survey responses on the outlook for the economy, job security, personal finances and real estate -- rose to 101.9 in December from 101.0 a month earlier. The index averaged 101.7 over the past six months, compared with 105.8 in the first half of 2012, as the country’s economy stalled. 

Data released this month suggest tepid growth for the world’s 11th largest economy in the fourth-quarter. Canada recorded inflation of 0.8 percent in November, the slowest in more than three years, while gross domestic product rose 0.1 percent in October after stalling a month earlier. 

Measures calculating optimism about housing prices rose to the highest since June, according to today’s Nanos poll. The balance of opinion between those who say they expect real estate values to increase in their neighborhood and those who believe they won’t rose to 20.6 in December from 17.1 in November. 

The balance of opinion between those who say the economy will be stronger in the next six months relative to those who believe it will be weaker fell to 2.1 in December from 2.8. 

Measures calculating personal finances and employment showed little change from levels that are the worst since the first half of the year. The balance of opinion between those who say their jobs are secure and those who believe they are not rose to 30.6 in December from 29.7 in November, while net perceptions on personal finances fell to -16.3 from -16.1. 

The Nanos poll of 1,000 Canadians was taken between Dec. 19 and Dec. 20. 

To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net
 
To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net

Happy New Year, BFS clients

BFS Clients.

http://www.mortgagebrokernews.ca/news/newsletter/171125/

_{By Vernon Clement Jones | 01/01/2013 4:00:00 PM | 0 comments}
 
Ottawa's move to increase by $50-billion the amount of residential mortgages it will back through Genworth and Canada Guaranty may ultimately accrue to the benefit of alternative clients, suggest some brokers.
"The maximum outstanding insured exposure for private insured mortgages will be increased from $250 billion to $300 billion," reports the larger of those two private default insurance providers. "The current risk premium is being replaced by a risk fee payable by the company to the federal government equal to 2.25 percent of gross premiums written."
The move effectively deepens the bulk insurance pockets of both Genworth and Canada Guaranty, and could, argue some channel veterans, encourage the insurers to provide more of those funds to lenders looking to minimize their conventional lending exposure.
Ostensibly, that could work to the advantage of brokers finding it increasingly difficult to arrange loans for self-employed clients, said one mortgage broker Wednesday. He points to last year's pullback by several lenders when the government announced it would keep CMHC's  $600-billion cap in place.
In fact, Genworth may, in fact, already benefited from that decision, which effectively limited lender access to portfolio insurance.
“There is plenty of runway." said Genworth CEO Brian Hurley last spring, pointing to the insurer's willingness and, indeed, its ability to write new bulk insurance business.
Genworth, including Canada Guaranty, will collectively tap into the government-backed fund now capped at $300 billion – and not the CMHC’s $600 billion pool, now nearing its lending limit.

But all lenders are themselves working with new, tighter guidelines from the Office of the Superintendent of Financial Institutions, likely to act as a limiting factor for many BFS deals -- high ratio or otherwise.