February 25, 2018

Should Fines Should Double For Realtors Breaking Rules?

The Ontario Real Estate Association (OREA) says fines for rule-breaking realtors should be double so the potential penalties keep pace with rising housing market.

Last year, realtors found guilty of violating the code of ethics faced an average fine of less than $6,000 from the Real Estate Council of Ontario (RECO), the industry regulator.  The existing penalties were set when the average resale Ontario home cost $211,000 compared to $619,000 today.

OREA recommended fines be doubled for violating the Real Estate and Business Brokers Act (REBBA) Code of Ethics. That would put the maximum penalty for salespeople at $50,000, while brokers and brokerages would face fines of up to $100,000.

The discussion paper is meant to elicit feedback from OREA’s 70,000 members to the Ontario Liberal government’s review of the real estate act.  New rules are expected in the fall for agents who represent both a buyer and seller in a single transaction.

In addition to the higher fines, OREA says RECO needs to be able to order realtors to return profits made through breaches of the act.  “Fines may not cover the entire fee earned as a result of unethical activity. In other words, even under a system of higher fines registrants could still profit from unethical behaviour,” said the OREA paper.

It also wants RECO to have the authority to revoke or suspend a realtor’s registration to practise, a finding that can be overturned by an appeals tribunal under the current system.

In an emailed statement from RECO registrar Joseph Richer, the regulator also supports higher fines and the ability to make realtors repay profits achieved by unethical practices.  It also agrees with the need to have the authority to revoke registrations.

There were 70,284 registered realtors in Ontario in 2014 and 73,751 in 2015.  But that number shot up to 78,870 last year, according to OREA.  Of those, 48,117 were real estate salespeople.

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406

Article:  https://www.thestar.com/business/2017/08/22/rule-breaking-realtors-should-face-stiffer-penalties-says-orea.html

Watch Out, Tighter Mortgage Lending May Still Be Coming

When will it stop!  After all the changes implemented to cool the housing market and reduce consumer debt, more tightening may still be coming.  Wouldn’t you think that the Ministry of Finance and OSFI would wait to see the impact before implementing more changes?

The recent changes targeted insured mortgages.  Now the Bank of Canada has identified the uninsured mortgage market as the next place to make tougher regulations.

The first measure that is likely being considered is related to Home Equity Lines of Credit (HELOCs). This is clear for two reasons. First, because the Bank of Canada believes that the greater use of HELOCs could also be contributing to increasing household indebtedness raising concerns that HELOCs may be putting some Canadians at risk of over borrowing.

The critical policy question that the Department of Finance could be considering is whether to extend the stress test for insured mortgages to uninsured mortgages as well.  This could possibly have an impact in further cooling the markets of Toronto and Vancouver.

Let’s hope the government shifts their focus to unsecured household debt instead of further secured debt restrictions. However, if the Bank of Canada’s review is representative of the Ministry of Finance’s considerations, watch out for changes to HELOCs with the stress test being applied to uninsured mortgages.

We should all write to our MP’s, enough is enough.  The market is cooling and all that is going to happen is more expensive mortgage financing and reduced competition.  Go after the unsecured loans and credit card companies, that is where consumer debt is out of control!


Colleen Saunders is a 20 year veteran in the mortgage industry, serving Oakville, Mississauga, Burlington and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406

Should You Get A Status Certificate?

With the current situation of house prices in the Toronto area, chances are first time buyers (and those of us downsizing) will be looking at purchasing a condo.  What is a Status Certificate.

Purchasing a condo or condo townhouse is very different from purchasing a detached home.  All condo buyers should be aware the unit’s status certificate as it provides important details about the unit you are interested in, as well as the condo corporation as a whole.  I strongly suggest you make your purchase conditional on a review of the status certificate.

Sometimes the seller will offer to provide you with a version of the status certificate that they previously obtained. But the certificate’s information could be out of date, and inaccurate.

Some questions about condos and the answers a status certificate will provide:

  • What’s in the condominium’s declaration, bylaws and rules? Often condos have rules regarding pet ownership, noise, balcony furniture, decorations, and even curtains and flooring material. Make sure you’re comfortable with these rules.
  • What kind of fees can I expect to pay?  What are your monthly fees for maintenance, landscaping, utilities in common areas, and other upkeep.  As well, are there special assessments that owners are still paying into.
  • Is the seller up to date on their fees?  If the seller is in arrears on their monthly fees, it’s the new owner’s responsibility to catch up the arrears, so find out beforehand.
  • What’s the financial status of the condo corporation?  Is there enough money in the reserve fund to cover future repairs? If the reserve fund isn’t large enough, you could end up facing a sudden hike in your condo fees or paying a special assessment.  Read this info carefully.  I left it for my lawyer to investigate only to find out the reserve fund had minimal deposits
  • Will I have full ownership of the included parking space or locker?  Will you personally own the space, or is it a common element that the condo corporation owns, and assigns to you. Be sure to confirm, with your lawyer, that the declaration documents match with the purchase and sale agreement in details such as the unit number, parking space number and locker number.

And what if the status certificate reveals something that gives you pause? If you make your offer conditional upon its review, you should be able to walk away from the deal.

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406


Shocking, This All Started 9 Years Ago!

If I were to ask when you remember the Office of the Superintendent of Financial Institutions (OSFI) making fairly recent changes to the mortgage rules, what would be your guess?  When was mortgage insurance banned on properties over $1 million?  Would you have guessed a couple of years ago?  It was actually 5 years ago!

Here’s a brief history of some of those key mortgage rule changes over the past decade:

  • January 1, 2017: OSFI imposed onerous capital requirements on default insurers, thus disadvantaging many bank competitors (and consumers) by jacking up rates substantially on low-ratio insured mortgages.
  • November 30, 2016: New stress test regulations were extended to include insured mortgages with 20% equity or more. It also banned certain mortgage types from being insured, including refinances, extended amortizations and single-unit rentals.
  • October 17, 2016: The federal government introduced a stress test to be used in approving all high-ratio insured mortgages with terms of five years or more. It required such borrowers to prove they can handle payments at the Bank of Canada’s posted 5-year rate (currently 4.84%).
  • February, 2016: The Department of Finance announced it was increasing the minimum down payment from 5% to 10% on the portion of a home’s price that’s above $500,000.
  • November, 2014: OSFI releases its B-21 guidelines, which set out insurer restrictions on everything from debt-ratio calculations and self-employment evaluation to borrowed down payments and cash-back mortgages.
  • July 9, 2012: The government reduced the maximum amortization period to 25 years for high-ratio insured mortgages, limited the gross debt service and total debt service ratios permitted to 39% and 44%, respectively, banned mortgage insurance on properties over $1 million and implemented a maximum 80% LTV for refinances.
  • March 18, 2011: Regulators introduced a 30-year maximum amortization on insured mortgages over 80% LTV, an 85% loan-to-value limit on insured refinances and eliminated government insurance on secured lines of credit (e.g., HELOCs).
  • April 19, 2010: The government introduced stress testing for insured mortgages using the Bank of Canada’s 5-year posted rate. Other key changes included a 90% LTV max. on refinances (down from 95%), and an 80% LTV maximum for rental financing.
  • October 15, 2008: The first mortgage rule changes announced by the government eliminated 40-year amortizations (dropping them to 35), raised the minimum insured credit score, added a new maximum total debt service ratio of 45% and additional loan documentation standards.

Further changes are still being proposed to tighten mortgage underwriting.  Now they are targeting the uninsured market, which would shut many borrowers out of the market!!

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406


The Facts Behind Our Rising Debt Levels

We are continually being reminded that Canadians are overextended and in too much debt. So much so, the Ministry of Finance has made getting a mortgage more difficult and changed the rules to qualify for financing.

What has recently been discovered is that while this may be true, we have generally borrowed wisely to build our net worth to record levels. Warnings about household debt often ignore assets and skew the picture.

The $10.3-trillion in net worth of Canadian households is the result of debt accumulated to finance assets such as real estate and investments, according to a Fraser Institute report. “When looking at debt levels it’s important to consider the degree to which Canadians are also using it to increase their net worth.”

Canadian household debt has topped $2 trillion but two-third of that is in mortgages (the rest is made up of credit card and other debt) and a new report says that helped fuel unprecedented levels of household net worth.

Canadians are not being irresponsible with household debt. Household assets, such as real estate, pensions, financial investments and businesses, have grown from $2.2 trillion in 1990 to $12.3 trillion in 2016.

It chastises governments for cautioning about household debt when their own finances are less favourable. “Governments across Canada have been racking up debt, particularly since 2007, but the net worth of governments in Canada has actually decreased,” said Di Matteo. “It’s somewhat hypocritical for governments to warn Canadians about rising household debt levels given the state of their own finances.”

Those without mortgages are seeing a declining trend in their average credit scores that began in 2015, along with an increasing likelihood of bankruptcy. As well, mortgage delinquencies for consumers over 65 are the highest of all age groups and rising, and higher delinquency rates for auto loans persisted throughout 2016. BMO Wealth Management reported that millennials say their top financial priority is paying down debt. It beat out finding meaningful and better-paying work, purchasing or upgrading a home and upgrading education.

“We may be borrowing, but we’re doing it in a pretty savvy way,” said Pattie Lovett-Reid, CTV News chief financial correspondent.

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.