Mortgages

80 Pages·2013·8.92 MB·English

Fall 2013 Volume 22 • Number 3
Published Quarterly by The Society of Notaries Public of British Columbia
Samantha Gale
INSIDE: Mortgages
CEO, Mortgage Brokers Association of British Columbia
Publications Mail Agreement: 40010827
TABLE OF CONTENTS
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You’re unique.
Your mortgage strategy
should be too.
As your financial picture changes over time, the right
mortgage strategy can help you meet your needs and
reach your goals.
If you’ve been thinking about consolidating high-
interest debts, renovating your home, or perhaps
purchasing a rental or vacation property, now’s the
perfect time for a mortgage check up.
As a professional mortgage broker, I’m committed to
providing you with the best mortgage strategy for your
unique financial situation – now and into the future.
Let’s talk.
Paula Siemens
Senior Mortgage Broker
pphhoonnee 660044 3 3551 17-4734838
eemmaaiill spieamuelan@[email protected]
wweebb wwwww.wsi.esmieemnesngsrgoruopu.cpa.ca
www.invis.ca
Invis-The Siemens Group — 902-777 West Broadway, Vancouver, BC, V5Z 4J7
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THE CEO/SECRETARY OF THE SOCIETY COVER STORY
Cy-près, Cassano, and the ACLF 6
The Evolution of Mortgage Brokering in BC 17
Wayne Braid
THE PRESIDENT OF THE SOCIETY
The Origin of “The Mortgage” 7
John Eastwood
To go directly
2013 Fall Conference and AGM 36
KEYNOTE
to an article,
Marny Morin
Mortgage Musings please CLICK on its title 8
Val Wilson or page number. HONOuRARY lIFE MEMbERSHIP
George Tanco 36
Office of the Superintendent
of Financial Institutions (OSFI) 10 The Board of Directors of The Society
of Notaries Public of BC 2013–2014 37
The Mortgage Process 101 12
The 2013 Members of The Society’s 25-Year Club 37
Kevin Lutz
New CMHC Tools for Homebuyers 15 Thank you, BC Notaries and Do Process! 37
BC Notaries, Their Guests,
Mortgage Insurance Considerations 16
and Our Conference Sponsors 38
Ian Callaway
Thank You! 38
B-20 Guideline
OSFI Residential Mortgage Underwriting bC NOTARIES’ EDuCATION
Practices and Procedures 18 MA ALS 603, Philosophy of Law:
Examining and Applying Legal Thought 42
The Mortgage Industry in BC (Chart) 19
Todd McKendrick
A Day in the Life of a Mortgage Broker 20 bC NOTARIES’ EDuCATION
Rob Regan-Pollock The Joy of Learning 43
Cam Sherk
Regulating Mortgage Brokers in British Columbia 22
THE ExAMINERS FOR bC NOTARY STuDENTS
The Residential Appraisal Process and Mortgages 24 D. Peter Ramsay, QC 44
Janice P. O’Brien
MEET THE bOARD OF DIRECTORS
The Role of a Professional Survey Travelling Mann: Lorne Mann in Creston 46
in the Mortgage Process 27
BC Notaries Speak Your Language 58
Chuck Salmon
Services a BC Notary Can Provide 75
Dream Home or Nightmare? 28
John Leech
Inspections Should Tell All 29
Mortgage Refinancing through Your BC Notary 30
Daniel Boisvert
Mortgage Enforcement in British Columbia 31 Building Better Communities, one grant at a time
Andrew Bury The Board of Governors 49
SPOTlIgHT ON gOOD WORKS
Schedule “A” 32
BC Notary Foundation
Mortgage FRAUD Exposed! 33 and BC Coalition of People with Disabilities 50
Ron Usher Jane Dyson
4 The Society of Notaries Public of British Columbia Volume 22 Number 3 Fall 2013
The MiX
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when Space is Limited, Think Bigger 52
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hotogra OHeRaIgltIhNyA Ml ReaElC TIPipEsS from Brazilian Cuisine 56
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Business to Business 59
Editor-in-Chief Val Wilson
REIbC
Legal Editors Wayne Braid, Ken Sherk
Board of Governors 2013–2014 60
Magazine Filip de Sagher, Chair
AbClS
Our Newest Surveyors 60 Committee Kate Manvell
Zoë Stevens
buSINESS
Marny Morin, Staff liaison
Square with Your Clients 61
Lisa Shaskin Administration Amber Rooke
Editor’s 61 Courier lightspeed Courier & logistics
MAKINg A DIFFERENCE
October is Community Inclusion Month.
The Scrivener
Community Inclusion is for Everyone 62
Telephone: [phone]
Cathy Grant
email: [email protected]
gIVINg bACK
The Birth Lottery: My Days in Haiti and the Lessons Learned 64 Website: www.notaries.bc.ca/scrivener
Setareh Khasha
LETTERS 68 The Society of Notaries Public of BC
604 681-4516
THE MATuRE MARKET
Ageless Tips for Effective Communicating 69
To send photographs to The Scrivener,
Rhonda Latreille
please see the Editor's column on page 61.
COPYRIgHT AND ONlINE IMAgES
Beware Using Other People’s Pictures! 70
All rights reserved. Contents may not be
Jennifer Dove
reprinted or reproduced without written
WIllS & ESTATES permission from the publisher. This journal
Sibling Rivalry: Mom Always Loved You Best 72
is a forum for discussion, not a medium
Trevor Todd, Judith Milliken, QC
of official pronouncement. The Society does not,
TAxES in any sense, endorse or accept responsibility
It’s in Your Interest to Make it Tax Deductible 74 for opinions expressed by contributors.
Andrea Agnoloni
TECHNOlOgY
Fall Tech Trio 76
Akash Sablok
HONOuRS & EVENTS
PEOPLE 78
CANADA POST: PUBlICATIONS MAIl
where in the world Has The Scrivener Been? 78 AGREEMENT No. 40010827
Postage Paid at Vancouver, BC
The Scrivener: What’s in a Name?
RETURN UNDElIVERABlE CANADIAN
“A professional penman, a copyist, a scribe . . . a Notary.” Thus the Oxford ADDRESSES TO CIRCUlATION DEPT.:
English Dictionary describes a Scrivener, the craftsman charged with ensuring
THE SOCIETY OF NOTARIES
that the written affairs of others flow smoothly, seamlessly, and accurately. Where
PUBLIC OF BC
a Scrivener must record the files accurately, it’s the Notary whose Seal is bond.
SUITE 1220 – 625 HOwE STREET
We chose The Scrivener as the name of our magazine to celebrate the
BOx 44
Notary’s role in drafting, communicating, authenticating, and getting the facts
VANCOUVER, BC V6C 2T6
straight. We strive to publish articles about points of law and the Notary profession
for the education and enjoyment of our members, our allied professionals [email protected]
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Volume 22 Number 3 Fall 2013 The Scrivener TABLE OF CONTENTS 5
THE CEO/SECrETary Of THE SOCIETy
Wayne Braid
ACLF AFDC
ASSOCIATION OF CANADIAN ASSOCIATION DES FONDATIONS
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BC Notaries are quite • The group MOSAIC, who conducted
…we do get involved a program that provides legal
unique in North America
in some very exciting advice to survivors of domestic
regarding the services violence. They conducted a series
and meaningful programs…
of workshops on issues pertaining
they provide to the public.
to domestic violence for providers
The Access to Justice Fund was and survivors.
Notaries in most Provinces and States
launched May 31, 2010. The response
in the USA do not practise in the Fourteen national projects were
exceeded expectations; more than 210
noncontentious areas of law that we do provided with grants. A national project
letters of intent were received from
here in British Columbia. The result is is identified as a project that will involve
across the country. An application form
that our involvement with counterparts more than one Province or Territory.
was developed and circulated through
on the continent is somewhat limited. Over one third of the projects
the various provincial Law Foundations.
funded had an Aboriginal theme and
On occasion, we do get involved Because of the overwhelming response,
provided many provincial Aboriginal
in some very exciting and meaningful the fund was closed to submissions on
organizations to use and expand their
programs and discussions. One such February 28, 2011.
expertise to deliver projects across
program came to us through our As of July 2013, 89 grants for
jurisdictions.
Notary Foundation of BC. a total of $13,762,628 have been
All provinces received some
made. Here are some of the British
As a result of a court decision in funding except PEI. They currently
Columbia organizations that received
Ontario, the Law Foundation of Ontario have a project being considered,
financial support for various projects.
(LFO) was entrusted with a $14.6 however, as does Nunavut.
• British Columbia Coalition
million cy-près award, known as the
Wayne Robertson,
of People with Disabilities
“Cassano” decision. The Court ordered
Executive Director
that the LFO disperse the funds using • Courthouse Libraries of BC
of the Law Foundation
a geographic model. Because the • People’s Law School, who received of BC and a member
case involved citizens from all the funding to perform hour-long plays of the committee who
provinces, the judge wanted the funds exploring legal issues of relevance reviewed the Grant
distributed Canada-wide. to students applications and letters
The Law Foundation of Ontario • Ending Violence Association of BC, of intent, kept the Notary Foundation
established an Access to Justice who received funds for a project of BC involved in the discussions
Fund with the funds and asked that works in partnership with of how to use the funds. Wayne
the Association of Canadian Law Legal Services Society of BC reported to our Foundation Board on
Foundations (ACLF) to assist with to train Aboriginal service providers a number of occasions as the projects
the distribution of the funds through about criminal justice, family were being considered.
a program to identify organizations in justice, and child-protection laws The fund will continue to be
each province that would make the • The Justice Education Society, managed by the Law Foundation
best use of the award. The Notary who received funding for of Ontario. All the Foundations across
Foundation of BC is a member a program to develop an online Canada should be acknowledged for
of the Association of Canadian Law self-help tool to self-represented their fine work. Many people who do
Foundations. We meet once a year litigants appearing on family and not or may not have access to justice
to discuss issues of mutual interest civil law matters before the BC tools and services were provided with
and concern. Supreme Court assistance in a very meaningful way. s
6 The Society of Notaries Public of British Columbia Volume 22 Number 3 Fall 2013
TABLE OF CONTENTS
THE PrESIDENT Of THE SOCIETy
John Eastwood
The Origin
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Back in history, as early • In England and Wales, the Law Since then, mortgage interest
of Property Act of 1925 created rates have fluctuated greatly,
as 1190 in England,
mortgages. increasing to approximately 8 percent
a mortgage was in 1968 and climbing during the
• In the USA, in 1934, the Federal
1970s to 9 and 10 percent, ending
a conveyance of land for a fee. Housing Administration Act (FHA)
the decade at 14 percent. In 1980
was created to insure mortgage
and 1981, the housing boom lead
The buyer agreed to pay the seller lenders against default.
to rapidly increasing rates that peaked
a fixed price for the land, with no
at 21 percent, resulting in a recession
interest, and the seller would sign over
Although mortgages in the real estate marketplace.
the land to the buyer.
have evolved into many Today, Canada Mortgage and
The conditions that had to be met
before the land would be the property different forms, they Housing Corporation (CMHC), together
with a few private insurers, provides
of the buyer were usually based upon are still basically the
mortgage lenders with default
the assumption that the land would
same essential charge insurance, with repayment amortized
produce sufficient income to pay back
the seller. A mortgage was drawn up against land that they up to 35 years.
and stayed in effect, whether the land were in 1190. Recently, concern over the
produced or not. rapidly increasing homebuyer
That type of mortgage gave the debt load and the potential for
Mortgages began to be widely
seller of the property—or the lender mortgage rate increases prompted
used. The FHA helped lower the
holding the deed to the land— the Canadian Government, through
downpayments on homes and made
absolute power over it to do whatever CMHC, to increase the downpayment
it easier for buyers to finance a home
they wished, including selling it, requirement and reduce the
purchase. After the introduction
not allowing payment, refusing payoff, amortization period.
of the FHA, approximately 40 percent
or creating other problems for the
of people in the United Sates owned Although mortgages have evolved
buyer, who had no rights to require
homes. Today that number is closer into many different forms, they are still
them to convey title.
to 70 percent, due in part to the basically the same essential charge
With time, and continued abuse current low interest rates. against land that they were in 1190.
of the mortgage system, the courts Many laws and regulations help protect
stepped in to enforce buyer’s rights; the buyer, seller, and lender. There are
The Government of Canada
buyers acquired legally enforceable a variety of mortgage rate plans with
in 1934 introduced the National
rights to absolute ownership of the historically low interest rates.
Housing Act (NHA), which provided
land and buyers were able to demand
default-insured residential mortgages. Mortgage lending has become
the deed be free and clear upon the
They were initially funded mainly very competitive. In addition to the
payoff of the property.
by life insurance companies until traditional mortgage through life
At the same time, steps were the introduction of the Bank Act in insurance companies and banks,
taken to ensure the seller still had 1954, which allowed banks to provide other lenders offer mortgage funds
rights to secure the debt, to protect residential mortgages at a rate of up with very competitive rates and
his or her interest, and make sure the to 6 percent. In 1967, that 6 percent terms, directly and through mortgage
money due was paid. cap was removed. brokers. s
Volume 22 Number 3 Fall 2013 The Scrivener TABLE OF CONTENTS 7
KEyNOTE
Val Wilson
Mortgage
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• Trademark Each quarter, the articles in the The articles in this issue range
front section of The Scrivener focus from simple “starter” information to
Prosecution, the history of mortgages and in-depth
on a specific theme. Our Summer
looks at the way the profession and its
Registration, theme was Stratas. (Back issues are
processes work today at various levels.
archived via www.notaries.bc.ca.)
Opposition, and
BC Notaries regularly do
Expungement The Fall theme is Mortgages. business with people we call Allied
Professionals—land surveyors,
Proceedings My first notion of “mortgage” lawyers, real estate professionals,
came from classmates who appraisers, accountants, financial
lived in a pleasant subdivision institutions, mortgage brokers, house
• Trade Name known as the VLA. I learned that inspectors, insurance professionals,
the buyers of those homes received and so on. Many of them have written
and Trademark help from the federal government about mortgages in this issue, from
because of their military service. their respective points of view.
Searches
The assistance came in the form Our topics include Refinancing
of a government loan. VLA stood by BC Notary Daniel Boisvert,
for Veterans Land Act. Foreclosures by Andrew Bury, and
• Corporate Name
a fine piece about Mortgage Fraud
Says our regular contributor Nigel
by Ron Usher.
Reservations Atkin, “There are many perspectives
to the concept of mortgages. The
BC Notaries regularly
variables of income, market value,
interest rates, and other factors all do business with people
1081 Cambie Street come into direct play in obtaining we call Allied Professionals…
Vancouver, BC V6B 5L7 a mortgage. The most obvious and
personal one is how much will a
[email protected] In September, the federal
financial institution think I am capable
Finance Minister, the Hon.
of paying for such and such a property.”
Jim Flaherty, said that
Phone: [phone] My first application for a tightening the mortgage
mortgage was rejected by my long- insurance market is a
Fax: [phone]
term financial institution because way of controlling prices
[email protected] I had recently chosen a promising Hon. Jim and that there is a need
new career path; the bank did not Flaherty for caution. On Monday,
consider me a good risk. September 23, 2013, he said, “House
Specializing
prices are relatively stable in Canada,
The banker who delivered the
and I’m comfortable with where we
news said, with obvious enthusiasm,
in Trademarks
are right now. The government doesn’t
“Now you don’t have to go through
anticipate taking any further steps in
with buying that property!” She did
since 1983 terms of tightening the market for the
not share my vision for the future.
time being.”
Fortunately, another bank felt
that I qualified for the mortgage. That is very good news! s
8 The Society of Notaries Public of British Columbia Volume 22 Number 3 Fall 2013
TABLE OF CONTENTS
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THE UNIVERSITY OF BRITISH COLUMBIA
fEaTUrE: MOrTGaGES
Office of the Superintendent
of Financial Institutions (OSFI)
History • Advance and administer Regulation
OSFI was established on July 2, 1987, a regulatory framework that Regulation involves providing input
by the Office of the Superintendent promotes the adoption of policies into developing and interpreting
of Financial Institutions Act and procedures designed legislation and regulations, issuing
(OSFI Act). to control and manage risk. guidelines, and approving requests
from federally regulated institutions
This legislation created a single • Monitor and evaluate system-wide
as required under financial institution
regulatory agency responsible for or sectoral issues that may impact
legislation.
the regulation and supervision institutions negatively.
of all federally chartered, licensed, Supervision
or registered banks, insurance OSFI’s legislation has due Supervision involves
companies, trust and loan companies, regard to the need to allow
cooperative credit associations, and institutions to compete effectively • assessing the safety and
fraternal benefit societies. and take reasonable risks. OSFI’s soundness of federally regulated
legislation also recognizes that financial institutions and pension
Since its creation, OSFI has seen management, Boards of Directors, plans, and
significant changes in the institutions
and plan administrators are ultimately • using supervisory powers
it supervises, the global context in
responsible and that financial to intervene in a timely manner
which it operates, and the regulatory
institutions and pension plans can fail. to protect the rights and interests
environment.
of depositors, policyholders, and
The Office of the Chief Actuary,
Mandate pension plan members.
part of OSFI, provides actuarial
OSFI was created to contribute
services to the Government of Canada. OSFI supervises in accordance
to public confidence in the Canadian
with its Supervisory Framework,
financial system. who OSFI Regulates introduced in 1999, and
Under OSFI’s legislation, its supplemented by its Supervisory
mandate is to accomplish the following. Banks (80) Framework Rating Assessment Criteria,
developed in consultation with industry
• Supervise federally regulated
Trust Companies (47) and introduced in 2002.
financial institutions and pension
plans to determine whether they Loan Companies (19) Guide to Intervention
are in sound financial condition for Federal Financial Institutions
Cooperative Credit Associations (6)
and meeting minimum plan
OSFI and Canada Deposit Insurance
funding requirements respectively
Cooperative Retail Associations (1) Corporation (CDIC) jointly have
and are complying with their
developed a Guide to Intervention
governing law and supervisory Life Insurance Companies (78)
for Federal Financial Institutions.
requirements.
The Guide provides a framework
Fraternal Benefit Societies (14)
• Promptly advise institutions for responding effectively
and plans in the event there are Property and Casualty Insurance to circumstances that could lead
material deficiencies and take Companies (172) to the instability of a financial
or require management, Boards, institution. Formalizing a process for
or plan administrators to take OSFI’s activities can be divided early intervention if potential problems
necessary corrective measures into two broad functions: Regulation are identified increases the likelihood
expeditiously. and supervision. of averting the institution’s failure.
10 The Society of Notaries Public of British Columbia Volume 22 Number 3 Fall 2013
TABLE OF CONTENTS