Mortgage Broker

Summer 2014

Mortgage Broker is the magazine of the Canadian Mortgage Brokers Association and showcases the multi-billion dollar mortgage-broking industry to all levels of government, associated organizations and other interested individuals.

Issue link: http://digital.canadawide.com/i/354755

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MORTGAGEBROKER mbabc.ca summer 2014 | 17 lendinguncertainty A few years ago the Court of Appeal rendered a pair of decisions that created some uncertainty as to the status of mortgages registered in anything other than first position. e result of these decisions was the common policy of obtaining title insurance on all mortgages that are not ranking in first position on title. e emergence of CRA's new, more aggressive stance in regards to super priority trust claims means that title insurance may now be recommended for all lending transactions in the hope that these unregistered CRA claims can be insured over. e fast pace transactions in British Columbia renders the notion of obtaining CRA clearance certificates and all the other appropriate searches from government agencies unfeasible in most transactions. As a result many lenders will insure over the deficiencies that the searches could have revealed by obtaining a title insurance policy. e reality of the problem being discussed in this article is that title insurance will insure over any deemed trust debts of the borrower as of the date of funding of the mortgage. In the case of a draw mortgage there could be more than one funding date but suffice to say that the title insurance coverage will not cover CRA debts that arise aer the date the mortgage was funded and the title insurance policy was purchased. is means that even though a title insurance policy is in place for the lender it will not protect the lender from debts that arise aer the date of funding. Also complicating this aspect of the issue is the fact that title insurance does not survive the discharge of the mortgage from the land titles system. In many cases the lender will not be aware of the CRA debts at any time during the currency of the loan and quite oen at any •

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