Mortgage Broker

letters to the editor 18 | summer 2015 mbabc.ca MORTGAGEBROKER update Brokers not offering mortgage life insurance I was hoping you might be able to provide some clarification on this question. Is it mandatory that we offer mortgage life insurance to clients? Normally brokers attach a mortgage life insurance application to the end of their mortgage commitment letters that must be signed, either taking the mortgage life insurance or choosing not to take mortgage life insurance. However, if we as a firm have chosen to remove that form altogether, I am wondering if we are overstepping our obligations in doing so. Any clarification would help. George Lay Director FS Capital Reply: Mortgage brokers may offer mortgage life insurance to borrowers at the time of the mortgage completion process. is is really all the applicable legislation says on this matter – so you do not have to provide mortgage insurance options and get a "yes" or "no" on any form. Having said that, there may be some civil cases out there where you can't have borrowers think they have insurance when they don't, or else you might be liable if the misunderstanding came from you. So for this reason, mortgage brokers protect themselves by getting the "no" box checked when borrowers elect not to get insurance. If you do not want to have a form with tick boxes, I would recommend putting something in the mortgage documentation signed by the borrower explaining that you are not offering mortgage insurance and to seek advice from an insurance broker. Foreign investment in local real estate ere has been much written over the last 12 months about the possible effect of foreign investment in residential real estate, specifically in Vancouver, and whether or not such investment is skewing the real value of Vancouver real estate, making it impossible for many residents to afford to purchase in their own city. Last August, when the issue was raised with CMHC, they indicated they had no data upon which to offer any opinion. ree months later in November suddenly they did have data and it was indicating that foreign investors accounted for less than five per cent of the market in the Vancouver Lower Mainland. What is interesting is how would CMHC even know the number of foreign investors because foreign investors would not qualify for mortgages in Canada, let alone CMHC mortgages, unless they were not foreign investors but rather foreigners arriving to work in Canada and processed under a New to Canada program? Between then and now, over 25,000 people have signed an online petition calling for some sort of government action to address the lack of affordability. ere have been numerous reports of developers indicating that up to 30 per cent of their buildings were sold to foreign investors and countless anecdotal reports of condos and homes throughout the Lower Mainland sitting empty. When Vancouver Mayor Gregor Robinson asked Premier Clark to take steps, she rebuffed the mayor's request, citing two reasons why action would not be warranted. One, that the amount of foreign investors was minor at less than five per cent, and two, that if the government took any action, it could dramatically effect peoples' equity and therefore their nest eggs. is was an interesting opposing point of view. On one hand the effect of foreign buyers was minor and yet on the other hand, if the government took any steps to control them, the effect could be major. I would suggest that it could not be both. Shortly aer this, Cameron Muir of the BC Real Estate Association made public a report in which again the five per cent figure of foreign investors was put forward, however with an admission that data is sketchy, suggesting the BC Government should start monitoring levels of foreign investment in housing by attaching a residency declaration in the land transfer form process "to provide an opportunity to gain further insight into this market segment." At roughly the same time, Mr. Ian Smith, the former Director of BC Land Titles, wrote a letter to the Vancouver Sun indicating that such information had been kept for over 20 years and the government never allocated any resources to review the data, so it was eventually destroyed and collection ceased. He suggested it would be simple to reinstitute such a system and advocated such an action. It is apparent that we do not have good data, or for that matter any data beyond anecdotal or best guess. Good decisions are based on being as informed as possible. As an association of professionals involved in the housing industry we should at the very least lobby Victoria to follow the recommendation of the BC Real Estate Association and the former Director of BC Land Titles and begin to collect this data and then allocate funds to review and analyze the collected information. is would allow us to make informed decisions based on accurate information as opposed to imitating the three blind mice who see no evil, hear no evil and speak no evil. John Woods Broker/Owner e Mortgage Centre, Fitzwilliam Mortgage Corp. Reply: ank you John, for your letter outlining an important and topical issue. We think that a debate on this issue is important, particularly since we haven't quite nailed down the issues here. Is the concern about empty houses, including vacation properties, which go unoccupied by their owner, who may be Canadian or perhaps from another country? Is it about wealthy immigrants moving into our city centres who intend to settle into their newly acquired properties? Or the foreign nationals who intend to rent the properties out to local tenants? And let us not forget about the property letters mbabc members' views housing by attaching a residency declaration in the land transfer form process "to provide an opportunity to gain further insight into this market segment." At roughly the same time, Mr. Ian Smith, the former Director of

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