Benjamin Tal Economic Buzz: Spring 2012

Benjamin Tal Economic Buzz Spring 2012

To qualify, the HST must be paid or payable (whichever is earlier) on or after April 1, 2012 and before April 1, 2013. In the case of new construction or a substantial renovation, the house must be substantially complete on or after April 1, 2012.

Your application must be received by the ministry within six months of the payment of the HST and prior to October 1, 2013. Forms are available for download on the Ministry of Finance website for

For information on the $10,000 first-time home buyer’s bonus, please see my post on the BC First-Time New Home Buyers’ Bonus.

The notice below contains all the qualification and detailed information on the grant.

Grant for New Secondary or Recreational Residences

With my paperless workflow now firmly in place I wanted to share to my industry colleges the technology and processes I’ve used to go paperless in my office. If you think you are ready to go paperless in your mortgage business read on!

Computers & Hardware
My day to day computer is an Apple MacBook Air 10.5″. The small size of this computer lets me take my laptop anywhere and it easily slips into my portfolio when going to meet clients out of the office.

While working from the office I have an external monitor that I can attach to give myself some more screen real estate if needed, but I usually find myself just working from the laptops screen and fined the 10.5″ screen more than adequate for my needs.

I also use an Apple iPad and the Verico Mobile Office which allows me to take clients applications, keep up on rates and lender policies, organize my lender policy information PDF’s in iBooks and also sign paperless mortgage commitments with clients. This video explains all the apps I use on my iPad.

Software
When dealing with electronic files you need a good PDF program. Apple’s computers come with a free PDF program called Preview. While Preview is an adequate PDF program it is definitely worth investing in Adobe Acrobat. This full featured program lets you combine PDF’s, re-organize PDF’s, shrink PDF sizes for easier emailing to lenders, add digital signatures and best of all you can convert other document types to PDF. If you’ve ever received a multi-page scanned document from clients saved as a .jpg image in high quality you’ll really appreciate using this program! It’s well worth the price. There is also a full function 30 day demo available if you use Windows. Unfortunately, there is no free Mac version to try, but trust me when I say it’s well worth the investment.

E-Fax
The company I use for receiving my e-faxes from clients is called Toll Free Forwarding. Their service lets me receive faxes to the same phone number as my toll free voice line. If a fax is received my phone doesn’t ring and a PDF is sent to my email as an attachment.

Other brokers I know use Ring Central or eFax.

Online Mortgage Applications
Verico provides all their agents with an online mortgage application form which allows clients to securely submit an electronic mortgage application. The same forms are also available to brokers directly from Filogix for a yearly fee. Once clients complete the online application it is automatically imported to Filogix and assigned a new lender number and you are advised via email a new application has been received. One suggestion I have is once you receive a new online application via Filogix is to go to the “Forms” area save a copy of the “Application” so you have a copy of the application as submitted by the client. If you make any changes to the clients job, income, address etc. and have to refer back to the original application you’ll have a copy.

Document Scanners
Early on I invested in a good multifunction printer/scanner/fax. While shopping for a multifunction machine find one that has a document feeder tray to make scanning easier and more efficient.

Although I try to be completely paperless and advise clients to either scan and email me documents or send to my e-Fax, there is the odd time when clients will provide me with hard copies of documents. When ever I receive a document on paper I scan a PDF copy and save it to a PDF. Any originals are returned to the client and copies are shredded and recycled.

While on the go I use JotNot Scanner Pro on my iPhone to make quick scans of documents while away from my office. It works well for a few pages, but for larger documents a traditional scanner is best.

Secure Document Storage
Now that you’ve gone paperless you still need to store your electronic documents somewhere securely. Protecting clients information is paramount. While working on a clients active file I keep all files password protected and stored on my laptop in their respective client folder.

Once the deal is complete all supporting documentation for the clients file is uploaded to Filogix Exchange . If there is any hard copies ie: signed commitment, disclosure forms etc. they are all shredded and recycled once they have been uploaded to Filogix Exchange.

Making the switch to paperless
Changing my workflow to be paperless wasn’t a quick transition. I already had workflows in place on how I managed clients files and it did take some time to get the new processes in place and I felt comfortable using them.

By using the tools outlined above you can see in the picture below the difference in going paperless does to the average mortgage file. On the left is just one file from a year ago. On the right is my most recent file that completed.

With the technology available to us now there really is no reason not to go paperless. Environmental savings alone are a worthwhile reason for going paperless but by doing so you will also realize that going paperless will allow you to become a more efficient mortgage broker and better serve your clients. Better efficiency means less stress for you and happier clients and referral sources when you can get your deals done quickly and efficiently.

I’d love to hear your thoughts. If you have any questions or a tip to share please leave a comment.

Key messages from the April 2012 Monetary Policy Report:

• The profile for global economic growth has improved since the Bank released its January MPR. Europe is expected to emerge slowly from recession in the second half of 2012, although the risks around this outlook remain high.

• The profile for U.S. growth is slightly stronger. This reflects the balance of somewhat improved labour markets, financial conditions and confidence on the one hand, and emerging fiscal consolidation and ongoing household deleveraging on the other.

• Economic activity in emerging-market economies is expected to moderate to a still-robust pace over the projection horizon, supported by an easing of macroeconomic policies.

• Commodity prices remain elevated owing to improved global economic prospects, supply disruptions and geopolitical risks. In particular, the international price of oil has risen further and is now considerably higher than that received by Canadian producers. If sustained, these oil price developments could dampen the improvement in economic momentum.

• Overall, economic momentum in Canada is slightly firmer than the Bank had expected in January. The external headwinds facing Canada have abated somewhat, with the U.S. recovery more resilient and financial conditions more supportive than previously anticipated.

• As a result, business and household confidence are improving faster than forecast. The Bank projects that private domestic demand will account for almost all of Canada’s economic growth over the projection horizon.

• Household spending is expected to remain high relative to GDP as households add to their debt burden, which remains the biggest domestic risk. Business investment is projected to remain robust, reflecting solid balance sheets, very favourable credit conditions, continuing strong terms of trade and heightened competitive pressures.

• The contribution of government spending to growth is expected to be quite modest over the projection horizon, in line with recent federal and provincial budgets. The recovery in net exports is likely to remain weak in light of modest external demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar.

• The Bank projects that the economy will grow by 2.4 per cent in both 2012 and 2013 before moderating to 2.2 per cent in 2014. The degree of economic slack has been somewhat smaller than anticipated, and the economy is now expected to return to full capacity in the first half of 2013.

• As a result of this reduced slack and higher gasoline prices, the profile for inflation is expected to be somewhat firmer. After moderating this quarter, both total and core inflation are expected to be around 2 per cent over the balance of the projection horizon as the economy reaches its production potential, the growth of labour compensation remains moderate, and inflation expectations stay well-anchored.

• Despite recent improvements to the outlook for the global and Canadian economies, risks remain elevated.
• The three main upside risks to inflation in Canada relate to the possibility of higher-than-expected oil prices, stronger-than-expected growth in the U.S. economy and stronger momentum in Canadian household spending.

• The two main downside risks to inflation in Canada relate to a reintensi­fication of sovereign debt and banking concerns in Europe, and the pos­sibility that growth in Canadian household spending could be weaker than projected.

• Overall, the Bank judges that the risks to the inflation outlook in Canada are roughly balanced over the projection period.
  Reflecting all of these factors, the Bank yesterday maintained the target for the overnight rate at 1 per cent. In light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the 2 per cent inflation target over the medium term. The timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments.

Bank of Canada Monetary Policy Report – April 2012

For mortgage borrowers this means that those in Variable Rate Mortgages will see no change in their rate. There has been no change to the Bank of Canada rate since September 2010.

The next scheduled Bank of Canada date for announcing the overnight rate target is 5 June 2012.

From the Bank of Canada Press Release:

The profile for global economic growth has improved since the Bank released its January Monetary Policy Report (MPR). Europe is expected to emerge slowly from recession in the second half of 2012, although the risks around this outlook remain high. The profile for U.S. growth is slightly stronger, reflecting the balance of somewhat improved labour markets, financial conditions and confidence on the one hand, and emerging fiscal consolidation and ongoing household deleveraging on the other. Economic activity in emerging-market economies is expected to moderate to a still-robust pace over the projection horizon, supported by an easing of macroeconomic policies. Improved global economic prospects, supply disruptions and geopolitical risks have kept commodity prices elevated. In particular, the international price of oil has risen further and is now considerably higher than that received by Canadian producers. If sustained, these oil price developments could dampen the improvement in economic momentum.

Overall, economic momentum in Canada is slightly firmer than the Bank had expected in January. The external headwinds facing Canada have abated somewhat, with the U.S. recovery more resilient and financial conditions more supportive than previously anticipated. As a result, business and household confidence are improving faster than forecast in January. The Bank projects that private domestic demand will account for almost all of Canada’s economic growth over the projection horizon. Household spending is expected to remain high relative to GDP as households add to their debt burden, which remains the biggest domestic risk. Business investment is projected to remain robust, reflecting solid balance sheets, very favourable credit conditions, continuing strong terms of trade and heightened competitive pressures. The contribution of government spending to growth is expected to be quite modest over the projection horizon, in line with recent federal and provincial budgets. The recovery in net exports is likely to remain weak in light of modest external demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar.

The Bank projects that the economy will grow by 2.4 per cent in both 2012 and 2013 before moderating to 2.2 per cent in 2014. The degree of economic slack has been somewhat smaller than the Bank had anticipated in January, and the economy is now expected to return to full capacity in the first half of 2013.

As a result of this reduced slack and higher gasoline prices, the profile for inflation is expected to be somewhat firmer than anticipated in January. After moderating this quarter, total CPI inflation is expected, along with core inflation, to be around 2 per cent over the balance of the projection horizon as the economy reaches its production potential, the growth of labour compensation remains moderate, and inflation expectations stay well-anchored.

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. In light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the 2 per cent inflation target over the medium term. The timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments.

The Deal Run Mobile App for iPhone & iPad is a simple application that has just three screens.

The first screen serves as registration window where you enter your and appears once at first launch.

On first launch you are asked to enter your name, brokerage, city, phone number and email address.

One problem I found with the registration screen was that once you enter your information there is no way to change any of your contact information without deleting the app and reinstalling. It would be nice to see a settings page so you have the option to change settings once the initial setup is complete.

The second screen is the screen you will see after you launch the app after the first time.

On this screen you enter property and application details including Province, City, Address, Loan to Value etc. Once all the information is completed there is a “Next” button on the top of the screen that takes you to the third screen of the app.

The third and final screen is where you enter information on the client and any notes pertaining to the application.

Once you have entered the required information there is “Send” button on the top of screen that will forward the application via email to MCAP for review. There is also an option on the third screen to push a button to call the MCAP Eclipse Deal Run desk directly.

My Final thoughts:
While I give kudos for MCAP for stepping outside the box and offering an alternative to calling into their Deal Run Hotline, I’m not sure I see myself using this app very often. I found it redundant to enter information into the app when I have already packaged the majority of the application into Filogix Expert. I have used the MCAP Eclipse “Deal Run Hotline” on past deals and found it quite helpful and in the future will probably just call them directly again. They answer the phone quickly and it only takes a few moments to go over the deal with them over the phone.

The Deal Run app however could be good use for a newer mortgage broker that doesn’t have as much experience with alternative deals. It walks you through in a step by step process on what alternative lenders look for in an application and it serves as a good template for packaging alternative deals and learning what information those lenders are looking for.

The two forms FIN 520 Application for the BC First-Time New Home Buyers’ Bonus [PDF Download Link] and FIN 520A Schedule A – Certification BC First-Time New Home Buyers’ Bonus [PDF Download Link] as well as instructions how to complete the application for the BC First-Time New Home Buyers’ Bonus are available on the Ministry of Finance Website.

Purchasers will qualify as a first-time new home buyer if:

For further info visit: www.fin.gov.bc.ca or call; 1-877-387-3332.

Full information on the B.C. Home Buyers Bonus is below:
2012 First Time Home Buyers Fact Sheet

In accordance with the new CMHC mortgage changes, at 12:01 AM EST Monday, the benchmark qualifying rate for insured high-ratio mortgages will be 5.44%.

Clients will now have to qualify based on the 5.44% interest rate if they want to choose a variable or a 1- to 4-year fixed term if you’re putting down less than 20%.

CMHC defines the benchmark rate as the Chartered Bank — Conventional Mortgage 5-year rate that is the most recent interest rate published by the Bank of Canada in the series V121764 as of 12:01 AM (Eastern Time) each Monday.

In this post Brenda explains the conveyance steps that a Notary completes when you purchase a used strata property.

Steps in a Simple Conveyance of a Used Strata Property

Step 1 – The buyer is contacted to obtain their full legal name, occupation and First Time Home Buyers status to prepare the paperwork accordingly.

Step 2 – The real estate office forwards the Contract of Purchase and Sale and details of the commissions to be paid. We require this paperwork in order to obtain the following for the transfer documents and the statement of adjustments:
‐ The title search is pulled to determine if there are any charges to be discharged upon the sale, and to review the non‐financial charges;
‐ The tax search is pulled to determine if there are any outstanding property taxes owing by the seller, and to determine the current years’ property tax adjustment required. Generally, if the transfer completes prior to July, the seller will owe their share of the taxes to the buyer, and if the transfer completes after July the Buyer will owe the seller their share of the taxes. Paid advance taxes are repaid to the seller upon completion;
‐ To determine if the seller is a non‐resident;
‐ Property purchase price and deposit paid;
‐ Completion, Adjustment, and Possession Dates;
‐ To determine if there are any holdbacks or credits;
‐ To obtain the name and number of the strata management company, in order for us to obtain
the Form F, strata fee payment, any funds outstanding, move in and out fees, and the details of
the Insurance Agent to obtain an Insurance Binder for the bank;
‐ To calculate the real estate commissions owing.

Step 3 – Once we know who the strata manager is, we order the Form F, and obtain the name of the Insurance Agent. In order to avoid RUSH fees, we are required to order this document at least 7 days in advance. We typically do not send the transfer documents to the Vendors Notary until we have received the undertakings and confirmation of fees from the strata manager. The realtor should provide us with the Form B Information Certificate to avoid the cost to the buyer of ordering it again.

Step 4 – Upon receipt of the strata undertakings, outstanding amounts move out fees, and any notification of a special levy, we then forward the transfer documents to the vendor’s notary for execution by the vendor, which consists of the following documents:
‐ Letter of Undertaking to the Vendors Notary setting out their undertaking to pay off the existing mortgage(s), overdue property taxes, utilities, and strata fees, and any debt outstanding that is the responsibility of the vendor to pay from the sale proceeds.
‐ A copy of the title and tax search
‐ The Transfer Form A
‐ Vendors Statements of Adjustments
‐ GST/HST Certificate
‐ Statutory Declaration regarding the Income Tax Act/ Residency Status
‐ Parking and Storage Locker Assignment

Step 5 – The Bank will send us the Mortgage Instructions. However, some banks require the buyer to attend a branch or see their mortgage broker to sign paperwork, prior to sending us the mortgage instructions. We typically cannot prepare the mortgage documents until we receive the instructions.
Upon receipt of the mortgage instructions, we have to read the entire package to obtain and prepare any documentation required by the bank. Documents that the bank generally requires are the following:
‐ Form B Mortgage
‐ Mortgage Commitment and Disclosure Statement
‐ Acknowledgment of Receipt of Mortgage Terms
‐ Electronic Filing Acknowledgement
‐ Receipt of the Form B Information Certificate
‐ Pre‐authorized debit form and void cheque
‐ Realty tax form
‐ Statutory declarations
‐ Identification document – client must have unexpired ID
‐ Insurance Binder
‐ Title Insurance
‐ Miscellaneous

Step 6 – Once we have received the mortgage instructions, which confirms the amount to be advanced to our office, we can prepare the final paperwork which will provide the final funds required for closing. The final funds required will include our fees and disbursements, all of the adjustments, and the balance of any further down payment required to complete. Or alternatively, once we have received the Contract, and Strata Information, we can calculate the entire funds required for closing to enable the buyer to determine the mortgage funds needed.

Step 7 – Upon completion of the paperwork, and prior to the closing appointment, we will email the following to the buyer:
‐ Our engagement letter to confirm the correct spelling of our clients name, and outlines the following tasks.
a) To search title; to discuss charges to remain on title; and to review a copy of the Plan as filed in the Land Title Office;
b) To obtain and review municipal tax information specific to the property;
c) To prepare or obtain transfer and mortgage documents as well as supporting
documents required by the registry or others;
d) To attend to or arrange for execution of transfer and mortgage documents;
e) To negotiate appropriate closing undertakings with solicitor/notary for Seller;
f) To receive and account for trust funds;
g) To provide your Lender with its requested security documents;
h) To attend to registration of relevant documents at the appropriate Land Title Office;
i) To make inquiries as to the residency status of the Seller pursuant to the Income Tax
Acts as required;
j) To disburse trust funds;
k) To report and provide you with a final State of Title Certificate, if applicable.
Purchasers statement of Adjustments which indicates the funds required for closing
‐ Mortgage Documents
‐ Mortgage Terms
‐ First Time Homebuyers Guide (if applicable)
‐ Title Insurance Information
‐ Confirmation of Appointment

Step 8 – Upon return and review of the Transfer documents from the vendor’s notary, we will be able to register the Form A Transfer on the date of completion.

Step 9 – We must formally request the Mortgage Funds from the bank for the completion date.

Step 10 – On the completion day we obtain a Pre‐Search and register the following documents at the
Land Title Office:
‐ Transfer Form A
‐ Form F Declaration
‐ Property Transfer Tax Application
‐ Form B Mortgage and Assignment of Rents( if Applicable)

Step 11 – After the Post Search, we disburse the funds and fax confirmation of registration to the applicable real estate offices.

Step 12 – We prepare the Final Report for the Bank.

Step 13 – We follow up for the appropriate discharges, and upon confirmation that the mortgages/liens have been discharged, we order a State of Title Certificate for the buyer and the bank which will show the new buyer and mortgage registered on title.