Real Estate Fraud Rare But Experts Warn Homeowners to be on the Lookout

Malcolm Morrison, THE CANADIAN PRESS
money.thecanadianpress.comTORONTO - Real estate fraud is a rare thing but experts in the field say that doesn't mean people should assume it will never happen to them - considering the misery it can inflict on the unwary homeowner, it's worth knowing that it's out there and it's nasty.

"I compare the fraud issue to the lottery," said Ray Leclair of title insurance provider TitlePlus.

"There are millions of transactions in Ontario alone in real property every year. A very minute number of those are fraudulent. So for the public to win or lose in the fraud lottery, the odds are very low."

But it's not an experience you would ever want to go through, he said, even though governments have put in place some measures to make it easier for people to regain ownership title that have been fraudulently pilfered.

"At the end of the day, even if you get your title back, there's the question of (legal fees)."

There are two types of real estate fraud to be concerned about - mortgage fraud and title fraud.

Mortgage fraud is something that is more troublesome for lenders. It involves a fraudster leaving the title or ownership of a property in the current owner's name but mortgaging it without their knowledge, sometimes by fraudulently discharging the existing mortgage. It can also happen when a would-be homeowner falsifies information to get a mortgage.

"That's just a fact of lending," said Laura Parsons, manager of specialized sales for Bank of Montreal in Calgary.

"There are people out there who normally wouldn't get a loan granted to them but because they are fraudulent and give incomplete information or they don't let the lender know all the information, they end up getting approved."

What the average homeowner has to look out for is title fraud. It happens when a fraudster changes the ownership or title of a property into another name in order to sell or refinance the property.

According to the Ontario Ministry of Consumer Services, "it often involves fraudsters using stolen identity or forged documents to transfer a registered owner's title to himself or herself securing a mortgage on the property and then disappearing with the mortgage proceeds."

Parsons calls it a form of identity theft.

"So they know all the details of the person, they go to the land title registry, they pull a title and they find out that there is no encumbrance on the property," she said.

"Now they have basically a ticket to sell the property, so they go in and they can change home ownership."

If the fraudster has enough information, they can change ownership of the property at a land titles office, put a property in their own name. Then they either sell it or go to the bank and get a homeowner line of credit or a mortgage put on that property for their own purposes.

You would think that you would know immediately if you had been scammed, but fraudsters aren't entirely stupid and there are ways to delay finding out.

"They have gone in and taken the title or put a mortgage on and then they will pay it for two or three months," said Leclair.

In the meantime, you're getting all your bills and everything looks fine.

"In the meantime, your mortgage is gone and there's a new mortgage on there - it's going to be paid for two or three months and then two or three months later, they default, there's two or three months waiting time before the bank actually does something so six months, nine months down the road, you now get an angry bank calling you, saying they're going to sell, or you get someone showing up at the door saying you're out the door."

Leclair also pointed to a fraud victim in Vancouver who started wondering why he wasn't getting his property tax bill.

He called city hall and was told "well, you sold the property."

"It's very ordinary things. You don't get a water bill, you don't get those kind of things that could be a hint that something has changed along the way."

Leclair notes that while the government has systems in place to help you if you are defrauded, it's up to the homeowner to monitor. Both he and Parsons emphasized the importance of protecting your private information as a way to avoid becoming a target of real estate fraud.

Parsons said, in particular, you want to keep your social insurance number confidential. And that means not carrying around your SIN card in your wallet where it could be lost or stolen.

"And now with these recycling bins, people are throwing more and more of their mail and personal information in the blue bin - people should get a shredder - $149 buys you some security," she said.

And consider title insurance. Not only does it protect you now and in the future, it provides coverage for fraud that may have occurred prior to your purchase of your home.

Leclair said the insurance costs about $200 to $300, depending on the value of the property, and it is good for as long as you own the home.

And one of the worst things you can do?

"I've read articles where people say the best protection against fraud is to get the biggest mortgage you can on your property - it's a fallacy," said Leclair.

"People figure, well if there's no equity in the property, how can they steal it? Well they can go in and fraudulently discharge the mortgage. I laugh every time I see this. Discharging a mortgage is probably simpler than anything else. It's the bank's signature, it's very easy to imitate. Who knows what a bank's signature looks like?"

http://ca.finance.yahoo.com/personal-finance/article/cpmoney/real-estate-fraud-rare-but-experts-warn-homeowners-lookout-20100408

Real Estate Fraud Rare But Experts Warn Homeowners to be on the Lookout

Canadian Economy Expanding Qickly, But Will Soon Trail G7 Countries: Carney

Julian Beltrame, THE CANADIAN PRESS
The Canadian Press

OTTAWA - Canada is leading the other G7 countries out of recession with the fastest growth in a decade, but it will be trailing those countries in a few years, the Bank of Canada said Thursday.

The central bank's latest economic outlook released Thursday makes several bold predictions, including that Canada's fast start out of last year's slump is already slowing, that the housing boom is fizzling out, and that the country's long-term growth prospects are discouraging.

And governor Mark Carney is cautioning markets not to be so sure Canada's central bank will raise its key interest rates in a matter of weeks.

On Tuesday, the Canadian dollar shot up more than 1.5 cents to above parity with the U.S. currency after the Bank of Canada said it was dropping its promise not to raise rates before July at the earliest.

But Carney told a news conference Thursday that there is still considerable risk in the global economy, or to anticipating his next move.

"There is nothing pre-ordained from this day forward," Carney said to a question on interest rates.

Most economists interpreted Tuesday's statement as an alert to plan for higher rates in June, but some argued Carney had left himself plenty of wiggle room.

"The Bank of Canada has limited scope to raise interest rates in the next several months," said Brian Bethune, chief economist with IHS Global Insight.

"While we may see one or two token moves to raise the overnight rate by a quarter of a point in the June to October window, action to raise rates will be very limited" by the fact doing so would further boost an already strong dollar.

In Thursday's report, the bank said it is planning for the dollar to hover around parity for the next three years and listed it as a major impediment to strong growth because it will make exports less competitive in global markets.

The dollar hovered just above and below parity throughout the Thursday trading day.

The report says Canada's economy expanded by 5.8 per cent in the just past quarter, the largest advance since 1999, but growth will likely slow to 3.8 per cent in the April-June period, and to 3.5 per cent the rest of the year.

It gets worse. Economic growth will average 3.1 per cent in 2011 and 1.9 per cent in 2012, about half what it will be in the United States and lower than both Europe and Japan.

"There is some good news here, our economy has returned to growth," said Carney, noting that more Canadians will find jobs and those who have had their hours reduced are more likely to be called in to work longer.

But as he has in the past, Carney warned that the longer-term prospects for the Canadian economy is modest unless the corporate sector starts investing heavily in new machinery and equipment to become more productive.

Canada is also facing a bigger issue of an aging workforce than the United States, exacerbating the divergent trend line between the two economies.

"This is in the hands of the private sector," Carney said. "If we want to grow faster, we're going to have to work smarter, invest better, (and) build new markets."

The bank said it fully expects businesses to step up investment this year, but it could hardly get worse - business investment actually declined in the fourth quarter when the rest of the economy was rebounding.

A big reason the economy has shot out of recession is that Canadian consumers, particularly home-buyers, have "front-loaded" their purchases because of record low interest rates.

But Canadians that bought homes in the past six months, or took advantage of the now defunct home renovation tax credit, won't be doing so in the future, hence bringing an end to the housing sector boom.

Housing, which is contributing about 0.6 per cent to economic growth this year, will actually be a slight drag next year, the bank forecasts. That doesn't necessary translate to an outright decline, but it does foresee prices and sales levelling out.

For the bank, that is a good thing because it regards the housing market as too hot for home-buyers' own good. It has warned repeatedly that households should make sure when they purchase a home that they will be able to afford the monthly payments once interest rates rise.

In the main, the bank's view of the Canadian economy and the world is actually brighter than the previous published analysis issued in January, while noting the high level of uncertainty.

The world economy will grow at around four per cent for the next three years, the bank says, led by China and other emerging countries. This should help Canada's export sector, the bank said.

The advanced countries, which borrowed heavily to soften the blow from the 2008-09 recession, will end up with lower activity going forward. Europe will be the weakest major economic region, with growth rates of 1.2 and 1.6 per cent over the next two years.

The bank also issued a more detailed explanation of its fears about inflation that provides more ammunition to analysts who expect Carney to raise the policy rate from 0.25 per cent to 0.5 per cent at the next opportunity, June 1.

The report says underlying inflation is higher than it had expected it to be at this point in the recovery because wages unexpectedly held up during last year's recession. Shelter costs have also increased faster than expected, it said.

The bank also warns that Canadians can expect prices to receive a 0.6-per-cent boost after July 1, when Ontario and British Columbia move to a harmonized sales tax.

The new tax will cut costs to businesses, however, and the bank says cost savings will likely be transmitted into prices in the second half of they year and trim inflation by 0.3 percentage points.

Total inflation, the amount Canadians actually see when they go to the store, will be higher than two per cent for the rest of this year before returning to target in the second half of 2011, it said

http://news.therecord.com/article/700765

Canadian Economy Expanding Qickly, But Will Soon Trail G7 Countries: Carney

Bank Signals Higher Interest Rates Only Weeks Away, as Dollar Soars

By Julian Beltrame, The Canadian Press

OTTAWA - The Bank of Canada signaled Tuesday it is poised to start raising interest rates in a matter of weeks, a move that will make borrowing costs higher on everything from car loans to mortgages.

Over the last few weeks, Canadians have already felt the impact of expectations that rates were due to rise - most major Canadians banks started hiking fixed-rate mortgage rates by as much as 0.85 per cent.

But with the central bank now saying it is prepared to move off its emergency 0.25 per cent overnight rate as early as June 1, the whole menu of variable and short-term rates are being brought into play.

"The one that will be affected is the prime lending rate... so the whole gamut will go up when the Bank of Canada raises its rate," said Bank of Montreal economist Michael Gregory. Those include variable-rate mortgages, lines of credit and short-term car loans, he said.

The bank is also risking sending the Canadian dollar into the stratosphere by moving significantly and robustly before the U.S. Federal Reserve moves off its own zero per cent interest rate policy.

The loonie soared within minutes of the central bank's 9 a.m. ET policy statement, which, while leaving the rate unchanged for now, made no secret of where it is headed.

The bank's governing council declared that with the economy and inflation growing faster this year than had been previously thought, there was no need to stay with its "conditional commitment" to leave rates unchanged until the end of the second quarter, or after June 30.

"This unconventional policy provided considerable additional stimulus during a period of very weak economic conditions," the council wrote.

"With recent improvements in the economic outlook, the need for such extraordinary policy is now passing, and it is appropriate to begin to lessen the degree of monetary stimulus."

Hence, the council went on, it was withdrawing the conditional commitment.

The bank also said it was ending its key emergency lending instrument that helped inject liquidity into money markets during the crisis, which economists called a clear signal about the central bank's future intentions.

The dollar rose about 1.5 cents shortly afterwards, breaking through the parity ceiling with the U.S. greenback. It closed up 1.58 cents at 100.12 cents U.S.

The currency move suggested that while the market had expected bank governor Mark Carney to signal a tightening bias, it was surprised by the hawkish tone.

"Removing the conditional commitment to keep rates on hold until July and ending purchase and resale agreements are as good as cementing a June 1 hike," said economists Derek Holt and Karen Cordes Woods of Scotia Capital in a note to clients.

Holt added in an interview that the language from the bank opens the door for a bigger-than-expected hike in June, perhaps by as much as half a point.

Not all analysts believe the market is right to anticipate a June hike, however. Some say Carney is still leaving himself some wiggle room to stay at the lower bound until July 20, while others are advising the governor to wait until the Fed acts.

"I would keep rates unchanged until the Fed moves, because otherwise you create this problem on the Canadian dollar," said Brian Bethune, chief economist with IHS Global Insight.

A strong loonie is regarded as a brake on economic growth because it makes the price of Canadian exports less competitive in foreign markets.

In the statement, the central bank conceded the point, listing the "persistent strength of the Canadian dollar," along with poor productivity and low U.S. demand as "significant drags" on the Canadian economy.

But economists suggested the bank's language suggests it is prepared to live with a strong loonie.

Even so, economists that favoured a rate hike said the bank can only get so far ahead of the Fed. They note the Canadian bank has flown solo twice before in the past two decades, only to have to subsequently pull back.

"The need for emergency rates have passed but we still have a need for low rates," Holt explained.

C.D. Howe's monetary policy council, a sampling of nine economists, sees the bank's policy rate rising to 2.5 per cent by the spring of 2011. That is a significant hike from the current level, but it is still below what would be considered normal and only slightly above the rate of inflation.

While the tone on interest rates was hawkish, the bank's view on the economy was only mildly more rosy. It upgraded this year's growth to 3.7 per cent, from a previous prediction of 2.9 per cent, but it lowered its forecast for 2011 to 3.1 per cent, and it believes 2012 will only bring a 1.9 per cent advance.

It now expects the economy to return to full capacity in the spring of 2011, a full quarter before the previous estimate it made in January.

The bank did raise the temperature, slightly, on inflation.

It said core prices have been firmer than projected, but that they were expected to ease slightly in the second quarter of this year and remain near the bank's two per cent target over the next two years.

Total headline inflation, which includes volatile items such as gasoline prices, was expected to be higher than two per cent this year, but returning to target in the second half of 2011.

Bank Signals Higher Interest Rates Only Weeks Away, as Dollar Soars

Bank of Canada Maintains Overnight rate at 1/4 per cent

2010
FOR IMMEDIATE RELEASE
20 April 2010 CONTACT: Jeremy Harrison
613 782-8782
Bank of Canada maintains overnight rate target at 1/4 per cent; removes conditional commitment

OTTAWA —The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/4 per cent. The Bank Rate is unchanged at 1/2 per cent and the deposit rate is 1/4 per cent.

Global economic growth has been somewhat stronger than projected, with momentum in emerging-market economies increasing noticeably. Exceptional stimulus from monetary and fiscal policies continues to provide important support in many countries. The recovery in the major advanced economies is still expected to be relatively subdued, reflecting ongoing balance sheet adjustments and the gradual withdrawal of fiscal stimulus commencing later this year. Despite recent progress, considerable uncertainty remains about the durability of the global recovery.

In Canada, the economic recovery is proceeding somewhat more rapidly than the Bank had projected in its January Monetary Policy Report (MPR). The profile for growth is more front-loaded than that presented in the January MPR. The Bank now projects that the economy will grow by 3.7 per cent in 2010 before slowing to 3.1 per cent in 2011 and 1.9 per cent in 2012.

This profile reflects stronger near-term global growth, very strong housing activity in Canada, and the Bank’s assessment that policy stimulus resulted in more expenditures being brought forward in late 2009 and early 2010 than expected. At the same time, the persistent strength of the Canadian dollar, Canada’s poor relative productivity performance, and the low absolute level of U.S. demand will continue to act as significant drags on economic activity in Canada. The Bank expects the economy to return to full capacity in the second quarter of 2011.

The outlook for inflation reflects the combined influences of stronger domestic demand, slowing wage growth, and overall excess supply. Core inflation, which has been somewhat firmer than projected in January, is expected to ease slightly in the second quarter of 2010 as the effect of temporary factors dissipates, and to remain near 2 per cent throughout the rest of the projection period. Total CPI inflation is expected to be slightly higher than 2 per cent over the coming year, before returning to the target in the second half of 2011.

In response to the sharp, synchronous global recession, the Bank lowered its target rate rapidly over the course of 2008 and early 2009 to its lowest possible level. With its conditional commitment introduced in April 2009, the Bank also provided exceptional guidance on the likely path of its target rate. This unconventional policy provided considerable additional stimulus during a period of very weak economic conditions and major downside risks to the global and Canadian economies. With recent improvements in the economic outlook, the need for such extraordinary policy is now passing, and it is appropriate to begin to lessen the degree of monetary stimulus. The extent and timing will depend on the outlook for economic activity and inflation, and will be consistent with achieving the 2 per cent inflation target.

In accordance with the removal of the conditional commitment, there will be no additional term Purchase and Resale Agreements issued by the Bank.

Information note:
A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on 22 April 2010. The next scheduled date for announcing the overnight rate target is 1 June 2010.

Bank of Canada Maintains Overnight rate at 1/4 per cent

Anticipation of Bank of Canada Rate Hikes are Fuelling Mortgage Increases, High Dollar.

By Julian Beltrame, The Canadian Press

OTTAWA — The Bank of Canada has yet to officially start hiking interests rates, but already Canadians are feeling the impact of higher borrowing costs.

Analysts say expectations the central bank will boost rates June 1 at the earliest and July 20 at the latest have boosted the Canadian loonie and pushed the big banks to twice raise mortgage rates in the past two weeks.

The loonie has been steadily gaining ground for weeks and Wednesday closed above parity, at 100.08 cents U.S., for the first time in almost two years.But economists warn there is danger in the Bank of Canada moving ahead of the U.S. Federal Reserve on hiking rates, even if it is justified by the fundamentals.

“The Bank of Canada is basically going to fly solo,” said Benjamin Tal, an economist with CIBC World Markets.“The markets are already discounting 75, maybe 100 basis points and it’s already in the price of the dollar.”

Canada’s economy has sprinted forward following last year’s recession to record a five per cent advance in the fourth quarter of 2009, and expectations are the first quarter will show an even quicker pace.

More importantly, Canada has recouped nearly half of the total job losses of the downturn, while the United States still struggles with the disappearance of 8.5 million jobs, a decimated housing market and a financial sector still hobbled by an excessive overhang of debt.

In testimony to Congress on Wednesday, Fed chair Ben Bernanke suggested it will be some time before the U.S. starts raising the policy rate from the current near-zero emergency stance.

“The Federal Open Market Committee has stated clearly that they currently anticipate that very low, extremely low rates will be needed for an extended period,” Bernanke told a Congressional committee.

Economists say moving ahead of the U.S. — which is all but certain — could have some beneficial effects, such as cooling what many believe is an overheated housing market by making mortgage costs higher.

But the bigger problem is that higher rates attract more foreign capital into Canada and gives an additional lift to the loonie, something few, except for possibly cross-border shoppers, want.

Finance Minister Jim Flaherty said Wednesday that the strong loonie is a reflection of the relative strength of the Canadian and U.S. economies.

While true, said Liberal critic John McCallum, a former bank economist, there is a risk in raising rates while the U.S. keeps theirs low.

“Then our dollar could get even stronger and that would be really bad for exports and jobs,” he said.

While some analysts have speculated that Canada’s manufacturing sector is no longer as exposed by a strong currency as a decade ago, few disagree with the notion that currency appreciation is a net negative for the economy.

This week’s trade numbers showed the rebound is almost all due to energy, while the goods side registered a $4.4 billion deficit in February.

Carl Weinberg of U.S.-based High Frequency Economists was not impressed.

“You might think that the largest supplier of crude oil to the United States would be able to run a bigger surplus,” said Weinberg. “Blame the strong loonie for a lot of the woes of exporters, especially since so much of what Canada sells is priced in U.S. dollars.”

Given the signals the bank has sent, it would take a major reversal in the recent spate of good economic news, as well as easing inflationary pressures, to stay the central bank’s hand on rates.

However, Sheryl King, chief economist with Merrill Lynch in Canada, says she does not believe governor Mark Carney will get too ahead of the curve and will keep the increases modest.

She says the economy may be hot now, but she sees it cooling in the second half of the year, and Carney putting on his brakes until the Fed shows signs of joining him on the policy tightening track. http://news.therecord.com/Business/article/698287

Anticipation of Bank of Canada Rate Hikes are Fuelling Mortgage Increases, High Dollar.

When Will the Bank of Canada Raise Interest Rates and By How Much?

Posted to FP: April 12, 2010, Jonathan Ratner

With most agreeing that a rate hike from the Bank of Canada is imminent, the talk now turns to the exact timing and extent of the central bank’s policy changes.

Governor Mark Carney made a “conditional” promise to keep the benchmark interest rate at 0.25% through the end of June 2010. However, one way to keep to this expiry date and provide markets with a jolt would be an initial rate hike of 50 basis points on July 20, according to Bank of America Merrill Lynch economist Sheryl King.

“Futures markets are only partially pricing in that possibility so it would be a shot across the bow to be sure,” she said in a note. “The strongest argument against this tack in our view is that the market would immediately rush to the conclusion that all future hikes will be similar in size.”

The economist thinks a 25 basis point hike on June 1 is the most likely scenario.

Meanwhile, Ms. King feels a 25 basis point hike on July 20 is the least likely scenario. She noted that this expectation is already fully priced into the Eurodollar and overnight index swap (OIS) markets. “If the Bank wants to elevate the risk premium in the bond market, validating market pricing cannot be the way they will go.”

The economist said that with growth running 40% faster than the Bank of Canada’s January forecasts, a rollover in unemployment and core CPI “frustratingly high,” there is justification to move a bit early. She added that moving early rather than large would help build up that needed risk premium without having 10-year notes move above the 6% mark that a normalized risk premium of 1.8% and a neutral overnight rate of roughly 4.5% would command.

The main arguement against a June 1 rate hike is that it comes ahead of the June 30 expiry commitment and puts the Bank’s credibility in the market at risk. Ms. King insists that credibility in achieving the central bank’s 2% inflation target is “very arguably the more important badge to maintain.”

“All along, the Bank has warned investors the commitment to not touch rates was not a promise and earlier rate hikes possible if conditions warranted.” http://network.nationalpost.com/NP/blogs/tradingdesk/archive/2010/04/12/when-will-the-bank-of-canada-raise-interest-rates-and-by-how-much.aspx

Australia boosts key rate

Central bank puts benchmark rate at 4.25%, says economy no longer needs the stimulus of low rates

Adelaide, Australia — the Globe and Mail-The Associated Press

Australia's central bank raised its key interest ratehttp://images.intellitxt.com/ast/adTypes/mag-glass_10x10.gif Tuesday for a fifth time in six months and said the economy no longer needs the stimulus of low rates with unemployment lower than expected and housing sales robust.

The quarter percentage point rise took the benchmark rate to 4.25 per cent and followed a warning last week by the central bank governor that mortgage rates would continue to rise.

“It is appropriate for interest rates to be closer to average” because this year's economic growth and inflation are likely to be near target levels, the Reserve Bank of Australia bank said in a statement.

Australia weathered the global downturn better than most developed countries and the economy grew at its fastest pace in nearly two years in the fourth quarter of 2009.

The central bank cited indications that lenders were more willing to lend, buoyancy in the housing market and lower unemployment than expected.

“With the risk of serious economic contraction in Australia having passed some time ago, the Board has been lessening the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker,” the bank said.

Federal Treasurer Wayne Swan said rates are still lower than they were before the global downturn and the central bank was making moves to bring them to normal levels.

“I know that is cold comfort for a lot of families and a lot of people in businesses,” he told reporters. “But that is the reality of a strengthening economy.”

http://www.theglobeandmail.com/report-on-business/economy/australia-boosts-key-rate/article1524458/

When Will the Bank of Canada Raise Interest Rates and By How Much?

OTTAWA - With the Canadian economy doing surprisingly well over the past six months, many see higher interest rates from the Bank of Canada in the not so distant future, but according to a report released Thursday from CIBC's chief economist Avery Shenfeld, rates are likely to remain at a very low 2.5% through to 2011.

In CIBC World Markets' latest Global Positioning Strategy report, Mr. Shenfeld lists several reasons for Bank of Canada Governor Mark Carney to keep interest rates subdued after July. He points out that the U.S. will probably have a more gradual approach to raising rates and if Canada gets too far ahead, that could send the Canadian dollar soaring.

"While factories are recovering in Canada alongside a global industrial revival, output remains nearly 20% below the pre-recession peak, and wages are now substantially above those stateside without the productivity gains to match. There's only so much of a competitive challenge that non-resource exporters can take in short order," Mr. Shenfeld said.

He also pointed out that inflation is not expected to rise much further and stimulus spending is expected to be reigned in by governments - including Canada's - which will slow growth.

"If the U.S., the U.K., and Japan all move from huge stimulus to even modest restraint, Canada will feel it in our export prospects come 2011," Mr. Shenfeld pointed out.

Mr. Carney has promised to keep interest rates where they are at 0.25% until the end of June. However, the latest reading of Canada's economic growth showed the core inflation rate at 2.1% in February, far above the Bank of Canada's forecast of 1.6% for the first quarter of the year. Many analysts believe the Bank of Canada will not wait until mid-2010 to raise rates.

Read more: http://www.financialpost.com/news-sectors/economy/story.html?id=2777584#ixzz0kdidcQRU