WHAT EVER HAPPENED TO ‘TRUTH IN LENDING?’
Truth in lending in the mortgage industry used to be based on straight forward terms
and conditions included in documents that one could easily understand.
We never hear of this term anymore and in fact a very opposite reality has become the
For this reason, getting a (bank) mortgage today has in effect, become a minefield of
potential hurt when one or two payments are missed.
The new bank mortgage product called Collateral Mortgages literally give the banks the
power to seize your house even when you may never miss a mortgage payment. Hard
to believe isn’t it?
As independent professional mortgage brokers, our job is to help you avoid this
minefield to the best of our ability, and to find you a mortgage solution which is fair and
equitable. In contrast with the banks, we go to great pains to inform and advise you as
much as possible to fully understand the mortgage documents you are signing.
In short we make every effort to protect your interests, and our service is free OAC.
Our last two articles in this paper cited many specifics about collateral mortgages of
which you need to be aware of.
Please take the time to review, discuss and share these articles with those you know.
Better yet go to our blog at: PriceTeamMortgages.ca and copy them for future reference
the next time your mortgage matures, or you are ready to buy your next home.
We are passionate about getting the truth out to the masses such that there becomes
are more general widespread awareness about the nature of Bank Collateral
Whenever we are asked what the differences are between us and the banks, we feel
like ‘A Kid In A Candy Store’ because we are excited to provide a host of powerful
reasons (and examples) why they can benefit by choosing us over the banks.
Think of us as your independent mortgage ‘Ombudsman’ here to protect and guide you.
Getting a mortgage through our friendly caring team is a whole different experience than
what you are accustomed to. We love our business and we take as much time as
necessary to make you feel appreciated and comfortable with your new mortgage.
For your next mortgage need, please give us a call.
Month: August 2015
‘BUYER BEWARE’ HAS NEVER BEEN SO IMPORTANT
Continuing from last week’s article where we pointed out that when you get a bank
collateral mortgage these days, you have no choice but to take it, and you do so
completely uninformed because you essentially agree to terms and conditions that YOU
ARE IN FACT NEVER MADE AWARE OF.
How can this be true you ask? Well, because the basic mortgage commitment you sign
excludes all the really important terms and conditions that are buried in a voluminous
document called STANDARD CHARGE TERMS that are sent to the lawyer days before
closing, and which you never get any reasonable chance of reading yourself.
How dangerous is this? Mortgage lending (from Big Banks) has evolved to the point
now where BUYER BEWARE NO LONGER APPLIES, that is in a practical sense
because you have little or no opportunity to understand what you are signing.
In law however the Buyer Beware doctrines still require you to be fully ‘aware’ of what
you sign and so you do not have a leg to stand on.
Let’s look at a few clauses taken from actual Bank Standard Charge Terms
We’ll start with the CIBC. Clause 5.2 Entitled ‘Demand to repay the total debt’ states
“...we will apply any money we receive to reduce the debt anyway we see fit.” Clause
5.6 states “We may require you to pay the total debt immediately if one of the following
events occurs > you do not make any payment as required by this mortgage or any
agreement.” also > you do not meet your obligations under this mortgage or any
agreement.” By the way ‘any agreement’ refers to any other credit cards, loans, lines of
credit etc you have with your bank. Together these two clauses give the bank the right
to call your mortgage in default as soon as you miss payments on any other credit/debt
you have with them. Hypothetically, you could continue to make all your mortgage
payments on time, and the bank can apply part of your mortgage payment towards any
missed payments on other debt, and technically render the mortgage in arrears and/or
Here is one (very scary) example of what can happen that was in the news last year. A
father cosigned for his daughter’s new credit card (with RBC) who went to university,
maxed out the card, never made a payment (never told her dad and failed out) and her
father received (without warning) a POWER OF SALE NOTICE on his house from the
bank because of his daughter’s irresponsibility, nothing more. He had banked with RBC
for over 30 years. It didn’t count. And it didn’t matter that he had done no wrong. This is
but one example of how callous the banks can be.
When a payment is missed the banks (all have similar terms) can begin to charge you
‘the highest interest’ at their discretion. Let’s look at SCOTIA’s clause 26. Guarantee.
>...”It is understood that we can without obtaining the consent of or giving notice to any
guarantor: Increase the rate of interest payable under the Agreements either during the
initial term or any subsequent renewal period.” No parameters are given as to what
interest rate can be charged in our view, nor does this clause mention default.
Looking at TD Banks clause 2.06 Costs. >”All costs incurred by the Bank will be
immediately payable by you, bear Interest at the highest interest rate and form part of
the debt” you owe.
In a nutshell, we believe that bank mortgages have become downright dangerous and
given the fact that you are not informed to any meaningful degree, so that you have a
reasonable comprehension of your new obligations, they should be avoided at all costs.
Folks our job is to inform, advise and protect you to the best of our professional ability.
We hope that for your next mortgage need you will call us first because we have many
lenders who do not even have such a mortgage product. We will keep you safe and put
you in a good ole fashion ‘friendly’ standard mortgage.
‘SMOKE AND MIRRORS’ BANK MORTGAGES
When you get a mortgage from a bank today, if they told you that your unsecured credit
cards, loans, line of credit, in other words every credit facility you have with them would
become secured under the new mortgage, would you agree to this?
If they told you they were going to register the amount of mortgage up to125% higher
than the value despite the funds you receive, thus rendering you with what appears to
be no equity, would you be OK with that?
Also if someone at the bank explained to you the penalty you would pay if something
went wrong, God forbid, like job loss, separation/divorce etc., which no one expects will
happen, when in fact they happen all the time, and you realize that the penalty is both
shocking and grossly unfair, would you proceed with such a mortgage?
Clearly your answer would be NO, NO AND NO!!! I’ll find a mortgage elsewhere.
The problem is that such disclosures of information are rarely given by the banks. You
show up a the lawyer’s office, and while he or she may do their best to inform you of
some of the perils of this new style ‘COLLATERAL MORTGAGE’ it is simply too late.
Costs have been incurred and your money has already been spent. It is too late to start
over, especially if you bought a house which must close and so you proceed and the
We are of the opinion that these new bank mortgage products give the bank virtual
control over you, financially speaking. You see, if you now miss one credit card or loan
payment you are considered in default OF EVERY DEBT you have with your bank. In
fact, if one misses even one credit card payment for example (and are falling behind
and in trouble) the bank can now act to take your house too. This was never the case
Please understand that when you obtain a bank mortgage today, you are agreeing to
many new ‘Dangerous to your Health’ terms that you don’t even see in the mortgage
commitment that you sign. Can this be true? Yes it absolutely is, because every
borrower is obligated by the STANDARD CHARGE TERMS which you sign at the law
office the day before closing giving you little to no chance to read. This is the FINE
PRINT that we keep warning you about that can harm you more than you can ever
Next week, we will continue this subject with specific quotations directly from various
Bank Standard Charge Terms documents, that will make you cringe.
Yes borrowing from the Banks has utterly become a game of SMOKE AND MIRRORS.
We are here to protect you the consumer. We can only hope that you will call us first for
you next mortgage need.