June 02, 2009
ResMor Statement On GM Filing

ResMor Trust, a subsidiary of GMAC Financial Services, says it¡¯s business as usual, despite GM¡¯s bankruptcy filing.

In a press release today, ResMor President/CEO, Tracie Tesser, said, ¡°There are no actions that need to be taken as a result of this filing.¡±

GMAC Financial Services is a creditor of General Motors Corp. GMAC has not filed for bankruptcy, nor does it intend to, says ResMor.

ResMor Trust Company is a federally regulated trust company focused on providing residential mortgages, mortgage servicing and deposit products through independent brokers.  As of April 3, 2009, it had more than $5 billion of mortgages under administration representing more than 33,000 homeowners.

Posted at 09:10 AM in Mortgage Broker News | Permalink | Comments (0)
June 01, 2009
RBC Raises 5-Year Fixed Rate

People had a sense it was coming.  Fixed rates are now ¡°officially¡± on the way up.

RBC just announced it is raising its 5- to 10-year fixed rates (RBC¡¯s Release).  It is the first increase in the posted 5-year rate in eight months, and it¡¯s thanks to a big spike in bond yields.

5-Year-Fixed-RatesRBC¡¯s new 5-year posted rate is 5.45%, up 0.20%.  The rest of the Big 5 will likely follow at some point.

Its ¡°special offer¡± fixed rate (an industry benchmark for discounted 5-year mortgages) is now 4.15%.

We¡¯ve also seen several other smaller lenders increasing fixed rates, including some of the leading no-frills lenders.

Will this lead to a longer-term uptrend in fixed rates?  We¡¯ll know in 6-12 months.

For now, the good news is that we¡¯re still just 0.20% above the lowest fixed rates in history.  Moreover, if you want to lock in near the bottom, there are still some lenders who haven¡¯t raised yet.

Posted at 10:57 AM in Mortgage Rate Trends | Permalink | Comments (24)
BMO Sues Top Mortgage Specialist

BMO-Mortgage-Specialist-Sued BMO mortgage specialist, Josephine Tortora, earned a reported $100,000 a month...until she got fired in late 2008.

This is according to The Vancouver Province newspaper.

BMO reportedly fired Tortora for conspiring with her branch manager, Shenaz Poonja, to extract unwarranted commissions from the bank.

The lawsuit also claims Tortora and her manager facilitated mortgages based on over-inflated appraisals.

Tortora and Poonja both deny the claims.  Tortora called the suit ¡°untrue, misleading and inflammatory, high-handed, reprehensible and malicious in nature,¡± while Poonja¡¯s lawyer charged BMO with ¡°lax¡± lending practices.

None of these claims have been proven.  A court hearing is set for October 2010.

If you¡¯re a bank PR manager, you¡¯ve got to love it when stuff like this gets out.  As intriguing as this tale is, however, it¡¯s equally interesting to hear that BMO mortgage specialists can make near 7 figures.  Maybe this story will help their recruitment efforts.

Posted at 12:04 AM in Mortgage Broker News | Permalink | Comments (0)
May 30, 2009
Variable Mortgage Premiums Shrink

There¡¯s been a noticeable industry-wide reduction in variable rates the past few weeks.  Whereas prime + 0.80% was the norm for a closed variable four weeks ago, today¡¯s variables are available for prime + 0.40%.  If you look hard, or have a good mortgage planner, you might find some even lower.

Interestingly, bankers acceptance (BA) yields have not gone down in that timeframe.  Nor has prime rate.

BA-Yields-20090530Instead, it appears that liquidity spreads above BA yields are improving.  (Liquidity spreads represent the extra premium that lenders pay for variable mortgage money.)

There are at least two factors at work here.  Short-term borrowing costs, in general, have improved significantly.  (See this story on the TED spread.)

In addition, lenders with alternative funding sources (like deposits) are currently flush with cash as investors park money in safe accounts.

Each factor is helping lenders generate short-term capital at better rates, which lenders are then passing along to borrowers (some lenders faster than others).

Going forward, unless we get another market shock, variable rates may continue to drift lower.  No one knows if we¡¯ll get back to ¡°prime minus¡± this year, but variable rates may indeed get closer to prime.

Posted at 12:17 PM in Mortgage Rate Trends | Permalink | Comments (1)
May 28, 2009
Scotia STEP Now Automatically Readvanceable

Scotiabank Scotia has always had a solid readvanceable mortgage (the STEP), but it¡¯s been plagued by one nagging problem.  Up until recently, you had to manually request a re-advance of credit when you made a principle payment.

No more.

The Scotia STEP is now automatically readvanceable.  If you pay down $100 in principle (the minimum increment), then Scotia automatically increases your authorized available line of credit by that amount.

This change has been a long time coming and it corrects the biggest fault of the STEP.  Mortgage planners and those considering the Smith Manoeuvre should be quite pleased by this new option.

Posted at 01:02 PM in Mortgage Broker News, New Mortgage Products | Permalink | Comments (11)
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Posted at 12:41 PM | Permalink
Yields Way Up

Canada¡¯s 5-year bond closed Wednesday at 2.56%¡­after its biggest 2-day jump in eight months.

As most know, fixed mortgage rates are linked to bond yields.  Certain non-bank lenders have already reacted by raising rates 0.05% to 0.20%.

5-year_bond_yields

While no big banks have moved yet, they may be getting anxious.  The cost of funds on 5-year money has soared roughly 30% (relatively, not absolutely) in the last month.

The spread between banks¡¯ advertised 5-year rate (3.95%) and bond yields is now down to 1.39% from about 2.00% a month ago.  When you factor in branch discretion (i.e., the additional discounts offered to some customers), the spread is often even narrower.

It is difficult to imagine the Big 5 not raising rates if yields move higher.  A lender email from yesterday said: ¡°rates are artificially low. Watch for fixed rate increases.¡±  Indeed, it seems some lenders are taking extra pains to avoid raising rates and giving up market share.

Posted at 08:45 AM in Mortgage Rate Trends | Permalink | Comments (20)
May 27, 2009
Front-Loaded Variables With Martin Shao

Front-Loaded-Variable-Mortgages With the Bank of Canada ¡°promising¡± a low overnight rate until 2010, many homeowners are considering taking out variable-rate mortgages for a year and then locking in.

We spoke with Martin Shao, President of Valueland Mortgages, about how front-loaded variables fit into this picture.  Our chat follows here¡­

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