Big Brother is Watching You!

They have come up with a new regulation that I will have to be accountable for. I am checking with the BC Civil Liberties Association, but at present I have no choice but to give the company more of your personal information. The new regulation is part of bill C-25. Check out the information below.

Big Brother is Watching You!

“New federal laws and regulations dealing with money laundering and anti-terrorist financing now in effect require real estate agents and brokers to collect and verify more personal information from buyers and sellers.

Real estate agents now must also track the source of funds received during the course of a real estate transaction, such as the deposit.

The new regulations are part of Bill C-25 passed in 2007 that requires a number of industries, including real estate, to do more to help stop money laundering and terrorist financing. The regulations are enforced by the federal agency known as the Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC.

“Real estate agents have had legal obligations under the federal government’s push to prevent criminal activity and terrorism since 2001, when Canada’s first comprehensive laws to combat money laundering and terrorist financing were introduced,” said Canadian Real Estate Association president Calvin Lindberg.

“In the first phase of compliance, real estate agents were required to report only suspicious transactions, or transactions involving more than $10,000 in cash,” he added. “Now, verified personal information must be kept of the buyer and seller for each and every real estate transaction in Canada. That personal information includes details such as occupation.”

Real estate agents are now required to ask for proof of the identity of all buyers or sellers involved in a Canadian real estate transaction — there were 559,325 MLS® transactions last year. If the client is a corporation, that information must include corporate documentation and the names of the corporation directors. Agents must also ascertain if a third party is involved in the transaction.

This also applies if a buyer or seller involved in a transaction is not represented by a real estate agent, but the other individual involved is represented. Those buying or selling privately will be asked by the agent representing the other party involved in the transaction to provide proof of identity as well, and that record must be kept by the real estate agent involved in the transaction.

Also under the new FINTRAC regulations, real estate agents dealing with clients they never meet must also verify personal information. The broker office involved can do this with a service agreement with an agent or “mandatary” (one given the mandate to act in the transaction) in the area where the client is located. That agent or mandatary must then meet the client,

verify the identification of the client, and

provide the information to the broker office

actually handling the real estate transaction.

“There are buyers, sellers or investors from other countries who rely on expertise here rather than visiting the property themselves,” the CREA president said. “They must now meet with an official agent of the Canadian broker, and provide proof of identity. This agreement will add to the business costs of the Canadian broker.”

In addition to verification of personal information, real estate agents must also complete a report on the receipt of all funds received during the real estate transaction, not just those of $10,000 or more.

In order to comply with these new federal regulations, real estate agents are required to keep this identification and receipt of funds information on file for five years and provide it to FINTRAC if requested. It is the individual broker office that will be responsible for the safe keeping of the information, and the brokerage that will have to respond to any FINTRAC information request.

Buying a Heritage Home

Getting an Electrical Inspection to facilitate insurance access.

I went to the big Vancouver Real Estate Conference at Canada Place last month. Following the breakfast meeting we had the choice of lots of work shops that seem to have two perspectives – one to make me richer and one to tell us how to service our clients better. I know I missed out on wealth years ago when I spent 30 years as an artist, but it is never too late for service to your customers.

Most interesting to me was a workshop on buying an old house with outdated electrical systems. They covered knob and tube wiring among other problem systems. The speaker stated that the problem Ken and Morgan’s Housewith old wiring is most often not that it is dangerous, but that you cannot get insurance on your house. (A major biggie.)

Most insurance companies refuse to insure an older house that has aluminum or knob and tube wiring. Up until recently, the only option available was to have the outdated wiring removed (at considerable expense), even though the wiring might in fact be perfectly safe.

To solve this problem, Brian Cook (the presenter), formed a new company called “PowerCheck Home Electrical Safety Inspections”. He approachedLinda’s house BCAA and proposed that they support an inspection that assesses any risk posed by the knob and tube (and other old wiring) to get them to accept the assessment for insurance purposes. BCAA agreed to insure heritage property with this inspection.

According to PowerCheck, (providing there has been no tampering), about 95 per cent of all knob and tube wiring is fine. In such cases, PowerCheck prepares a list of “Corrective Actions”. Once the corrective actions have been remidied, the home is automatically re-rated at a respective lower risk rating.

The insurance companies will automatically give you insurance (at a premium rate) when you buy using PowerCheck with an agreement that once you bring the risk down you will have your insurance lowered.

For more information check out or call (604) 684-3630Red house in snow

Reverse Mortgages

The end of the rainbow

The Reverse Mortgage – why not?

I am totally against the Reverse Mortgage. It is a con game organized by the bankers to steal your house and your inheritance.

You know the hype about Reverse Mortgages, “If you are age 62 or older and are “house-rich but cash-poor,” a reverse mortgage may be an option to help increase your income.” They go on to say, “It allows you to access money which is not required to be paid back until you leave the house or it’s sold. However, because your home is such a valuable asset, you may want to consult with your family attorney, or financial advisor before applying for an RM.”


Here are a few of the down sides to the reverse mortgage that you should consider before you jump in.

1. Interest is added to the balance starting with the first month and each month thereafter. This means that the total amount of interest you owe increases significantly because interest is compounding and you are paying interest on the interest.

2. Insured plans charge insurance premiums and some have mortgage servicing charges. Even though you can put these costs on the loan, this reduces what you can borrow.

3. RMs use up a portion of the equity in your home, leaving fewer assets for you and your heirs in the future.

4. Interest on RMs is not deductible for income tax purposes until you pay off all or part of your debt.

5. Because you retain title to your home with an RM, you also remain responsible for taxes, repairs, and maintenance.

The most damning information I have received related to the RM came from a friend whose parents had gotten one and who lost thousands of dollars. Here is her letter!

“I would like to tell you about the experience my parents, both 82, had with the reverse mortgage company, Canadian Home Income Plan (CHIP). I’m sure that you have seen their very seductive television ads; even Gordon Pape is speaking for CHIP suggesting that it is a “good investment”. I believe that the business practice of this company should be exposed. They are preying on the elderly, low-income people in Canada.

Five years ago, my parents signed an agreement with CHIP for a reverse mortgage of $43,000, over a 10 year term. At that time they owned their home outright. Five years later, halfway through the term, they were encumbered with $88,000.00 worth of debt on their home. In exchange for this, they had been receiving an annuity payment of $360.00 per month. So essentially, they had paid $88,000.00 for $21,600.00. Had they let the term run the ten years, they would have been encumbered with $125,000.00 worth of debt on the home, so paying $125,000.00 for $43,200.00. And they would have absolutely nothing to fall back on if either one of them had to go into long-term care.

The implied idea in selling reverse mortgages is that the value of your home will increase, so you are not really “losing” anything. Their home is presently worth about $145,000.00, and is located in a rural area of southern Vancouver Island. Home prices in this area have stayed steady for the last 7 years, and they are not likely to rise much in the future, as it is a fairly depressed area economically.

In order to stop the erosion of the equity in the home they decided to take out a mortgage. Luckily, rates are now low, and their monthly payments are also fairly low and manageable. When I was searching out lawyers for them to draw up the mortgage papers, each one of them agreed with me that the CHIP reverse mortgage was something to be very wary of.”

So, what are your choices?

Had they taken out a standard interest only mortgage of $50,000 at 5.5% for five years – amortized over 20 years, and put the $50,000 in the bank their yearly interest payment would have been 2,750/year. That plus $350/mon ( $4,200/year), would have given them over 7 years before they used up the$50,000 (not counting the interest they would have gotten from the $50,000). It would have dropped their property value down only the 50,000 rather than 125000, and they still would have had a nest egg for emergencies.

Again I urge you to see a lawyer before you get into a reverse mortgage.

Perhaps a more suitable way for you to deal with a need for monthly income would be to downsize your living situation and investing the difference in an RRSP or a retirement fund. Give me a call and let’s work out a solution together, and remember, there is no pot of gold at the end of the rainbow.