By: Vesna Spehar, Account Manager, Client Relations at Canada Mortgage and Housing Corporation

As Fraud Prevention Month comes to a close and home buying season begins, remember that if you plan on purchasing a home there are simple steps you can take to avoid becoming a victim of mortgage fraud.

Mortgage fraud occurs when someone deliberately misrepresents information in order to get mortgage financing that would not have been approved if the truth had been known.  This can take several forms – from misstating one’s employment, to inflating one’s income, length of service, or agreeing to be a “straw buyer” where one signs onto a mortgage application on behalf of another person.

Borrowers who misrepresent information or allow their name to be used in the purchase of a home are committing mortgage fraud. They will be responsible for any financial shortfall should the mortgage default and may also be held criminally responsible.

Protecting yourself from this kind of activity comes down to being an informed consumer. Remember: if a deal sounds too good to be true, it probably is. To protect yourself and your family, follow these guidelines:

• Never deliberately misrepresent information when applying for a mortgage
• Never accept money, guarantee a loan or add your name to a mortgage unless you fully intend to purchase the property
• Always know who you are doing business with and never sign anything without understanding exactly what you are signing
• Use a licensed or accredited mortgage and real estate professional
• Get independent legal advice from your own lawyer/notary and talk to them about title insurance and alternative methods of protection
• Contact the local provincial land titles office to obtain the sales history of any property you are thinking about buying and consider having it inspected and appraised.
• Find out from your lawyer if anyone other than the seller has a financial interest in the home or if there are any outstanding liens or tax arrears
• If a deposit is required, make sure the funds are payable to, and held “in trust” by, the vendor’s realty company or by a lawyer/notary

You can also help to protect yourself by inspecting your credit report at least annually by contacting Canada’s two credit-reporting agencies: Equifax Canada and TransUnion Canada.

For more information, visit Canada Mortgage and Housing Corporation’s website.

If you suspect that you or someone you know has been a victim of mortgage fraud, please contact your local police department or the Canadian Anti-Fraud Centre.

‘We have a serious challenge with the availability of housing,’ says Squamish Mayor Patricia Heintzman

Exemptions to the province’s speculation tax have some communities close to the Lower Mainland worried they might face an increase in foreign buyers and empty homes.

The provincial government tweaked its speculation tax after criticism and it now only applies to properties left vacant in large urban centres. The tax no longer applies to properties in several areas, including Bowen Island and Squamish.

But some believe the tax should apply to these two places, which are both struggling with housing affordability.

“We have a serious challenge with the availability of housing,” said Squamish Mayor Patricia Heintzman.

“By our exclusion [from the tax], there is some concern that situation might get worse.”

The housing market in Squamish is closely connected to the Lower Mainland’s market, but that seems to have been overlooked in the choice to exempt the area, she told Stephen Quinn, host of The Early Edition.

“We are part of that bigger cup of housing,” she said. “If the Lower Mainland breathes in, we breathe in. And if they exhale, we exhale,” Heintzman said.

Squamish council is evaluating the impact of the tax and deciding whether to ask the province to be included, she said.

Michael Chapman, an affordable housing advocate on Bowen Island, said his community faces similar issues to Squamish and should not have been excluded from the tax either.

“Bowen Island has become a hotel for Vancouver with our residential long term properties becoming Airbnb [rentals],” he said. “It’s dire, people are living in cars and boats and it’s not looking good.”

Properties on the Gulf Islands, Parksville, Qualicum Beach and rural Fraser Valley are also excluded from the tax.

Not a ‘blanket policy’

Some communities included in the tax, which are further away from the Lower Mainland, have expressed concern that it will affect those who have owned seasonal or vacation properties for years.

Kelowna city council, for example, drafted a letter to the provincial government after the tax was announced saying the city is “fundamentally opposed” to the vacancy-based speculation tax and wants to be excluded.

West Kelowna and the Regional District of Nanaimo expressed similar concerns.

Justin Fung, spokesperson for Housing Action for Local Taxpayers (HALT), said tweaks were necessary to the tax.

“We first heard about this as a bit of a blanket policy across the whole province,” Fung said. “Now we are seeing that it is being refined.”

Fung is confident the tax will help address speculation and affordability.

“It makes sense in some of these places that have traditionally been places with vacation homes,” he said. “[Municipalities that are exempt] may regret it in a couple years time when their housing prices have started to soar.”

New Ontario law fails to address buyers of new builds who are locked into equipment contracts

Nadia Mendola didn’t think she’d be signing her life away for a water heater when she bought her brand new home in Waterdown, Ont., in 2016.

She’s stuck with a 14-year rental contract with Enercare, paying $56.43 per month for the water heater. Now she can’t get out of it unless she buys the equipment outright at $3,600 — three times the cost of an average water heater.

“If you can buy it from Home Depot for $1,000, I just don’t understand why you would go renting it.” As a first-time homebuyer, she admits she didn’t know how much a water heater should cost. “I was paying it for six months and my dad saw one of my bills and thought it was high.”

So she called Enercare in August 2017, and was told that her expensive bills were due to having a high-end, energy-efficient tank. That’s also when she learned she’s locked in for 14 or possibly 18 years.

Enercare also indicates that the higher cost of renting instead of buying includes repairs and maintenance. Mendola feels she had no choice. “It’s just an appliance … Your washer and dryer are expensive items but you don’t rent them. It just seems like a big scam to me.”

Buyer seeks documentation

Under Ontario’s Consumer Protection Act, 2002, unsolicited door-to-door marketing and contracting for water heaters and HVAC equipment are banned. As of March 1 this year, suppliers are required by law to provide a cover page with contracts for such products and services.

Enercare told CBC News that it expects “the purchaser or the purchaser’s lawyer, to have made the necessary inquiries in respect of the rental agreement, prior to agreeing to assume it on closing” and that the wording in Mendola’s contract “does not conform to Enercare’s standard agreements with home builders.”

Samuel On of Toronto was provided documentation during an inspection of his new town home in March 2017 but was told by the builder that he had to sign Enercare rental contracts to accept the occupancy.

Enercare says that in their agreements with home builders, “the home builder is required to provide all the necessary rental details to the purchaser and agrees to do so as part of their legal obligations under their agreement with Enercare.”

On says, “I was told to sign because that’s just the vendor [the builder] chose.”

Enercare adds, “A homeowner is not required to rent their equipment and can purchase it outright from the builder or otherwise negotiate with the builder.” On — who had Enercare rental contracts for his hot water tank, air handler and air conditioning unit — was quoted $5,000 for each unit if he were to buy them outright. “I did the math. It just wasn’t adding up,” he says.

“There’s no way all this costs $15,000.”

He ended up buying out all the equipment at $9,000 a year after he bought his home. In a response to a question from CBC News, Enercare recommends new homebuyers “engage a real estate lawyer to review their purchase agreement and explain any contractual obligations.”

Mendola is now thinking of engaging a lawyer with neighbours who have similar concerns.

Landlord chooses to rent the equipment

For Men-Chong Luk, frustration with Enercare started in November when her tenants couldn’t get hot water due to a broken part of the hot water tank. “I was so angry,” she recalls of her playing phone tag with Enercare’s customer service.

Luk pays $30.99 plus tax per month for her hot water tank rental. Her contract is 14 years, which means she’ll have paid $5,000 to have that tank for the life of the contract. If she were to purchase a heater today, she’d likely pay about $1,500, she estimates. But she is OK with that premium because she thought it would buy her peace of mind in knowing that if the unit ever broke, the company would fix it quickly.

“Basically, I’m paying $3,500 for a service program, so I’m expecting that if it breaks down, you will come and fix it and if you can’t fix it, then you’ll replace it for me.” After numerous calls to Enercare, she learned that parts are handled by a separate division.

“Customer service can order the part but they don’t track it. They put the onus on the customer to check when the part arrives,” explains Luk. “Then when it arrives, you have to call Enercare back to install the part.”

Enercare confirms it is “not a manufacturer or parts supplier and is required to work with vendors to source the necessary parts from the manufacturer or manufacturer-approved suppliers. … As such, it has no control over the timing of delivery of parts.”

Although only a pump was broken, it was decided that the entire system would need to be replaced.

From the time Luk first contacted the company, it took four days for Enercare to fix the problem and for her tenants to get hot water again. “You want to pull your hair out,” she said. “Once you’re in the contract, you’re stuck. There’s no one else out there.”

Rent rebates

She ended up giving her two tenants a rent rebates of $100 each for the inconvenience. Enercare credited her account for three months as goodwill but to Luk, that’s not enough. “Who’s paying me for the hours and hours of frustration?” she asks.

Mendola adds, “When you call, they always tell you that managers are not in and that they’ll call you back.”

Enercare claims that “whenever the company’s office of the president receives customer concerns, it readily investigates and works with those customers to resolve their concerns in a timely manner.” Mendola’s case has been forwarded to that office.

She hopes to get out of her rental arrangement.

In Luk’s case, her story ended with another twist. Weeks after the company came to fix her rented hot water tank, a package arrived on her doorstep. It was the replacement part. “I have to keep this because in case it breaks again,” she says. “It’s the funny, sad part.”

OTTAWA — The head of one of Canada’s largest banks is urging the federal government to stem the flow of investment capital from this country to the United States — because, he warns, it’s already leaving in “real time.”

RBC president and CEO Dave McKay discussed some of his biggest concerns about Canadian competitiveness, particularly those related to recent U.S. tax reforms, during a recent interview.

Ottawa has come under pressure from corporate Canada to respond to a U.S. tax overhaul that’s expected to lure business investments south of the border.

McKay told The Canadian Press that a “significant” investment exodus to the U.S. is already underway, especially in the energy and clean-technology sectors.

The flight of capital, McKay added, will likely be followed by a loss of talent, which means the next generation of engineers, problem solvers and intellectual property could be created not north of the border, but south of it instead.

“We would certainly encourage the federal government to look at these issues because, in real time, we’re seeing capital flow out of the country,” McKay said.

“We see our government going around the world saying what a great place Canada is to invest — yes, it is a great country, it’s an inclusive country, it’s a diverse country, it’s got great people assets.

“But if we don’t keep the capital here, we can’t keep the people here — and these changes are important to bring human capital and financial capital together in one place.”

Since the election of U.S. President Donald Trump, Canada’s investment landscape has been dealing with deep uncertainty related the ongoing renegotiation of the North American Free Trade Agreement.

But many point to Trump’s recent U.S. tax measures as potentially more dangerous, fearing that dramatic corporate tax cuts in the U.S. will eliminate Canada’s advantage.

Canada’s competitiveness challenges go beyond the high-level, tax-rate changes in the U.S. bill, McKay said.

For instance, he pointed to another important element he said is encouraging capital to flow out of Canada — a change that enables U.S. companies to immediately write off the full cost of new machinery and equipment.

“The acceleration of that in the U.S. completely changes the investment returns that you see on major investments,” said McKay. “I think that alone may shrink competitiveness.”

Tax expert Jack Mintz said the U.S. change allows firms in all sectors to expense the full cost of new equipment. In comparison, he said, Canada has a two-year write-off for equipment for just the manufacturing and the processing sectors.

Mintz, a University of Calgary professor, said he believes the expensing of capital investments is encouraging a lot of companies to shift their investments to the U.S.

Although the business community pressed federal Finance Minister Bill Morneau to take specific steps in his February budget to address the competitiveness concerns, their efforts went unrewarded. Indeed, Morneau has had to defend the budget against complaints it didn’t do enough to protect Canada from the U.S. tax changes.

A spokesman for Morneau did the same, arguing that Canada’s corporate tax rates remain competitive and that the country has led the G7 in growth.

“There will be no knee-jerk reactions from this minister, and we are doing our homework,” Daniel Lauzon wrote in an email. “This includes listening to, and hearing from, the business community on how the competitive environment is evolving.”

John Manley, president of the Business Council of Canada, said the issue of competitiveness was “absent” from the federal budget.

“We’re always in this difficult competition to attract investment and to retain investment — and it’s not to be taken lightly because investment can move quickly,” Manley said.

Regardless of the cause, some experts are seeing signs in the economic data that suggest capital is already flying south.

BMO chief economist Douglas Porter said it’s too early to draw conclusions, but the fact the Canadian equity market and currency have both been on the weak side this year supports the possibility that capital is leaving the country.

The Canadian dollar is one of the few currencies in the world to weaken against the U.S. dollar this year, and for no immediately apparent reason, Porter said.

None of the provincial budgets released so far took steps to improve Canada’s competitiveness, such as tax relief, he added.