Should you Live with Your Parents to Save for your Downpayment?

Living with the parents while saving for a home.
A new survey might make parents nervous. A survey of potential first-time homebuyers found that 29 per cent of Canadians between the ages of 21 and 34 are living with their parents while saving for their home down payment. In cities such as Toronto and Vancouver, the numbers are significantly higher, suggesting that staying on at the old homestead is considered the fastest route to jumping onto the property ladder.

The survey, conducted by Decima Research, polled 1,205 young adults aged 21 to 34 from Halifax, Montreal, Toronto, Winnipeg, Calgary and Vancouver who had aspirations to purchase a home in the ‘near’ future. According to the survey, almost one in three are living with their parents while they prepare to make the transition to home ownership. While it is no surprise that Canadians under the age of 30 are staying home longer, whether to attend school or save for a home purchase, what is surprising is the number of Canadians in the 31 to 34 years old category who are also still at home.

The survey says the Greater Toronto Area (GTA), Halifax and Calgary have the highest percentage of ‘stay-at-homes’ who are older than 31 years of age (22 per cent in the GTA and 17 per cent in both Halifax and Calgary). A red hot real estate market and rising home prices have likely contributed to this trend. But these factors may also contribute to a sense of urgency amongst young first-time homebuyers who feel they don’t have the requisite finances and may have to scramble to cobble together a down payment. Some of this anxiety may be avoidable by developing a financial plan early that sets realistic short-term and long-term financial goals.

The survey found a considerable gap between potential first-time buyers’ expectations and their realities when it came to planning and saving to buy a home. Although most young Canadians would like to purchase a home within the next few years, most do not have a practical plan to get there.

According to the survey, Canadians between the ages 21 and 34, on average, have been saving for their down payment for only 1.6 years, yet expect to take only a total of 3.8 years to save enough to commit to a purchase.

On average, young Canadians say they expect to be able to amass a down payment representing 15.4 per cent of the cost of a new home by the time they are ready to make a purchase. These expectations are unrealistically high given their low savings rate and the increasing cost of housing in markets across the country.

Other findings include:
- Thirty per cent of all those with home ownership aspirations intend to take advantage of the First Time Home Buyers RRSP Plan as a major source of funding for the down payment.
- Sixty per cent intend to rely primarily on savings or investments to make the purchase.
- The average reported savings rate (as a percentage of pre-tax income) of young Canadians polled breaks down as follows:
Across Canada, 12.5 per cent. In Toronto, 14.3 per cent. In Vancouver, 13.3 per cent. In Halifax and Winnipeg, 8.8 per cent. Those who live at home with their parents, 16.6 per cent. Those who are currently renting, 11.0 per cent. If the study reinforces one thing it is that more young Canadians need to sit down with a financial planning professional to develop a realistic game plan, if they are going to shorten their stay with their parents and make their home ownership dreams a reality.

There are a number of steps that young Canadians should take in order to reach their home ownership goal sooner. First of all they should consult a financial professional as early as possible to put together a financial plan that addresses both their short and long-term goals. This plan should address steps such as how to pay off debt sooner in order to free up more cash flow for their home down payment and developing a working monthly budget. Article is courtesy of R.Paul Chadwick from TD CT

More information on how to save money in real estate




For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Choosing the right School for your Children

Choosing the Right School for Your Children

For many families, a move to a new state or community means making difficult choices. Choosing from among the wide array of options of appropriate day care for younger children or schools for the older ones can be a complex and time-consuming chore. Parents need to examine their own basic values, their child-rearing and educational philosophies, and each child's needs when making decisions that will affect their child's future.

For many parents, choosing the best schools for their children determines other life choices. Newcomers usually investigate the public school systems thoroughly before selecting an area in which to settle. Each school district determines its own curriculum, requirements, and special programs. However, individual schools within a district can differ because of variations in student bodies, individual principals and teachers, and parental involvement. Neighborhoods with higher income levels and percentage of parents with college educations generally have schools with better test scores and a larger percentage of students going on to college. Real Estate agents are a good source of information in this area.

In comparing school districts and individual schools within each district, the following general questions should be asked:

Is the physical location of the school adequate and secure?
What is the school's teacher/student ratio?
What teaching methods (traditional, open classroom, team-teaching, etc.) are used?
Observe classes if possible.
What arts programs are offered?
What are the special education facilities and programs in each school/jurisdiction?
Is homework given and, if so, how much each night?
Is there an adequate sports program?
What extracurricular clubs and interest groups exist?
Parents of elementary school children should ask other questions:

Can a young child walk to school safely without crossing main roads?
Is transportation available?
Is there sufficient space for recreation and adequate playground supervision?
Are there after-school and extended day programs? Parents can use school profiles and interviews with principals or counselors to answer the following questions:
Does the school have a good orientation program for new students?
What courses are included in the basic curriculum?
What elective courses are available?
What Advanced Placement courses are offered?
Is there vocational education for those students wishing to take a trade, skill or career course?
How have students scored recently on standardized tests (such as the S.A.T.)?
What percentage of high school students go to college? How are college and career counseling handled?
Private schooling is another option to be considered Classes are usually smaller, children may receive more individual attention, and college-bound students are given more personalized counseling. Schools sponsored by religious organizations are often less costly than other independent schools, but their classes tend to be larger.

Students interested in private schools should begin the application process early as the most competitive schools have February deadlines. Since many of the most selective schools require interviews, families should consider scheduling interviews before a formal application is made. It is unwise to apply to only one school. Because of space limitations, many bright children are denied entrance to the more popular schools. Some Catholic schools give priority to families that are members of the parish. Applying to four or five schools should prevent disappointment.

Home Playground Safety Checklist


To make sure your home playground is a safe place to play:

Install and maintain a shock-absorbing surface around the play equipment. Use at least 9 inches of wood chips, mulch, or shredded rubber for play equipment up to 7 feet high.
Install protective surfacing at least 6 feet in all directions from play equipment.
Never attach - or allow children to attach - ropes, jump ropes, clotheslines, or pet leashes to play equipment; children can strangle on these.
Check hardware for open "S" hooks or protruding bolt ends, which can be hazardous.
Check for spaces that could trap children, such as openings in guardrails or between ladder rungs; these spaces should measure less than 3.5 inches or more than 9 inches.
Make sure platforms and ramps have guardrails to prevent falls.
Check for sharp points or edges in equipment.
Remove tripping hazards, like exposed concrete footings, tree stumps, and rocks.
Regularly check play equipment and surfacing to make sure both are in good condition.
Carefully supervise children on play equipment to make sure they are safe.


More about schools in Mississaug and the GTA




For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Backyard Fireworks Safety Considerations

When planning a backyard fireworks display, follow these safety guidelines:

While children are an ideal audience, never allow them to light any fireworks. Only responsible adults should handle all materials while all spectators watch from a safe distance.

Only one person should be in charge of igniting fireworks. With the exception of sparklers, fireworks are not meant to be handheld.

Carefully read the instructions and precautions that accompany the fireworks. Before they are used, store them in there original package to avoid sparks.

Fireworks should be buried to at least half their length in a bucket of sand or earth before they are ignited. If portable firing bases are not available, plant them directly in the ground, making sure that each is firmly supported before igniting.

Always have a garden hose ready to douse any fireworks that continue smouldering after discharging.

Light fireworks at arm's length, standing back and keeping your face away. Don't relight fireworks that fail to ignite, wait for several minutes and then soak them with water.

Sparklers should also be doused with water, or allowed to cool in a safe place away from children. The ends of sparklers continue to stay hot for some time, and will easily burn a child's skin, clothing, or any nearby combustible material. Only use sparklers outdoors.

Always keep fireworks and sparklers out of reach of children, preferably in a locked cupboard or drawer. Make sure that children are unable to access these materials to avoid a tragedy. For example. after the 1998 July 1st holiday, Toronto Firefighters responded to a blaze that was accidentally started by children playing with sparklers. Consequently, a four-year-old child died in the fire.

Fireworks are only permitted on designated holidays. After the holiday, return all unused fireworks to where you bought them.

-In case of fire or an emergency, call 9-1-1. Courtesy Toronto Fire Services



For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Click your way to a better mortgage

Click your way to a better mortgage
Photo courtesy of www.metrocreativegraphics.com(NC)-The next time your mortgage is coming up for renewal, get yourself to the nearest computer. When it comes to researching mortgage options there's no better way to go than the convenience and speed of the Internet. While many customers still prefer to complete their loan transaction in a face-to-face environment, the inception and success of the "virtual bank" in Canada has quickly started to change consumer perception about how and where to get a mortgage.

Consider these three reasons to click your way to your next mortgage:

1. Online prices are up-to-date and easy-to-find. Mortgage rates are relatively easy to find, and easy to compare to the quotes on other sites. Rates are usually updated just as soon as they change so there's little fear of receiving out-of-date information.

2. The best rates are often posted online. Because online vendors don't have to carry the costs of maintaining retail lending facilities (branches), including the commissions paid to loan officers, the cost savings are generally passed on to borrowers.

3. 24/7 access. You can make inquiries or do mortgage research online anytime, day or night. So if you work full time, you can do your mortgage homework in the evening (when an actual mortgage office or bank branch would be closed). For an up-to-date, reliable mortgage quote go to myCTFS.com or call 1-866-606-2837.

Credit: www.newscanada.com


Read more about how to find the best mortgage rates here


For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Safe Kids Canada's water safety advice for parents

Safe Kids Canada's water safety advice for parents: "Layers of protection are the best way to prevent your children from drowning"
(NC)-Each year, an estimated 58 children under the age of 14 will drown and another 140 children will be hospitalized as a result of a near-drowning incident. Safe Kids Canada strongly recommends parents use all of these "layers of protection" to keep their children safe when in, on or around water.

1. Actively Supervise: 42 per cent of all children under the age of 14 who drowned in the past 10 years did not have an adult watching them. Whether it's a bathtub, a home pool, a lake or a river make sure you stay within sight and reach of children at all times. Avoid talking on the phone or reading a book when your children are in, on or around water. Even children who can swim need adult supervision. Children can drown quickly and silently in inches of water and in just a few seconds.

2. Get Trained: Know how to react in an emergency situation. Learn to swim or have an experienced adult swimmer supervise children in, on or around water. Weak swimmers should take swimming lessons, and caregivers should learn First Aid and CPR before assuming the role of supervisor.

3. Create Barriers: Children should not be able to get to the pool directly from the house. Using a four-sided pool fence with a self-closing, self-latching gate can prevent up to seven out of 10 drownings in children under the age of five. Installing a 1.2 m (4 ft) high four-sided fence with self-closing, self-latching gate around the pool can keep young children safely away from the pool. If a property has natural water hazards (lakes, ponds, streams, rivers etc.) or even decorative water features, a separate play space for children should be fenced off to keep them safely away from the water.

4. Use Lifejackets: Put young children and weak swimmers in lifejackets when in, on or around water. Children should never be left without adult supervision even if they are wearing a lifejacket.

5. Teach Kids To Swim: Parent and tot swimming classes are fun for the family, and they help educate parents on how to keep toddlers safe around water. By age five, children are ready to be enrolled in swimming lessons. But remember, swimming lessons alone are not enough. You need to put in place all of these layers of protection to keep your child safe in, on or around water.

These tips are part of the 2007 Safe Kids Week campaign - Splash into Safety - running from May 28 - June 3 and sponsored by Johnson & Johnson. To learn more about drowning prevention, call Safe Kids Canada at 1-888-SAFE-TIPS (723-3847) or visit www.safekidscanada.ca.

Credit: www.newscanada.com

Read more about home inspection issues around your house



For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

New Housing Costs rise Substantially in April

The cost of new housing rose substantially in April, rising 0.8 per cent from the previous month.

Contractors' selling prices were up 8.9 per cent from a year earlier as 12 of 21 metropolitan areas surveyed registered increases.

Edmonton led all monthly increases, at 4.4 per cent, as well as annual increases, at 40.5 per cent.

Regina (up 2.2 per cent), Saskatoon (2.1) and Calgary (2) followed as monthly price advances were mostly attributable to materials and labour; noteworthy gains were also recorded in Halifax, Greater Sudbury and ThunderBay, Ont., and Vancouver.

Five metropolitan areas registered no monthly change. Victoria (-0.9%) recorded the largest decrease due to a moderating market. Prices in St.John's, Saint John, Fredericton and Moncton, and Charlottetown also declined.

Land prices rose in only five of 12 metropolitan areas surveyed.

See more statistics for resale homes at this page



For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Advantages of New Home and Resale Home purchase

The Advantages of a New Home

Tips and discussion

NEW: If you purchased your new home prior to July 1, 2006 and will be taking possession after July 1, 2006 click here for transitional GST information and rebate form from the Canada Revenue Agency (Posted June 2006)

If a home comes up for sale in a mature neighbourhood where there’s an established sense of community and a history of strong property values, buying a resale home can be a good choice. However, there are several reasons why buying a new home is often the wiser choice.

We just don’t build homes the way they used to – and that’s a good thing! Today’s homes are built with state-of-the-art technology using lowmaintenance and durable building materials, to save you time and money.

From vinyl-clad windows to aluminum soffits to clay brick, a modern home requires far less upkeep than a resale home, even a fairly modern one. Advanced wiring and Internet-ready cabling means you can work out of your new home about as efficiently as you can in many office buildings.

Modern home design is lightyears ahead of older homes. Indeed, light is one of the main design features of today’s homes. Windows are bigger and better and they’re everywhere. They flood the interior with natural light without letting in the cold or letting out the heat.

Today’s homes also offer floorplans that are very functional, accommodatingyour needs, not the lifestyle of some mythical family from bygone generations. Open concept plans give modern homes a light and airy feeling, yet they can be informal or formal, casual or elegant.

Moreover, you can get exactly what you want, because many builders will customize the model you choose, allowing you to create rooms or styles that meet your personal needs. Options and upgrades provide further flexibility. Modern designs are also very clever when it comes to providing storage space, the lack of which is one of the biggest drawbacks of older homes.

Better insulation, higher efficiency heating systems, better windows and doors, overall tight construction and improved ventilation are hallmarks of homes built in the last few years. That means lower energy costs and a more comfortable home all year round.

With the purchase of a new home also comes peace of mind. Every new home sold in Ontario is covered by one-, two- and seven-year warranties, described in detail later. Safety is also improved, with features such as smoke detectors wired into the home’s electrical system; or video surveillance in condos.

Finally, many new homes are built in new communities, where there is consistent design among the homes and careful attention paid to public elements such as landscaping and street lighting. New home communities generally offer parks, schools, shopping and recreational amenities close at hand.


Advantages of a Resale Home

The major advantage of buying a resale home is that you are moving into an established neighborhood. Your lawn is green, your shrubs are growing, your driveway is paved and your trees are well enough established to give your street a feeling of permanence. Often, most extras are already present, such as appliances, curtains, drapes, central vacuum, humidifiers, decks, fencing, electric garage door openers, finishing the basement, walkways, outdoor lighting, indoor light fixtures, trees, shrubs, gardens and landscaping, children's play sets, swimming pool, air conditioning, etc.

In terms of investment, a resale home will often give you far more value than a brand new home. Many owners put tens of thousands of dollars into home improvements ranging from small items, such as landscaping, to major projects, such as a finished basement or any of the items above. Although these improvements will make the home more attractive to potential buyers, they may not increase the market value of the home. A $35,000 swimming pool or a $15,000 finished basement or even $5,000 worth of landscaping may make the home very attractive. However these additional costs incurred may not necessarily increase the market value of a home, especially if you have to sell it at a time of year where these major items add little or no perceived value. The buyer gets the home at its real fair market value, which is based on comparable homes for sale or sold in the neighborhood. All those expensive extras may be included in the home with benefit to the buyer at little or no extra cost. This can be a substantial savings over buying a new home.

With a resale, the vendor's asking price is almost always negotiable downwards unlike the builders list price which is usually firm. Any extras or changes are added to the list price of a new home and add up quickly.


Read an indepth article about buying new or resale home




For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

How does an "Offer to Purchase" (a high rise Condo) under "Power of Sale" differ from a regular offer?

I had another client email me with a Power of Sale Question and have posted my answer below.

Question: How does an "Offer to Purchase" (a high rise Condo) under "Power of Sale" differ from a regular offer?

Answer: Thank you for your real estate inquiry. The short answer is 'tremendously' and the medium answer is:
The clauses in the offer for a power of sale protect the bank and the previous owner, just in case the owner comes up with the money prior to closing. As well, the bank will NOT warrant any items in the condo, the condo maintenance fees, taxes, utilities, status certificate or anything related to the condo, the building or the sale. This is how power of sales are carried out in Ontario.


The long answer to how a power of sale differs from a 'normal' sale is shown in a section of my website that I just wrote last night. It's an incredibly detailed set of pages and I am not quite done yet, as soon as I am, I will post/email you the link. You can also let me know what you think of the new section on my site.

To read about what I have already written about power of sales browse to my POS FAQ's

Please let me know if you have any other questions or if there is anything else I can help you with.





For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Residential Real Estate Shatters Records Across Canada

MLS® resale housing market shatters all previous records in May
Major market activity on track to set a new annual record in 2007

OTTAWA – June 14, 2007 – MLS® residential sales activity, new listings, average prices and dollar volume in Canada's major markets broke all previous monthly records in May, according to statistics released by The Canadian Real Estate Association (CREA).

Actual MLS® home sales activity in Canada's major markets was up 11.6 per cent year-over-year to 42,039 units in May 2007. Led by year-over-year gains in Toronto and Montréal, this was the first time in history that sales activity in Canada's major markets surpassed 40,000 transactions in one month.

On a seasonally adjusted basis, activity rose by 1.3 per cent from the previous month to 31,053 units in May. The increase was fueled by a monthly increase in activity in Vancouver, Winnipeg, London & St. Thomas, Ottawa and Montréal. Seasonally adjusted sales activity set new monthly records in Winnipeg, Ottawa, Montréal and Saint John, and reached the second highest level on record in Saskatoon, Regina and Toronto.

“Dramatic price increases and additional listings in Alberta's major markets are causing some buyers in that province to take a bit longer to make a purchasing decision,” notes CREA Chief Economist Gregory Klump.

Year-to-date transactions also set new records in most major markets in May. Transactions via Board and Association MLS® systems numbered 165,800 units in Canada's major markets during the first five months of 2007, which represents an increase of 8.5 per cent over the same period last year.

“Activity broke all previous records in the first quarter, and gained momentum in the second quarter,” Klump said. “The increase in transactions for the year-to-date suggests activity is on track to set a new annual record this year.”

MLS® residential new listings also reached the highest level ever in May, climbing 6.7 per cent year-over-year to 63,165 units. This was also the first time that the number of new listings on Board and Association MLS® systems in Canada's major markets surpassed 60,000 units in a single month.

Seasonally adjusted MLS® residential new listings rose 0.8 per cent month-over-month to 49,665 units in May to surpass the previous monthly record set in October 1990. The monthly increase was fueled by a large rise in new listings in Edmonton, and additional new listings in Calgary and Saskatoon. Seasonally adjusted new listings in Calgary and Edmonton reached their highest levels ever in May.

The major market MLS® residential average price rose 10.2 per cent year-over-year to set a new monthly record of $333,524 in May. Average price reached the highest monthly level on record in many of Canada's major markets including Vancouver, Calgary, Edmonton, Regina, Saskatoon, Toronto, London & St. Thomas, Hamilton-Burlington & District, Montréal, Quebec City and Halifax-Dartmouth.

“With mortgage interest rates on the rise and an increasing supply of new listings on the market, CREA expects that price increases will return to the single digits in the second half of this year,” added Klump. “CREA forecasts that the annual national average price will rise by 9.5 per cent in 2007, and by 5.5 per cent in 2008.”

“Canada's resale housing industry is a driving force behind the national economy, and a new study released by The Canadian Real Estate Association shows the average MLS® home sale generates $32,200 in additional consumer spending above and beyond the purchase price,” said CREA President Ann Bosley. “Job creation is also a major spin-off benefit of the resale housing market, with more than 94,000 jobs created in Canada each year as a direct result of resale housing transactions.”

CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.

MLS® is a co-operative marketing system used only by Canada's real estate Boards to ensure maximum exposure of properties listed for sale.

The Canadian Real Estate Association (CREA) is one of Canada's largest single-industry trade associations, representing more than 90,000 REALTORS® working though more than 100 real estate Boards and Associations. CREA's primary mission is to represent members at the federal level, and to defend the public's right to own and enjoy property.

This report is published by the Communications Department of The Canadian Real Estate Association (CREA). Further information can be found at www.crea.ca.

Read more about average prices



For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Mortgage Fraud, Common Methods to Dupe You and Your Money

Common forms of mortgage fraud
April 2007 ET Pat Curry

Mortgage fraud can take countless forms, says Ann Fulmer, an attorney, mortgage fraud investigator and founder of the Georgia Real Estate Fraud Prevention and Awareness Coalition. Homebuyers can run afoul of the law under a broad category called "fraud to qualify" or "fraud for house." In these cases, the borrower typically provides false information, such as income, source of down payment, employment, or intent to occupy the property.

Or, the fraud might be in the form of what's called a silent second. The seller lends the buyer money for a down payment through an unrecorded second mortgage. When this happens, the lender thinks the borrower is investing his own money. Why would lenders care? "The critical issue is the risk the lender is taking," Fulmer says. "It misrepresents the financing picture of the borrower."

Whatever the form of fraud, the goal is the same: to obtain a mortgage for which the borrower would not legitimately qualify. In these cases, the borrower wants the house and plans to repay the loan.

Then, there is "fraud for profit," a much more sophisticated version of mortgage fraud that involves industry insiders, such as real estate agents, appraisers, lenders or closing attorneys.

While there are an infinite number of variations on fraud for profit, these are among the most common:

Flipping. This term has gotten confused because of TV shows, such as "Flip This House," which isn't flipping at all. Those types of deals, in which houses are acquired legitimately, improvements are made and the houses are resold quickly, are known in the business as quick turns. "There is nothing wrong with that," Fulmer says. "It becomes illegal when people start lying about the improvements, the value of them or (lying) to qualify the buyer." Flipping involves a fraudulent appraisal and a grossly inflated sales price.

Straw buyers. One of the most frequent types of fraud occurs when "straw buyers" are used to hide the identity of the true borrower, who would not qualify for the mortgage. "The perpetrators use a straw buyer because they have good credit and can get the loan," Fulmer says. Straw buyers may be duped into thinking that they're investing in real estate that will be rented out, with the rental payments paying the mortgage. In fact, no payments are made and the lender forecloses on the loan. Or, sometimes, straw buyers are in on the scam and are getting a cut of the proceeds. "People may see this as a way to make a lot of money," Fulmer says. "In one case, a number of straw buyers purchased numerous properties and received boatloads of money back."

Appraisal fraud. Appraisal fraud is a part of most mortgage fraud scams. A dishonest appraiser inflates the value of the property. When the seller gets the check at the closing for a bogus amount, he pays off the appraiser and anyone else involved in the scam. Usually, the borrower doesn't make any payments and the house goes to foreclosure.

Foreclosure schemes. These are particularly evil because they prey on people with big enough financial problems that they're in danger of losing their home. A homeowner in the early stages of foreclosure may be contacted by a fraudster who says he can help the homeowner get rid of his debt and save his house for an upfront fee, which the fraudster takes and then disappears. In another scheme, a homeowner is approached by a con artist who offers to help them refinance the loan. "They sign all these documents and find out later that they actually sold the house -- to the fraudster. Then they face eviction. That's a lovely one." Read more about foreclosure and power of sales

Read more about mortages

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com