Unfortunatly CMHC sure does not do their home work . They just blindly stumble along . They spend a huge amount of our money by not checking for what is best . They have not ever recommended NACHI that I know of.
First story shows how they spend our money ,second story show how they still think CAHPI is the only to do inspections .They talk about the National Certification ( "to find a home inspector in your area who meets national certification " )as being the standard for a home inspector . Not true and not fair.
Fraud, forgery alleged in mortgage scheme
Mississauga man faces charges
Complex flip-flops probed by RCMP
Sep. 2, 2006. 01:00 AM
A Mississauga man has been arrested and charged with two counts of fraud over $5,000 and two counts of uttering forged documents in relation to mortgages obtained in 2001 on a property at 33 Earl Grey Rd., in Toronto.
John Anthony Stinziani appeared at Old City Hall court last month to set a trial date.
Announcement of the arrest was made by the Royal Canadian Mounted Police’s Greater Toronto Area commercial crime section. Police allege that Stinziani used fraudulent information to obtain and later default on about $250,000 in mortgage funds from two separate lenders.
Normally, the Toronto Police Service handles fraud investigations in this city, but the RCMP are believed to be involved because one of the lenders was insured by Canada Mortgage and Housing Corp.
A title search of the property conducted last week revealed a bizarre scenario. The house has been sold six times in five years. Four of those transactions were highly questionable, involving sudden and unexplained increases in value.
Sometimes this sort of transaction is called an “Oklahoma,” or “value fraud.”
It involves artificially increasing the value of a property so the mortgage lender is left with security that may be partially or entirely worthless.
The increase is often accomplished by a simultaneous purchase and resale (or flip) of the property. It can also be done without a flip by simply inflating the value of the property so that the purchase mortgage is more than the underlying value of the property.
Last week I went to see the outside of the house, near Danforth and Pape Aves. It is a tiny, semi-detached cottage-type bungalow on a street of impressive two-storey houses. The frame structure is about 712 square feet in size, sitting on a lot measuring 17 feet by 100 feet.
The mind-boggling title search shows:
Transaction 1. The property was purchased on June 14, 2000. The original deed (in the pre-electronic registration system) was typed showing a price of $115,000. That number was altered by hand to declare that the sale price was $135,800. The National Bank of Canada advanced a mortgage of $127,275 which — if the underlying value was really $115,000 — was significantly more than the house was worth.
Transaction 2. On April 5, 2001, John Stinziani bought the property with a declared price of $227,000. The Royal Bank advanced a first mortgage of $196,809, including the CMHC high-ratio insurance fee. (I wonder how the value of the property could have jumped so dramatically in less than a year.)
Two months after closing, a fraudulent discharge of the Royal Bank mortgage was registered. With the title now free of debt, the owner borrowed an additional $70,000 from a private lender.
That mortgage quickly went into default and I was retained by the private lender to start default proceedings. When I discovered the forged discharge of the prior mortgage, I referred the client to a colleague to pursue a claim against the title insurer, Stewart Title.
The Royal Bank obtained a court order restoring the registration of its mortgage.
An independent appraisal in 2002 showed the market value to be only $143,000 — significantly less than the $227,000 price reportedly paid by Stinziani a year earlier.
Transaction 3. Stewart Title paid out the private second mortgage lender, took an assignment of that mortgage, and sold the abandoned house under power of sale in December 2002, for $125,000.
Transaction 4. Less than six months later, on June 4, 2003, the property appears to have doubled in value. It was sold for $249,500 by the purchaser company which bought it from Stewart. The Bank of Montreal financed that purchase.
Transaction 5. In February 2004, land title records show that the tiny bungalow on a 17-foot lot sold for an amazing $429,900. CIBC Mortgages Inc. provided a CMHC-insured loan for $394,628.20, which quickly went into default.
Transaction 6. Slightly more than a year later, CIBC assigned its mortgage to CMHC, and the property was sold under another power of sale to Ronald Male for $180,000. For CMHC, the loss on this loan was well in excess of $200,000.
Last week I spoke to Male and reviewed the price history with him over the phone. I asked him if the house might ever have been worth $227,00. “That’s way out of whack,” Male said. “It’s just not worth that.” Not to mention the $429,900 supposedly paid in February 2004.
Male told me he wanted to buy
the ugliest house on the nicest street,'' and that's what he did.It’s a good thing I got title insurance,’’ he added.
In the meantime, it appears to me that the CMHC got stung not once, but twice, by two borrowers on the same house in situations where the declared purchase price appears to have exceeded the underlying true value of the property.
All this makes me wonder just how much investigation and due diligence today’s mortgage lenders perform when they hand out gobs of money on home purchases.
House inspection is vital before you buy resale
Hire professional to assess structure
Discover problems ahead of time
Sep. 2, 2006. 01:00 AM
Buying a home is one of the most expensive and important decisions you will ever make.
But unlike most other major purchases, when it comes to buying a house, there are no return policies or money-back guarantees.
A professional home inspector can help you find out as much as possible about a home’s condition, livability and safety before you sign on the dotted line.
To help you make more informed decisions — and keep unpleasant surprises to a minimum — the Canada Mortgage and Housing Corp. offers several tips for finding and selecting a qualified home inspector, including:
Ask friends or family members who have recently purchased a home for a recommendation.
Check association websites, the Yellow Pages and housing trade magazines to find a home inspector in your area who meets national certification standards.
These national standards of competency were developed by the Canadian Association of Home and Property Inspectors. Visit http://www.cahpi.ca to learn more.
Make sure the home inspector you choose is an experienced, full-time inspector, not just a renovator or contractor with an inspection business on the side.
Nationally, the average cost of a pre-purchase home inspection is about $350.
Look for inspectors who belong to a provincial association, and who have successfully completed their association’s certification process.
Ask for three references of past customers, and then call to ask them whether they were satisfied with the service they received.
Choose only home inspectors who are not associated with any other construction or housing trade, and who do not carry out any repairs or improvements themselves.
Make sure the home inspector does not solicit, receive or give referral fees.
Ensure that the inspection is carried out during the day, as night-time inspections may miss vital components of the exterior of the house.
Find out where you can get more information about the inspector and his or her firm, such as the firm’s website address or industry association.
Ask what you will receive once the inspection is complete, and when you can expect to receive it.
A professional home inspector should provide a written report reviewing every major system and component in the home within about 24 hours of completing the inspection.
For more information or a free copy of the *About Your House *fact sheet *Hiring a Home Inspector *or other fact sheets on virtually every facet of owning, maintaining or renovating your home, call the CMHC at 1-800-668-2642 or visit the website at http://www.cmhc.ca.
Roy Cooke … RHI…CAHPI… Royshomeinspection.com