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“Up until now, mortgage life insurance programs have generally been very cookie-cutter’ with hardly any difference between them,” said Tina Bellavia, Benesure’s VP of Broker Product Management & Operations. “but we have changed all that. Starting in February of 2009, we will be the first mortgage protection provider to offer some form of protection to everyone who submits a life insurance application, regardless of their health. As long as they are between the ages of 18 and 65, we will decline no one.”

“And this is why the theme of Mortgage Protection Plan’s new marketing campaign is Yes’ … that’s the response we give to every life insurance application we receive.”

“Not only that, but coverage will start the minute we receive an application. The client can walk out of the broker’s office, knowing that they are already protected. And that also allows us to speed up our broker compensation payments.”

MORTGAGE PROTECTION PLAN SAYS “YES”
“For quite a while now, I have been promoting the message that “Every mortgage should be protected”, added Steve Van Buskirk, VP of Mortgage Protection Plan Sales. “But my message would get just a little bit more diluted, every time we turned down a client’s application. What we were really saying to the brokers who sent us those applications was ‘Every mortgage should be protected … but not necessarily by us !”

“Now my product is totally congruent with my main message. We believe every mortgage should be protected, and we offer protection to every mortgage client. But the best news is that we are able to do this while still offering very competitive premium rates.”

According to Bellavia, “the traditional approach to offering a ‘guaranteed-issue’ life insurance product usually means expensive premiums for the consumer. But we have structured our product in a whole new way that varies premiums and coverage based on the applicant’s health. This keeps premiums affordable.”

This new edition of Mortgage Protection Plan still offers all features that have helped to make it the #1 choice of Canada’s mortgage brokers, including full coverage portability, a 60-day money-bank guarantee, and its unmatched Brokershield indemnification program.

Mortgage Protection Plan which was first offered in 1995, has grown to be the largest independent plan of its kind, protecting well over 100,000 Canadians. The past two years in particular have shown a significant rate of growth. In 2008 alone, Mortgage Protection Plan expects to receive applications from 40,000 Canadian households.

• A credit report is a ‘snapshot’ of your credit history.
• It is one of the main tools lenders use to decide whether or not to grant credit by quantifying a borrower’s credit worthiness

What makes up a credit report?

• Beacon Score: Your overall scoring based on the previously discussed factors
• Reasons for Score: The credit bureau report should indicate some possible reasons why the score is what it is (eg: numerous inquiries, late payments, etc)
• Personal Information: Name, current and previous addresses, SIN, telephone number, Date of Birth.
• Inquiries: Indicates the lender and the date of an inquiry
• Employment Information: Lists your current and previous employers
• Public Records: Any info on the public record such as a bankruptcy or judgement
• Collection Information: Shows whether you have ever had a debt that you could not pay, that was referred to a collection agency for payment.
• Credit Information: Info related to any credit you may have, including credit cards, retail cards, lines of credit loans, mortgages (though not all mortgages currently report on the bureau).
• Consumer Statement: Any statement you may have made to explain a particular situation, such as a financial dispute or a fraud warning.

What makes up your credit score?

• Credit scores range between 300 and 900
• Payment History – 35% (315 Points)
• Outstanding Balances – 30% (270 Points)
• Credit History – 15% (135 Points)
• Credit Type – 10% (90 Points)
• Inquiries – 10% (90 Points)

What affects your credit score?

• Payment History (35%) – Paying debt on time and in full has a positive impact. Late payments and collections have a negative impact. Missing large payments has a greater impact than missing low payments.
• Outstanding Balances (30%) – This is the ratio between the outstanding balance and available credit. A balance below 10% of your available limit is ideal and will have a positive impact. Balances above 75% will have a negative impact. Going over your limits will have an even greater negative impact.
• Credit History (15%) – Having credit accounts and using them responsibly will have a positive impact. Having credit accounts and not using them will have a negative impact. Having multiple (5 or 6) of the same type of credit cards will have a negative impact.
• Credit Type (10%) – A mix of instalment loans and revolving credit is more positive than a concentration of debt from only one type.
• Inquiries (10%) – Having a ‘quiet’ bureau will have a positive impact. Having numerous credit inquiries and numerous new credit accounts will have a negative impact. Many inquiries may indicate ‘credit seeking’ behaviour, meaning a borrower opens numerous credit facilities without an obvious purpose.

What do the letters mean?

• I – Installment (fixed number of payments)
• R – Revolving or Option (30 days)
• O – Open
• M – Mortgage

What do the individual numbers mean?

• 0 – Too new to rate; approved but not used
• 1 – Pays within 30 days of billing (pays as agreed)
• 2 – Pays between 30 and 60 days (one payment past due)
• 3 – Pays between 60 and 90 days (two payments past due)
• 4 – Pays between 90 and 120 days (three or more payments past due)
• 5 – Account is at least 120 days past due but is not yet rated a 9
• 6 – No rating exists
• 7 – Paid through a consolidation order, consumer proposal or credit counselling debt management program
• 8 – Repossession
• 9 – Bad debt or placed for collection or bankruptcy

How do the reporting agencies get their information?

• Information is supplied at the time of the credit request from the credit application, which can be input by the applicant or the credit grantor
• Credit grantors report payment history
• Some credit grantors may report to only one of the credit bureaus, which may result in some accounts appearing on one credit bureau, but not another

Click here to view chart showing how Canadian Score

• Genworth Financial Canada (GNW) has revised their eligibility requirements. Borrowers who have immigrated to Canada within the last 36 months (previously 24months) will now be eligible for insured financing through GNW.
• The maximum Loan to Value (LVR) for a GNW insured mortgage under this program has increased to 97%. A default insurance premium of 2.90% will apply for GNW insured mortgages with LVR’s from 95.01% – 97% (Previously 95%)

Documentation requirements for insured mortgages have been revised. One of the following documents will now be required as a personal reference, in addition to verification of landed immigrant status:

For GNW insured Applications with LVR’s up to 90%:

• Canadian credit history with a minimum Beacon score of 650 (No Hit/No Score not acceptable), or;
• Letter of reference from a recognized financial institution, or;
• 6 months of bank statements from a primary bank account
• If none of the above are available, U.S. or International Credit Bureau demonstrating no derogatory credit history

For all Canada Mortgage and Housing Corporation (CMHC) insured applications and for GNW insured applications with LVR’s from 90.01% – 97%:

• Canadian credit history with a minimum Beacon score of 650 (No Hit/No Score not acceptable), or;
• Two alternate sources of credit demonstrating timely payments (no arrears) for the past 12 months. The two alternate sources are:
  • 1. Rental payment history confirmed via letter from landlord and supporting bank statements, and;
  • 2. One other alternative source. Acceptable sources include hydro or other utilities, telephone, or cable. To be confirmed via letter from the service provider or 12 months billing statements.
• If none of the above are available, U.S. or International Credit Bureau demonstrating no derogatory credit history.

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Bill 152: Phase 1
To comply with this change many lenders are noting that the alert will appear as follows:

*** WARNING*** ALERT TO VERIFY CONSUMER’S IDENTITY – PLEASE CONTACT CONSUMER AT (000)000-0000 BEFORE EXTENDING CREDIT
***ADVERTISSEMENT*** ALERTE POUR VÉRIFIER LÌNDENTITÉ DU CONSOMMATEUR – VEULLEZ APPELER LE CONSOMMA AU (000)000-0000 AVANT DÀCCORDER UN CREDIT

Bill 152: Phase 2
Over the next few months lenders will implement processes to ensure they act on these consumer alerts. At this point in time the auctioning of these alerts, or verifying the client`s identity, will be handled as efficiently as possible. This means, the broker does not have to do anything different then they do today. However, for the clients with these alerts, credit approvals may take a bit longer.

Given that clients initiate these alerts, and are made aware of this impact when they sign up, a possible delay should be expected.

Clients with questions about the new legislation or who wish to apply an alert to their credit bureau file should be directed to their credit bureau provider.

General:

All mortgage applications that contain an identity Verification Alert on the credit report requires verification of the applicants` identity

Effective March 31st, 2008, if an Identity Verification Alert is on an applicants` credit report underwriters will place an outbound call to the applicant to validate their identity at the number provided on the credit report.

This procedure applies to all lenders

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Survey Coverage
The Starts and Completions Survey is carried out monthly in urban areas with populations in excess of 50,000 as defined by the 2006 Census. In urban areas with populations of 10,000 to 49,999, all Starts are enumerated in the last month of each quarter (i.e. four times a year, in March, June, September and December). In these centres with quarterly enumeration, Completion activity is modelled based on historical patterns. Monthly Starts and Completion activity in these quarterly locations are statistically estimated at a provincial level for single and multi categories. Centres with populations below 10,000 are enumerated on a sample basis, also in the last month of each quarter (i.e. in March, June, September and December)…

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The central bank said it is lowering its target rate to 4 per cent – the second month in a row for looser monetary policy – and said it was slashing its growth forecasts for the United States and Canada, for this year.

Inflation in Canada is also proving to be less of a threat than the Bank of Canada expected in its last forecast in October, the bank said, suggesting that prices will remain suppressed…

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