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‘I was beginning to lose hope’: Woman battles bank for 2 years for information on her own account

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An Edmonton woman who spent two years battling her bank for information about her own account is defying a confidentiality agreement to go public about what happened, in a bid to shed light on a highly secretive system she says is stacked against the customer.

“Numerous phone calls, numerous emails. I documented everything,” Rhonda McMillan told Go Public during an interview at her home where she showed us boxes of paperwork — the result of her long fight with CIBC for a document she believed would confirm unauthorized activity on her account.

In 2016, McMillan noticed $691 had been moved from an account belonging to her and her husband to an account she had with her son which was closed a month earlier.

McMillan says the bank slip she fought two years to get appears to show that a CIBC manager and another employee signed their own names authorizing the transfer of the money, reopening the account without her knowledge or permission.

“It wasn’t our signatures and it shook us,” says McMillan.

She has no idea why the bank would do that, and may never know. After waiting months and months to get the document she wanted, she says the bank told her too much time had passed to get answers. 

Two years after money was transferred from her account, Rhonda McMillan still doesn’t know why the transaction occurred without her authorization. These are just some of the documents she has chronicling her fight with CIBC. (Trevor Wilson/CBC)

But it’s not only the unauthorized transaction itself that concerns McMillan — it’s how hard she had to fight to get basic information about activity on her own account and get answers to what happened and why.

“I was beginning to lose hope. I’m pretty persistent, but I was getting worn down,” she says.

Secretive complaint system

The banking complaints system is surrounded by secrecy and dominated by the banks, says Wanda Morris, a consumer advocate with CARP.

“We’re at a crisis,” says Morris, who would like to see a major overhaul of the system. 

In order to get the document she was looking for, McMillan initially filed a complaint with CIBC’s ombudsman. 

The bank and its ombuds service told her she had to sign a confidentiality agreement, promising not to tell anyone what the document revealed, and not to disclose anything about the investigation or any settlement to anyone.

If they want to come after me … then bring it on.– Rhonda McMillan

McMillan  says she reluctantly agreed to sign the gag order, but contacted Go Public anyway, after receiving a copy of the bank slip for the transaction she says was carried out without her knowledge.

“If they want to come after me … then bring it on,” McMillan told Go Public in an email.

Both the bank’s internal ombudsman and the national independent ombuds service, OBSI, required Rhonda McMillan to sign confidentiality agreements. (Trevor Wilson/CBC)

Go Public asked CIBC specific questions about the case, but the bank didn’t offer an explanation. In a statement, a spokesperson wrote that CIBC “strongly disputes the nature of the allegations.”

“As the matter is going through a dispute resolution process, we are unable to comment further,” CIBC spokesperson Tom Wallis wrote.

‘No wrongdoing,’ but settlement offered

McMillan didn’t lose any money but the bank did offer a financial settlement.

“They just would say there’s no wrongdoing — we’re not admitting to any wrongdoing, but here’s our settlement,” McMillan said.

Unhappy with the results of the investigation by the bank’s ombudsman, McMillan escalated her case to the national independent Ombudsman for Banking Services and Investments (OBSI), and was again asked to sign another non-disclosure agreement. 

That investigation resulted in another settlement offer, but again, no explanation for why the money transfer was carried out without her knowledge. 

Lack of transparency

Canada’s banking complaints system needs to be more transparent, says Morris. 

Consumer advocate Wanda Morris of CARP says the current complaints system for banks is tilted in favour of financial institutions. (Rosa Marchitelli/CBC)

She says the system allows banks to choose which dispute resolution service will handle their customer complaints. ​

OBSI is a non-profit, independent consumer dispute service started by the federal government in 1996. It now only investigates two of Canada’s big banks — BMO and CIBC.

The three other big banks — Scotiabank, RBC and TD — jumped ship from OBSI and moved to ADR Chambers Banking Ombuds Office, a private company.

“We have a situation where essentially banks get to choose their referee,” says Morris. “And they’re consistently choosing the referee that investigates fewer complaints, that finds fewer of those complaints in favour of customers, and has less transparency about their findings.”

Neither OBSI nor ADR Chambers publicly releases the results of their investigations, the names of the banks involved or the amount of compensation handed out.

Sarah Bradley is the Ombudsman at OBSI, one of two external dispute resolution services used by banks in Canada. Banks are allowed to decide which service they use. (Gary Morton/CBC)

All banking consumer dispute services require non-disclosure agreements. Sarah Bradley, ombudsman at OBSI, says without the agreements, banks would be more cautious about taking part in investigations.

She wants to see one, non-profit, public service dispute resolution service that handles all banking complaints and is mandatory for all banks.

“The government of Canada should look at this issue very carefully. And it’s our view that the best interests of Canadian consumers would be served by having one ombudsman,” Bradley says.

Proposed legislation

Last week, the federal government introduced Bill C-86 (the Budget Implementation Act 2), which it says will improve consumer protection and make the banking complaints process more transparent.

If passed, it would:

  • Require banks to keep a record of all complaints and make the information available to the commissioner of the Financial Consumer Agency of Canada (but not public).
  • Publicly identify banks that commit serious breaches of their legal obligations.
  • Prohibit banks from using misleading terms regarding their complaints-handling procedures, including terms that suggest independence. That includes the use of the term ombudsman.
  • National dispute resolution services (OBSI and ADR Chambers) would have to publish on their website a summary of their final recommendations and the reasons for them.

The proposed legislation doesn’t include a plan for one independent dispute resolution service. 

“We expect all approved external complaint bodies to maintain a strong reputation for being operated in a manner consistent with the standards of good character and integrity, and to ensure that complaints are addressed in an impartial and independent manner,” Pierre-Olivier Herbert, press secretary for Bill Morneau, wrote in an email to Go Public.

Moved money to credit union

McMillan says the OBSI investigation is now over and she’s waiting to receive a financial settlement from the bank.

She’s now moved all of her family’s money out of CIBC to a credit union.  She started the process while trying to get the bank to hand over her account record — transferring money out little by little — while CIBC played what she calls “the procrastination game” with the document she wanted.

With files from Ana Komnenic

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Go Public is an investigative news segment on CBC-TV, radio and the web.

We tell your stories and hold the powers that be accountable.

We want to hear from people across the country with stories you want to make public.

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Real Estate

5 ways to reduce your mortgage amortization

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Since the pandemic hit, a lot of Canadians have been affected financially and if you’re on a mortgage, reducing your amortization period can be of great help.

A mortgage amortization period is the amount of time it would take a homeowner to completely pay off their mortgage. The amortization is typically an estimate based on what the interest rate for your current term is. Calculating your amortization is done easily using a loan amortization calculator which shows you the different payment schedules within your amortization period.

 In Canada, if you made a down payment that is less than the recommended 20 per cent of the total cost of your home, then the longest amortization period you’re allowed to have is 25 years. The mortgage amortization period not only affects the length of time it would take to completely repay the loan, but also the amount of interest paid over the lifecycle of the mortgage.

Typically, longer amortization periods involve making smaller monthly payments and having a much higher total interest cost over the duration of the mortgage. While on the other hand, shorter amortization periods entails making larger monthly payments and having lower total interest costs.

It’s the dream of every homeowner to become mortgage-free. A general rule of thumb would be to try and keep your monthly mortgage costs as low as possible—preferably below 30 per cent of your monthly income. Over time, you may become more financially stable by either getting a tax return, a bonus or an additional source of income and want to channel that towards your principal.

There are several ways to keep your monthly mortgage payments low and reduce your amortization. Here are a few ways to achieve that goal:

1. Make a larger down payment

Once you’ve decided to buy a home, always consider putting asides some significant amount of money that would act as a down payment to reduce your monthly mortgage. While the recommended amount to put aside as a down payment is 20 per cent,  if you aren’t in a hurry to purchase the property or are more financial buoyant, you can even pay more.

Essentially, the larger your down payment, the lower your mortgage would be as it means you’re borrowing less money from your lender. However, if you pay at least 20 per cent upfront, there would be no need for you to cover the additional cost of private mortgage insurance which would save you some money.

2. Make bi-weekly payments

Most homeowners make monthly payments which amount to 12 payments every year. But if your bank or lender offers the option of accelerated bi-weekly payment, you will be making an equivalent of one more payment annually. Doing this will further reduce your amortization period by allowing you to pay off your mortgage much faster.

3. Have a fixed renewal payment

It is normal for lenders to offer discounts on interest rate during your amortization period. However, as you continuously renew your mortgage at a lower rate, always keep a fixed repayment sum.

Rather than just making lower payments, you can keep your payments static, since the more money applied to your principal, the faster you can clear your mortgage.

4. Increase your payment amount

Many mortgages give homeowners the option to increase their payment amount at least once a year. Now, this is very ideal for those who have the financial capacity to do so because the extra money would be added to your principal.

Irrespective of how small the increase might be, in the long run, it would make a huge difference. For example, if your monthly mortgage payment is about $2,752 per month. It would be in your best interest to round it up to $2,800 every month. That way, you are much closer to reducing your mortgage amortization period.

5. Leverage on prepayment privileges

The ability for homeowners to make any form of prepayment solely depends on what mortgage features are provided by their lender.

With an open mortgage, you can easily make additional payments at any given time. However, if you have a closed mortgage—which makes up the larger percentage of existing mortgages—you will need to check if you have the option of prepayments which would allow you to make extra lump sum payments.

Additionally, there may also be the option to make extra lump sum payments at the end of your existing mortgage term before its time for renewal.

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Real Estate

Mortgage insurance vs. life insurance: What you need to know

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Your home is likely the biggest asset you’ll ever own. So how can you protect it in case something were to happen to you? To start, homeowners have a few options to choose from. You can either:

  • ensure you have mortgage protection with a life insurance policy from an insurance company or
  • get mortgage insurance from a bank or mortgage lender.

Mortgage insurance vs. life insurance: How do they each work?  

The first thing to know is that life insurance can be a great way to make sure you and your family have mortgage protection.

The money from a life insurance policy usually goes right into the hands of your beneficiaries – not the bank or mortgage lender. Your beneficiaries are whoever you choose to receive the benefit or money from your policy after you die.

Life insurance policies, like term life insurance, come with a death benefit. A death benefit is the amount of money given to your beneficiaries after you die. The exact amount they’ll receive depends on the policy you buy.

With term life insurance, you’re covered for a set period, such as 10, 15, 20 or 30 years. The premium – that’s the monthly or annual fee you pay for insurance – is usually low for the first term.

If you die while you’re coved by your life insurance policy, your beneficiaries will receive a tax-free death benefit. They can then use this money to help pay off the mortgage or for any other reason. So not only is your mortgage protected, but your family will also have funds to cover other expenses that they relied on you to pay.

Mortgage insurance works by paying off the outstanding principal balance of your mortgage, up to a certain amount, if you die.

With mortgage insurance, the money goes directly to the bank or lender to pay off the mortgage – and that’s it. There’s no extra money to cover other expenses, and you don’t get to leave any cash behind to your beneficiaries.

What’s the difference between mortgage insurance and life insurance?

The main difference is that mortgage insurance covers only your outstanding mortgage balance. And, that money goes directly to the bank or mortgage lender, not your beneficiary. This means that there’s no cash, payout or benefit given to your beneficiary. 

With life insurance, however, you get mortgage protection and more. Here’s how it works: every life insurance policy provides a tax-free amount of money (the death benefit) to the beneficiary. The payment can cover more than just the mortgage. The beneficiary may then use the money for any purpose. For example, apart from paying off the mortgage, they can also use the funds from the death benefit to cover:

  • any of your remaining debts,
  • the cost of child care,
  • funeral costs,
  • the cost of child care, and
  • any other living expenses. 

But before you decide between life insurance and mortgage insurance, here are some other important differences to keep in mind:

Who gets the money?

With life insurance, the money goes to whomever you name as your beneficiary.

With mortgage insurance, the money goes entirely to the bank.

Can you move your policy?

With life insurance, your policy stays with you even if you transfer your mortgage to another company. There’s no need to re-apply or prove your health is good enough to be insured.

With mortgage insurance, however, your policy doesn’t automatically move with you if you change mortgage providers. If you move your mortgage to another bank, you’ll have to prove that your health is still good.

Which offers more flexibility, life insurance or mortgage insurance?

With life insurance, your beneficiaries have the flexibility to cover the mortgage balance and more after you die. As the policy owner, you can choose how much insurance coverage you want and how long you need it. And, the coverage doesn’t decline unless you want it to.

With mortgage insurance through a bank, you don’t have the flexibility to change your coverage. In this case, you’re only protecting the outstanding balance on your mortgage.

Do you need a medical exam to qualify? 

With a term life insurance policy from Sun Life, you may have to answer some medical questions or take a medical exam before you’re approved for coverage. Once you’re approved, Sun Life won’t ask for any additional medical information later on.

With mortgage insurance, a bank or mortgage lender may ask some medical questions when you apply. However, if you make a claim after you’re approved, your bank may ask for additional medical information.* At that point, they may discover some conditions that disqualify you from receiving payment on a claim.

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Real Estate

5 common mistakes Canadians make with their mortgages

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This article was created by MoneyWise. Postmedia and MoneyWise may earn an affiliate commission through links on this page.

Since COVID-19 dragged interest rates to historic lows last year, Canadians have been diving into the real estate market with unprecedented verve.

During a time of extraordinary financial disruption, more than 551,000 properties sold last year — a new annual record, according to the Canadian Real Estate Association. Those sales provided a desperately needed dose of oxygen for the country’s gasping economy.

Given the slew of new mortgages taken out in 2020, there were bound to be slip-ups. So, MoneyWise asked four of the country’s sharpest mortgage minds to share what they feel are the mistakes Canadians most frequently make when securing a home loan.

Mistake 1: Not having your documents ready

One of your mortgage broker’s primary functions is to provide lenders with paperwork confirming your income, assets, source of down payment and overall reliability as a borrower. Without complete and accurate documentation, no reputable lender will be able to process your loan.

But “borrowers often don’t have these documents on hand,” says John Vo of Spicer Vo Mortgages in Halifax, Nova Scotia. “And even when they do provide these documents, they may not be the correct documentation required.”

Some of the most frequent mistakes Vo sees when borrowers send in their paperwork include:

  • Not including a name or other relevant details on key pieces of information.
  • Providing old bank or pay statements instead of those dated within the last 30 days.
  • Sending only a partial document package. If a lender asks for six pages to support your loan, don’t send two. If you’re asked for four months’ worth of bank statements, don’t provide only one.
  • Thinking low-quality or blurry files sent by email or text will be good enough. Lenders need to be able to read what you send them.

If you send your broker an incomplete documents package, the result is inevitable: Your mortgage application will be delayed as long as it takes for you to find the required materials, and your house shopping could be sidetracked for months.

Mistake 2: Blinded by the rate

Ask any mortgage broker and they’ll tell you that the question they’re asked most frequently is: “What’s your lowest rate?”

The interest rate you’ll pay on your mortgage is a massive consideration, so comparing the rates lenders are offering is a good habit once you’ve slipped on your house-hunter hat.

Rates have been on the rise lately given government actions to stimulate the Canadian economy. You may want to lock a low rate now, so you can hold onto it for up to 120 days.

But Chris Kolinski, broker at Saskatoon, Saskatchewan-based iSask Mortgages, says too many borrowers get obsessed with finding the lowest rate and ignore the other aspects of a mortgage that can greatly impact its overall cost.

“I always ask my clients ‘Do you want to get the best rate, or do you want to save the most money?’ because those two things are not always synonymous,” Kolinski says. “That opens a conversation about needs and wants.”

Many of the rock-bottom interest rates on offer from Canadian lenders can be hard to qualify for, come with limited features, or cost borrowers “a ton” of money if they break their terms, Kolinski points out.

Mistake 3: Not reading the fine print

Dalia Barsoum of Streetwise Mortgages in Woodbridge, Ontario, shares a universal message: “Read the fine print. Understand what you’re signing up for.”

Most borrowers don’t expect they’ll ever break their mortgages, but data collected by TD Bank shows that 7 in 10 homeowners move on from their properties earlier than they expect.

It’s critical to understand your loan’s prepayment privileges and the rules around an early departure. “If you exit the mortgage, how much are you going to pay? It’s really, really important,” Barsoum says.

She has seen too borrowers come to her hoping to refinance a mortgage they received from a private or specialty lender, only to find that what they were attempting was impossible.

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