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Computer scientist David Magerman wants to build a more ethical internet




Multi-millionaire computer scientist David Magerman believes he has met the enemy, and it is us.

Maybe not exactly the flesh-and-blood us, but certainly our cyberselves — the unwitting employees of Facebook and Twitter who absently click great gobs of our personal information into the maw of social media, allowing a handful of internet titans to put it to work and make more money than God.

For one thing, Magerman resents that people on his payroll spend some of their workday on social media doing things that benefit the bottom lines at Facebook and Twitter.

They’re “moonlighting,” he says, “and I’m paying them.”

But most worrisome to him is that people don’t seem to understand the value of the personal information they give up as they surf the web, and how it is being used to shape their world and bend their preferences —  including their political preferences.

“We’re spending our productive time helping Facebook and Twitter be valuable,” he says. And if we don’t even realize that’s what we’re doing, how can we choose whether we want to do it?

Rather than just patch the holes in the internet with quickly obsolescent security products, Magerman imagines a whole new layer to cyberspace — a renovation with more privacy, data protection, encryption and transparency.

Important to him in all of this is a question that has nagged him since the election of Donald Trump: What role in his win was played by the data we unconsciously surrender in the deeply flawed cyberspace we wander through every day?

Many observers believe sophisticated online data mining helped Donald Trump become U.S. president in 2016. (Jeff Roberson/Associated Press)

Magerman gained momentary fame a couple of years ago as an outspoken critic of Trump — and of his own boss, hedge fund billionaire Robert Mercer. Mercer was a pioneer in the use of data for investing, and was an owner of the now-defunct data mining firm Cambridge Analytica, which some believe had a significant role in electing Trump in 2016.

All of that has ultimately driven Magerman to a new purpose in life: To try to strangle the golden goose of the internet economy — data collection — and replace it with something more socially useful and less profit-driven.

He’s looking for ideas and, if no one else will, he’ll put some of his own money into them.

A better internet

Magerman worked at Mercer’s hedge fund, Renaissance Technologies, for a couple of decades, using his computer science background to help make a fortune for himself, for Mercer and for the business.

Even then, Magerman was conscious of how little social benefit came from his work. He saw Renaissance Technologies as “a place that uses really bright people, who could do a lot of great things in the world — and simply has them sit at their desks and make money from money.” And yet, he was one of those people.

But it was over Trump that Magerman had a tabloid-worthy falling out with Mercer, Trump’s most influential backer.  

Magerman argued with Mercer about all of that—specifically about race politics — and was fired. He filed a wrongful dismissal suit with sensational allegations of racism against Mercer that lit up the normally prosaic business press, which had previously reported with envy and awe on the rise of Mercer’s company to the pinnacle of the hedge fund world.

Robert Mercer is the enigmatic co-owner of Cambridge Analytica, a data analysis firm that is widely thought to have had a large role in Trump’s election win. (Oliver Contreras/Washington Post/Getty Images)

Eventually, the suit was settled. Magerman says he got everything he wanted, but he didn’t go back to work. He continued to nurture his bitterness about the 2016 election and a suspicion that Facebook and Cambridge Analytica had somehow helped usher Trump into the White House.

How much data analytics really had to do with the outcome in 2016 we might never know. But it added to Magerman’s discomfort with the downside of the internet.

“We are creating social and emotional and psychological cancer for society through how technology is infiltrating and being adopted,” he says, echoing the comparison that others have noted between Facebook and the big cigarette companies of the last century.

So, how to change that?

Creating a new ‘layer’

Magerman’s first foray in the battle was to get behind the Freedom From Facebook campaign, which is trying to persuade regulators to rein in the company and break it up. He was the original donor to the cause last fall with a gift of $400,000.

But breaking up Facebook doesn’t guarantee something more socially responsible will slide into its place.

That’s where his new partnership with venture capitalists comes in. Last fall, Magerman joined Differential Ventures to work with a couple of angel investors, Nick Adams and Alex Katz. They both have experience seeding start-ups, with an interest in big data and its impacts.

Having made a great deal of money working for Mercer’s hedge fund, Magerman is now looking for ways to create a less profit-driven internet. (Jason Burles/CBC)

It’s Magerman’s hope that they can begin to imagine a new kind of  internet, one built to be safe and secure, where a constrained Facebook and Twitter would be worth just a fraction of what they are today — valued by what they actually do for their customers, not what their customers’ personal information does for them.  

“I’m talking about creating that layer,” he says, “where everything is encrypted and every single communication in that environment has an identity associated with it — meaning a human being.” (Magerman concedes there is a need for some anonymous space to protect dissidents in repressive countries.)

Imagine a Twitter without anonymous trolls and bots, or a Facebook that didn’t presume to curate your life — or even a cyberspace safe for children.

Less profit-driven

The problem investors normally have with something like that sounds like a punchline.

“They don’t see how to monetize it,” says Magerman, “and I think there is truth in that.”

But actually, that’s the point. Part of the way many internet-based companies have become so fantastically successful is through their indifference to social responsibility. A company that profits by treating its customers as though they’re merely data-generating employees is not a socially responsible business model for the internet — it’s a parasite.

In the world according to Magerman, a company like Facebook would have to be content with being a $10-billion company, not a $500-billion company.

Therein lies the real obstacle. The first steps toward a new kind of internet will require government intervention, says Magerman. And, since it’s ultimately about taking power from the powerful, there will be resistance to that.

Lots of it, and well-funded — through all those profits earned by social media giants thanks to you and the personal data you’ve given up without so much as a whimper.

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Real Estate

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





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





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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Real Estate

Canadian mortgage rules: What you should know





If you’re a new homebuyer seeking a mortgage, or an existing homeowner looking to switch or refinance, it’s important that you’re up-to-date on the new mortgage rules in Canada. Here are some of the top things you should keep in mind if you’re looking for a new home. 

The Canadian Mortgage Stress test in 2021

The stress test was introduced on January 1, 2018, as a way to protect Canadian homeowners by requiring banks to check that a borrower can still make their payment at a rate that’s higher than they will actually pay.  The purpose of the stress test is to evaluate if a borrower (a.k.a. the potential homeowner) can handle a possible increase in their mortgage rate.

For Canadians to qualify for a federally regulated bank loan, they need to pass the stress test. To do this, homebuyers need to prove that they can afford a mortgage at a qualifying rate. For homebuyers who have a down payment of 20% or more, currently the qualifying rate is determined using the Bank of Canada’s five-year benchmark or the interest rate offered by the lender plus 2%, whichever is higher. For homebuyers who have a down payment of less than 20%, the qualifying rate is the higher of the Bank of Canada five-year benchmark rate and the interest rate offered by the lender.

This stress test is also performed with homeowners looking to refinance, take out a secured line of credit, or change mortgage lenders. Those who renew with the same lender will not have to undergo the stress test.

Other new mortgage rules in Canada

As of July 2020, a number of changes were implemented for all high-ratio mortgages to be insured by the Canada Mortgage and Housing Corporation (CMHC).

A high-ratio mortgage is one where the borrower has a minimum down payment of less than 20% of the purchase price of the home. A high-ratio mortgage is also referred to as a default insured mortgage. Let’s break down what recent changes have been made.

Qualification rate

The new CMHC rules will lower the amount of debt that borrowers with a default insured mortgage can carry. Mortgage applicants will be limited to spending a maximum of 35% of their gross income on housing and can only borrow up to 42% of their gross income once other loans are included. This is down from the previous 39% and 44%.

Credit score

The new rules also require the borrower to have a minimum credit score of 680 (good score). If you are purchasing a home with your partner, one of you must have a score of 680. This is up from the previous minimum score of 600 (fair score).

Down payment

Homebuyers are now required to use their own money for a down payment instead of borrowed funds. This means homebuyers are no longer able to use unsecured personal loans, unsecured lines of credit or credit cards to fund their down payment.

Homebuyers with a down payment of less than 20% of the purchase price are required to purchase mortgage default insurance. Properties costing $1 million or more are not eligible for mortgage default insurance.

CMHC and CREA projections

Due to the pandemic, job loss, business closures, and a drop in immigration, CMHC predicted a 9% to 18% decrease in housing prices from June 2020 to June 2021.* However, this prediction hasn’t come to fruition.

Instead, 2020 ended up being a record year for Canadian resale housing activity, according to Costa Poulopoulos, the Chair of the Canadian Real Estate Association (CREA).**

The CREA predicts that all provinces except Ontario will see an increase in sales activity into 2021 as a result of low-interest rates and an improving economy. As for the CMHC, they stand by their original prediction.

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