Connect with us

Real Estate

RBC ‘regrets’ mortgage error that labelled loans as accelerated when they weren’t

Editor

Published

on

Canada’s biggest bank says it regrets an error that caused it to mischaracterize some of its mortgages as being on an accelerated payment plan even though they were not.

Last fall, the bank sent letters to some of its customers who had recently renewed their mortgages with the bank and had chosen an accelerated payment plan that lets them pay down the loan quicker than other options. 

By RBC’s definition, an accelerated mortgage is one where the client is making the equivalent of one extra monthly payment per year, with that amount being spread over smaller periodic payments through the year. A $150,000 mortgage at 5.5 per cent for 25 years, for example, can be paid off in a number of ways. Someone with that mortgage could choose to go with:

  • One monthly payment of $915.59.
  • Two payments per month of $457.80 
  • One payment of $422.58 every two weeks.
  • Or $211.29, once a week. 

Under an accelerated mortgage payment plan, a mortgagee could opt to pay $457.80 every two weeks — an amount that’s higher than the standard biweekly payment plan outlined above, and one that would shave almost four years off the life of the loan, putting that person on track to pay down their mortgage in just over 21 years.

Some customers had signed up for what they thought was an accelerated option but was actually not the quickest payment plan available.

“The language of our mortgage renewal agreement stated that your payment type was ‘accelerated’ even though the mortgage payment you chose was not an accelerated payment type,” the letter said.

The letter goes on to explain that despite the error, the underlying math in the agreement is correct — the payment terms they agreed to will see them pay off their loan in the amount of time they thought it would. But it isn’t technically accelerated because it wasn’t the fastest possible option after all, and that has some of the bank’s customers feeling steamed. 

Keswick, Ont., resident Natalie Floyd and her husband opted to renew their mortgage with the bank at an accelerated biweekly payment plan last May. For her, paying the mortgage off as quickly as they could was the main appeal, so they were a little upset to receive the letter from the bank informing them that wasn’t the track they were actually on.

After being presented with new payment options, she has opted to stay with her existing plan, but she says the experience has really soured her on the bank and she’s unlikely to stay with RBC when the loan comes up for renewal.

“My husband and I both felt pretty robbed,” she said. “I feel … it was deceptive.”

Royal Bank says it uncovered the discrepancy during what it calls a ‘regular business review.’ (Nathan Denette/Canadian Press)

For its part, RBC says it regrets the error and is working with customers to rectify the situation.

“Through one of our regular business reviews, we discovered that a limited number of clients’ mortgage payments were incorrectly labelled at the time of renewal,” spokesperson AJ Goodman said. 

“We contacted clients to explain the discrepancy to them, assure them that the payments, terms and amortization periods remain the ones they selected at the time of renewal and that principal and interest payments were correctly applied. We regret any client inconvenience and encourage them to contact us with questions.”

He declined to offer specifics of how many of the bank’s $247 billion worth of mortgages were improperly pitched as accelerated.

The Financial Consumer Agency of Canada, the government regulator tasked with looking out for consumers when they have disputes with their financial service providers, wouldn’t discuss the RBC case, citing an “obligation to maintain confidentiality.”

But other industry critics say the responses from both the bank and the regulator are sorely lacking. 

“If they believe they were misled, some might want to go to court … to make their case,” said John Lawford, the executive director of the Public Interest Advocacy Centre, an Ottawa-based group that speaks out on consumer rights issues.

Lawford says banks are far from transparent when it comes to disclosing how they deal with disputes with their customers.

It’s why he’s lobbied the federal government for many years to establish a consumer’s bill of rights that would set clear rules for what both parties are required to do when these sorts of issues arise.

“It would be better in future if they had a clear right and if the regulator had a clear rule for the banks so that this sort of misunderstanding didn’t fall on consumers to have to pay for it.”

Based on his reading of it, the tone of the bank’s letter to affected customers is “probably an attempt to avoid litigation, because if they took the opposite position then people would be owed money,” he said, noting the letter falls well short of an apology or acceptance of responsibility.

“There is no particular offer … to compensate or provide a small amount of money as a token of having made a mistake,” he said.

Source link

قالب وردپرس

Real Estate

Montreal real-estate prices climbing much faster than Toronto or Vancouver: study

Editor

Published

on

By

MONTREAL — The cost of housing per square foot has skyrocketed in Montreal while other cities saw little change over the last year, according to a new national survey.

The study found that condominium prices in downtown Montreal are up 13.5 per cent from last year to, on average, $805 per square foot.

That’s not as high as other cities, but it’s catching up — and Montreal’s rate of growth is outpacing other major Canadian cities.

Toronto’s condo prices grew to $1083 per square foot, an increase of just under 10 per cent, according to the study. In Vancouver, where you can find some of Canada’s most expensive condo prices, rates are down 4 per cent to $1192 per square foot.

To make the comparisons, Canadian real estate giant Century 21 collected data from real estate boards across the country to calculate the home costs per square foot.

“It’s important to compare apple to apples,” said Todd Shyiak, the company’s vice president of operations.

Montreal’s rise was even more explosive for detached homes and townhouses.

Detached houses in Montreal’s downtown and southwest rose to $958 per square foot, 40 per cent up from last year.

“It’s wild,” said Century 21 broker Angela Langtry. She says the pandemic raised demand.

“People had a lot of time to figure out they don’t like the home they’re in,” she said. “They all want pools.”

There was a big spike in sales, she noted, following a pause in brokerage during the spring, at the peak of the pandemic.

Experts say the pandemic will push people into the suburbs as they search for affordable housing and home office space.

“A huge portion of our society’s housing needs changed overnight,” said Shyiak. People “no longer need to be 10 minutes from the office.”

He says that could mean less demand for condos in the future. “People want their own front door,” he said.

Continue Reading

Real Estate

Carttera buys prime downtown Montreal development site

Editor

Published

on

By

Carttera has acquired a prime downtown Montreal site at 1455 De La Montagne St. which will mark its third development on the thoroughfare.

“We think it’s probably one of the best, if not the best, locations in the whole city,” Carttera founding partner Jim Tadeson told RENX. “We’ve had great success on De La Montagne.”

The two earlier projects are: L’Avenue, a building with 393 residential units, 84,000 square feet of office space and 34,000 square feet of retail that was developed with Broccolini and occupied in 2017; and Arbora Residences, a two-phase development with 434 rental and condominium units in three buildings being built in partnership with Oxford Properties.

Thursday’s latest acquisition, for $48.5 million from 630745 Ontario, is a 31,750-square-foot surface parking lot with flexible mixed-use zoning on the corner of De La Montagne and De Maisonneuve Boulevard West.

The site is near the Vogue Hotel Montreal Downtown, the new Four Seasons Hotel Montreal and high-end retail.

“It’s zoned for up to 203,000 square feet of density, which we’re going to take advantage of,” said Tadeson. “Our vision for the site is a condominium project with some retail.”

Since there is no demolition required and no heritage issues to contend with, Toronto-based Carttera plans to move ahead quickly with the luxury project.

It’s in the concept design phase and Tadeson said it could take six months or more before it’s prepared to make a submission to the city.

Continue Reading

Real Estate

Montreal Has the Hottest Real Estate Market in Canada Right Now

Editor

Published

on

By

If you thought Toronto’s real estate market was on fire, it’s time for a second take, because the market in Montreal is the hottest in all of Canada right now.

A newly-released annual report from CENTURY 21 Canada reveals that, following an early-spring decline due to the COVID-19 pandemic, sales numbers are bouncing back and house prices across the country are maintaining their strength. The study compared the price per square foot of properties sold between January 1 and June 30 of this year, compared to the same period last year.

In Toronto and Vancouver, unsurprisingly, prices remain high. But while regions across the country are seeing varied stories when it comes to their housing market fluctuations, Montreal stands out — there, prices have increased dramatically since 2019. While the numbers remain lower than Toronto and Vancouver, that housing market is proving to be the country’s strongest right now.

In Quebec’s largest city, prices have increased significantly since last year, particularly in the downtown detached house and townhouse markets. For example, the price of a detached house in Montreal’s downtown and southwest rose 42.14% to $958 per square foot, while townhouses went up 44% to $768, and condos, 13.55% to $805. Comparatively, in Toronto and Vancouver, prices saw more modest increases or, in some cases, even declines.

“Even though real estate in Quebec was not considered an essential service, we have seen strong demand and a jump in prices in 2020,” said Mohamad Al-Hajj, owner of CENTURY 21 Immo-Plus in Montreal.

Continue Reading

Chat

Trending