Mortgage Renewals | Storm on the Horizon

More expensive, longer and more complicated. The wave of mortgage renewals that is looming will have the appearance of a storm because of a contradictory interpretation of the Notarial Lawfear the real estate brokerage experts. The representatives of the notaries, however, are not on the same wavelength.

“This year there are a lot of people who have renewed in a transfer category [d’hypothèque]that the loan is accepted, that everything is fine, and then we arrive and oh, we don’t have a notary to take the file,” summarizes Simon Lupien, mortgage broker and co-founder of apoint Hypothèque.

Result? Recently, a client had to find an “emergency notary” to prevent his transaction from falling through, says Mr. Lupien. The bill: $3,500. All this for a mortgage renewal. In the real estate brokerage community, many fear seeing this scenario repeat itself.

The modernization of the Notarial Lawin force since last fall.

According to the interpretation of the Chambre des notaires du Québec (CNQ), only notaries are now authorized to draft mortgage files and they must carry out all the steps of the process themselves. However, First Canadian Title (FCT) and Fidelity National Financial (FNF), known for their mortgage refinancing services, see things differently.

The two parties are at loggerheads, to the point where the two Ontario firms brought the matter before the courts last February.

FCT and FNF believe that they can still handle the files before sending them to a Quebec notary. The latter must ensure that everything is in order before finalizing the transaction with the client. This less expensive method is particularly popular with non-bank lenders – such as First National Financial, Manulife Bank, etc. – when making subsidiary transfers or renewing a mortgage loan.

Notaries intimidated?

By the time the court rules, the number of notaries willing to work for the two plaintiffs will have decreased significantly, FCT CEO Michael LeBlanc said in an interview with The PressHe decided to make a rare public appearance in order to shine the spotlight on a situation which, in his opinion, risks causing a lot of headaches for borrowers.

“I would tell you that half of the notaries we do business with [au Québec]or even a little more, have taken a step back, says Mr. LeBlanc. Given that a certain number of notaries have been approached by the Chamber, and I would say that they have been intimidated, they have told us, for fear of reprisals, that they can no longer help us.

It is in this context that the mortgage brokerage players interviewed by The Press are worried about the coming months. Renewal time is fast approaching for many owners.

When interest rates were at historic lows in 2020, fixed-rate mortgages with three- to five-year terms were very popular. According to the Canada Mortgage and Housing Corporation (CMHC), 2.2 million homeowners in the country are preparing to renew their loans. In Quebec, we are talking about some 295,000 borrowers this year.

Ultimately, it is consumers who will pay more if it is absolutely necessary for a notary to handle the entire process for a refinancing or mortgage transfer.

“We have noticed that the price of notaries is elastic,” says Mr. Lupien. “What we fear is that people who want to go to the market [magasiner] to renew their mortgage may not be able to complete their transaction.

In many cases, borrowers may have to resign themselves to staying with their financial institution to avoid having to go to the notary, but at a higher interest rate since they will not be able to shop around, fears the broker.

His observation is also shared by Mortgage Professionals Canada (MPC), which represents 15,000 members across the country. Éric Chamelot, one of the Quebec directors, says that the association is already seeing longer delays in obtaining appointments with a notary for subsidiary transfers.

“The bill also jumps,” he emphasizes. “A transaction with FCT or FNF was less expensive. In the end, the big losers are the consumers.”

No tags

At the Association professionnelle des notaires du Québec (APNQ), president Kevin Dubé retorts that notaries are “free” to set their fees “according to the type of file.” Everything is relative, he says.

“Refinancing a bungalow is not the same as refinancing a $3.5 million house,” says Mr.^e Swell. It remains relative to the time we put into it.

According to him, the Notarial Law is clear: a notary “cannot be limited in his mandate to such an extent that he becomes a mere commissioner of signature”. In other words, he cannot receive a “pre-filled” file and simply sign it.

M^e Houle expects to see an increase in demand from notaries due to the context of early mortgage renewals. In his opinion, if we start early with these professionals, there shouldn’t be too many waves.

Second round

Seven years ago, the Court of Appeal ruled that it did not see how public protection would be jeopardized by companies like FCT and FNF. Modernizing the Notarial Law However, the dispute was rekindled.

Convinced that the court will rule in favor of his company and FNF, Michael LeBlanc wonders why the Chamber is reacting so quickly.

“Why not let the court make the decision rather than rushing the process? The only people who are disadvantaged right now are consumers. All this creates is uncertainty, unnecessary costs and delays.”

Referring to the “current dispute,” the Chamber declined to answer questions from The Press aimed at learning more about the means put in place to ensure that its members respect its interpretation of the Notarial LawThe office of Justice Minister Simon Jolin-Barrette offered the same response.

With the collaboration of Marie-Eve Fournier, The Press