Toronto Condo and Real Estate Blog

Critics say decision in previous case favours banks and mortgage firms over fraud victims

By Harold Levy - Toronto Star

Almost a year after identity thieves stole her home and left her with a $300,000 mortgage, Susan Lawrence has finally got to make her case before Ontario’s highest court.

The North York woman asked the Ontario Court of Appeal yesterday to reverse a decision it made 12 months ago in a different case which some critics say favours banks and mortgage companies over innocent victims of fraud.

She has “no interest in being responsible in any way for a mortgage which (she) had nothing to do with, put on (her) home by identity thieves and fraudsters,” her lawyer Morris Cooper told the court.

Lawrence discovered earlier this year that as a result of the decision referred to as the “Household Realty” case, she was on the hook to Maple Trust for a $300,000 mortgage the thieves had secretly put on the property after forging her signature to acquire it.

The court had interpreted the Ontario’s Land Titles Act to say that transactions based on fraudulent documents such as forged powers of attorney become valid and enforceable as soon as they are registered on the Province’s Land Titles system — even where the homeowner was utterly unaware that the fraud had occurred.

After a judge reluctantly ruled that the mortgage was valid in her case, Lawrence vowed to ask the court to review its decision. “Like any similar victim of title fraud, Susan Lawrence can do nothing to prevent it from occurring,” Cooper told the court. “Like all of the others, Susan only found out about it months after the fact, and in her case, purely by accident.”

“Contrast that innocence with Maple Trust who were ready, willing and extremely happy to lend approximately $292,000 to a fictitious person, who worked for a non-existent employer, who had non-existent savings of $32,000, and a non-existent annual salary of $73,500 a year which he apparently made washing cars,” Cooper said. “Thomas Wright (the name used by the fictional purchaser/mortgagor) did not steal money from Maple Trust. They cheerfully gave it to him and thanked him for his business.”

Cooper told the judges that Ontario’s law was never meant to allow title to properties to be transferred through fraudulent documents, and that under the common law, “a fraud is a fraud is a fraud.”

“There is nothing in the Land Titles Act that should make homeowners worry that the nightmare faced by Susan Lawrence could happen to them,” Cooper said.

“She certainly should not have to fight to get a fraudulent mortgage removed from her title, and should certainly not be at any risk of being held in any way responsible for that mortgage.”

Much of yesterday’s hearing revolved around the question whether Ontario’s land registration system was designed to protect existing homeowners, like Lawrence — or to provide “certainty” to individuals who subsequently acquire an interest in the property.

Lawyer David Golden, who represents Maple Trust, told the court that the lender had acted in good faith without any notice of the fraud, and that its previous decision was the “best approach to balancing the rights of all fraud victims.”

Golden warned the court that “tampering” with the ruling “would lead to unintended consequences which will create a nightmare far beyond Mrs. Lawrence having to wait for compensation.”

Golden also predicted that Ontario’s Land Titles system would collapse if the court accepted Cooper’s arguments.

In an unusual twist, Lawrence was supported at yesterday’s hearing by a lawyer representing the Ontario government which had been allowed to intervene in the case

Lawyer Ronald Carr said, “We believe the charge (mortgage) should be declared invalid and eliminated from the registry.”

The court reserved its ruling.

Look for economic pick-up in 2008, Paris-based think-tank suggests

Reuters News Agency

PARIS — Canada’s economic growth is expected to slow marginally next year, and overall inflation should decelerate, the Organization for Economic Co-operation and Development says.

“The economy is expected to grow at below-potential rates in the near term,” the Paris-based group said yesterday in a twice-yearly economic outlook.

“Domestic demand has been firm, but there are signs of cooling.

“But the slowdown is likely to be short-lived with the economy subsequently growing at a reasonably solid pace.

“A recovery of export demand should be one of the main drivers of the rebound, especially as external markets accelerate and the effects of past currency appreciation dissipate.”

The Paris-based think-tank expects Canadian gross domestic product to expand 2.8% this year and 2.7% next year, rebounding to 3.1% in 2008.

Overall price increases are expected to decelerate next year as the decline in energy prices takes effect.

Still, underlying inflation is expected to inch up, albeit within comfortable ranges for the Bank of Canada.

Consumer price inflation is expected to slow to 1.5% next year from 2.1% this year, then pick up to 2.0% in 2008.

Core inflation, excluding volatile food and energy prices, should pick up to 2.1% next year from 1.9% this year, before easing slightly to 2.0% in 2008.

Against this backdrop, and barring any surprise shocks, the Bank of Canada should look to keep interest rates on hold at 4.25% over the next two years, the group said.

The main risk for Canada is if the recent slowdown in the country’s biggest trading partner, the United States, lasts longer than expected.

Fed chairman sees risks from inflation, ailing home market

By Anne D’Innocenzio - Associated Press

NEW YORK — Three pillars of the U.S. economy — consumer confidence, orders for manufactured goods and home prices — showed surprising cracks yesterday, flashing signals that growth may slow more heading into the important holiday shopping season.

The New York-based Conference Board said its widely watched consumer confidence index fell to 102.9 in November from a revised reading of 105.1 in October. November’s figure was the lowest since August’s 100.2 and well below economists’ expectations of a 106 reading.

That news arrived on the heels of a government report showing orders for big-ticket manufactured goods plunged 8.3% in October — the largest drop in more than six years.

And the median price of a home dropped to $221,000 (U.S.) in October, a decline of 3.5% from a year ago, according to the National Association of Realtors. It was the biggest year-over-year price decline on record for an asset that many Americans use as a gauge of their financial well-being.

The reports drew some air out of any inflated hopes for a robust holiday shopping season. Economists still believe it will be a decent season, however, because of lower gasoline prices, which have put more money in consumers’ pockets. Consumers “are not feeling really good now,” said Gary Thayer, chief economist at A.G. Edwards & Sons Inc., though he added they’re feeling better compared to this past summer when gasoline prices surged.

“We are still positive on the consumer sector. I think it will be a good holiday season,” he noted.

Some of the weaker-than-expected economic news, namely the durable goods and consumer confidence reports, boosted U.S. Treasury bond prices and knocked down yields, a measure of long-term interest rates.

The 10-year Treasury yield fell below 4.50% for the first time since late January on expectations that a slowing economy may force the Federal Reserve Board, which has left interest rates intact since August, to begin lowering interest rates next year.

Federal Reserve Board chairman Ben Bernanke said yesterday that risks from inflation or a worse-than-expected housing slump could further complicate matters for the U.S. economy. In his first speech in months, Bernanke made it clear that he would monitor the situation, particularly labour costs.

In prepared remarks to the National Italian American Foundation in New York, the Fed chairman said “substantial uncertainties” surround the Fed’s outlook.

He noted that the slowdown in the housing market could turn out to be deeper than expected, dragging down overall economic activity even more. In contrast, economic growth could rebound more strongly than expected, which could lead to rising inflation.

Merchants are counting on confident shoppers to keep spending through the holiday season, but worries about job security could make them scour for bargains at the malls and department stores.

High-profile layoffs in the auto industry and steep cutbacks in home building have made consumers uneasy about the labour market, even though government reports have painted a healthy picture for jobs.

The drop in durable orders also provided more evidence that U.S. factories are beginning to feel the effect of the slowdown in the economy and could derail any gains made in the employment market.

“A tighter labour market and a more guarded short-term outlook have combined to curb consumers’ confidence in November,” said Lynn Franco, director of the Conference Board Consumer Research Center. But she added that despite the retreat, “the overall level of confidence remains favourable and continues to suggest that the economy will expand throughout the first half of next year.”

The consumer confidence report — derived from responses through Nov. 14 to a survey mailed to 5,000 households in a consumer research panel — showed that labour market conditions were less favourable than in October.

Those saying jobs are “hard to get” rose to 22.4% from 21.8%.