Lender questions the value of REDX

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A lender is joining brokers in questioning the industry’s use of REDX, arguing the system, meant to flag fraud, is too often misused by underwriters and other subscribers.

“It’s like anything else: garbage in; garbage out,” Equity Financial Trust CEO Nick Kyprianou told MortgageBrokerNews.ca. “Why would you pay for a service that you don’t know where the value proposition is? I think broker names are being put on the list without the necessary due diligence on the part of some lenders and underwriters. I’m not saying the records are always inaccurate, but they’re inaccurate enough to compromise the value of the system.”

Equity Financial Trust is one of a handful of lenders in the channel that refuse to use REDX, an electronic database allowing lenders and other subscribers to report “incidents of alleged fraud and material misrepresentation” committed by brokers.

That system came under fire last week, after an industry veteran registered concern about possible ramifications for mortgage brokers unfairly saddled with incident reports. Those records can challenge the ability of mortgage professionals to register with new lenders, and while they can access their individual reports, the names of their accusers are withheld.

“I have seen lenders putting comments onto reports such as a mortgage went delinquent within six months or that you cancelled your AMP and then subsequently got it back,” Paul Mangion, a broker with The Mortgage Centre in Mississauga, told MortgageBrokerNews.ca. “But when a lender checks your report they are only looking at the number of submissions and not what is actually being said in those submissions. The other problem is, why is it done anonymously? When there are no repercussions then people tend to exaggerate the truth.”

It’s part of the reason Kyprianou is leery of using the “non-public database." Cost is another one.

“Just because the broker submitted the deal doesn’t mean he committed the fraud,” Kyprianou said. “Sometimes these brokers get labeled with something wrong that they didn’t do. We don’t use REDX because we do our own due diligence – monitoring the deals and the brokers we deal with.”

It wasn’t the approach another lender took when evaluating a recent registration application submitted by Shawn Allen, said the owner of independent Matrix Mortgage Global in Toronto.

“In July, I was specifically told in an email from an underwriter that I’d been declined because I had two reports attached to my name on REDX,” he told MortgageBrokerNews.ca on Friday. “The first one was made in 2008 just saying that I became an AMP, and the second, was in 2010, saying that I cancelled my AMP. I don’t understand why either one was made, and the lenders aren’t reading them. They’re just seeing two incident reports and rejecting me based on that.”

  • Ron De Silva - RMAI on 2011-10-18 3:53:01 AM

    I'd like to see some commentary from the other lenders that don't use REDX.

  • sue on 2011-10-18 1:11:45 PM

    I hope more and more agent or broker will try to sue Redx, because it is not Fair Web, why it just public agent or broker information but not public Lender information. It looks like some lender who does like some agent, so they can put the agent name there, even the lender libel there, agent still hard to argue. unfair WEB.

  • An Ontario Principal Broker on 2011-10-19 2:00:16 AM

    Redx looks like it belongs in a former Soviet-block country. Guilty & sent to a "business Gulag" until proven innocent.

    Without being too dramatic alot of our fathers, grandfathers & great grandfathers fought so we would not have to live in a country that tolerated this "law by the few" that, in the past, ravished Europe & and parts of Asia .

    I think someone commented on this last week, saying something to the effect that, if you do nothing wrong you have nothing to fear. What utter trash. Mr. Allen's only mistake was joining CAAMP! What support has he recieved from them? I would bet SFA. Edmund Burke said "For evil to triumph, it only takes good men to do nothing." Mortgage brokers & agents get off your butts. Ask your associations & their Boards what they are doing about REDX.

    I am sure someone thought Redx was a great idea at the time,and so are chainsaws. However neither should be placed in the hands of the untrained.

    The fact that CAAMP's endorsement is on the REDX home page, speaks volumes about CAAMP & who it really supports.

    REDX is owned by Teranet, which in turn is owned by Borealis, a division of the Ontario Municipal Employees Retirement System (OMERS). An Ontario municipal police officer can't "convict" you, but apparently his/her pension plan can!

    To CAAMP & the lenders, I would suggest you take a long hard look at the training you give to people accessing & reporting on this system. A first year law student can see a very obvious link between, a wronged mortgage agent/broker/brokerage & a massive lawsuit.

    To Shawn Allen, and any other mortgage broker/agent who has been harmed by REDX I would suggest that you write a letter to the President & the Board of Directors of the OMERS pension plan, explaining what happened to you as a result of an obvious incompetent party using a system that they ultimately own, and ask them how they can justify investing pension contributions in such a company.

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