A mortgage professional has shared with MortgageBrokerNews.ca in-depth details around the extra work monoline deals require of lawyers.
“Below is an example of the issue we discussed and the comments we received from a local lawyer,” Daryl French of Lending Max wrote in an email to MortgageBrokerNews.ca. “The lender should have already received the full contract prior to removing subjects so why ask for it again at closing? If it is needed, get the mortgage agent to supply it to the lawyer reducing the client’s work.”
Below is a sample of a closing document French says a lawyer working on a file this summer received from a monoline.
- "Assignment" clause to be removed from page 8 from the purchase contract
- Solicitor to confirm that clients own no other properties other that those disclosed on the application by way of signed affidavit by borrowers
- Solicitor to ensure receipt of a fully signed and witnessed copy of the Offer to Purchase including all addendums. Where electronic signatures are used, the Solicitor is to provide written confirmation the signatures meet the requirements of the Electronic Transactions Act.
- Where it has been determined that a condominium is experiencing (or has in the past) water penetration problems, will require the following documents: an Engineers Report which details the repairs required and an estimate of the costs; a copy of the Strata Council Minutes describing the Special Assessment and indicates, either in the Minutes or the Engineers Report, that the Special Assessment represents a complete rather than a partial fix of the problem; and verification of which party is responsible to pay the Special Assessment.
“How is a lawyer to know if a condo has experienced water penetration?” French wrote. “The lender requires Strata/AGM minutes, depreciation reports, as well as financials prior to subject removal, so this has been dealt with.”
French also provided correspondence he says he received from a lawyer, detailing some of the issues the attorney had to deal with prior to closing.
Addressing those conditions caused a great deal of back-and-forth between French, his attorney and the loan fulfillment company and resulted in higher legal fees.
A recent MortgageBrokerNew.ca article drew attention to the fact that some lawyers are charging $100 more for monoline files and since then, many brokers – including French – have shared similar experiences. A common thread throughout these cases is the use of loan fulfillment companies, which could be exacerbating the problem.