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Mortgage Solutions for the every day Canadian mortgage consumer. Are you thinking about becoming a mortgage broker learn first hand what you should look for in a brokerage and what you need to be successful.
Len 00:02
Lane, welcome. My name is Len Lane, and I am the founder and president of Brokers for Life Inc, and we are Dominion Lending Centers in Western Canada. The topic of our podcast will be about what we consider to be Real Life Mortgage Solutions.
Len 00:19
Welcome back. At the end of season one, we talked about technology, and that technology that we use on a regular basis is called Velocity. A long conversation with Heather about that, but today we're going to talk about some new technology that's just come on the market in the last few months. For many years, we we struggled with getting documents from clients, but a company that's called Fastkey Technology that has come back and helped us, especially with the CRA portion. My guest today is Dave Ford, and he is the lender relationship manager for Fastkey Technology.
Dave 00:51
Morning, Len, thanks for having me.
Len 00:54
Glad you can be here today. CRA documents have been an issue over the years. People seem to not keep them for some reason, I'm not sure why, and/or they don't have access to proper access to CRA, or they were doing it through their accountant. So, let's take maybe a step back and say, look at so, what was going on before? We had several companies that were allowing us access to CRA documents, and of course, CRA eventually shut that down. So, what was that difference that they were doing the way that compared to what you guys are doing?
Dave 01:27
So, my understanding is that the companies that were in this space before ultimately were using the accountant route. So, there's, you know, accounting documents and accounting process and procedures, as well as accounting software that you know, it's very easy to use and it can provide you instant access and just with the kind of the stroke of a pen right, one form signed and, and it's all done. So, what CRA deemed as not allowed, essentially, is just that these CRA document retrieval companies weren't actually doing any accounting, any accounting services, ultimately, so they were, you know, essentially using the accounting software forms everything to do with an accountant, but not actually filing any taxes. And my understanding is that E-file, you know, goes through a rigorous screening process of all users on an annualized basis. And you know, when they see 1000s of tax documents pulled, which these companies were like, they were great companies. They, you know, the end result was, was awesome, and I know that, you know their hearts were in the right place. But CRA said, Well, you know you are not an accountant to doing accounting business like, no, I'm sorry, but your license is revoked. So, you know there has always been a different method. And you know, ultimately, accountants can still get tax documents for applicants. So, you know, that's still good, but only if they're actually accountants, doing accounting business. So, that's my understanding of what happened with these prior companies.
Len 03:10
Right? And in some cases, it was almost like they were giving the mortgage broker permission to get those documents. Am I right?
Dave 03:18
Ya know, I'm not sure. You know. I do know, you know, I used a couple of the companies a few times. Ultimately, you know, I just, I saw the accounting authorization form, because they were, you know, promoted and just around in the industry. I really, I honestly didn't see any issues with it, from my perspective, wearing a broker hat. I just thought, wow. Like, we can get authentic documents, and you can turn it around quickly, like, this is awesome. This is a great service, right? So.
Len 03:49
Yeah, and it was, don't get me wrong, there were some of our agents who used that pretty much on every file. Yeah, you know, it's like, it was quick, it was easy, it saved the client trying to find them. And, you know, you had them in a matter of a day, if that, right? So. What is it that Fastkey is doing differently, that CRA is now allowing it again through you?
Dave 04:13
Yeah, well, so, I would like to point out that it's not that they are allowing it and weren't before. This is a, you know, this is not the accounting method. So, you know, accountants still have that accounting method, because that was always made for accountants. CRA does have this, like a separate avenue where you can assign an authorized representative to your account, and that authorized representative could have just different forms of access. So, you know, an accountant would have level two access. They can make changes to your taxes. They can file taxes for you, you know, and that's what that permission is for. Level one access is online access, read-only access, where that authorized representative is simply retrieving, you know, your documents, or logging in, giving you information about the account, if there's taxes owing, or what's your TFSA contribution room, you know anything to do with just reading the information. And that's been around since CRA online was established, and that's, you know, for the purpose of, you know, let's say a friend, or family member, or power of attorney like a financial planner, really, kind of anyone that you deem to have access could have access. You can set an expiry on it, and that could be quick, like seven days or a month, or it could be a year or two years. So, that's this, you know, authorized representative. This has been around for a long time, so we have been, you know, using this route and still delivering the same results and still just as effective as kind of the first time around.
Len 05:58
It seens that the, yeah, there was always access. I know my accountant to send an email. I can have my NOAs here in a matter of hours, right? But now that there's another way to do it, I think that's going to help a lot of clients. I know a lot of clients actually get their own in a way, sometimes, but they come out with no name on it, which is kind of weird. T4 same kind of idea. So, does this access give you access where you can see the name?
Dave 06:27
Yeah. And so again, my understanding is CRA just changed the formatting. I believe it was just last year, last summer, where the formatting was changed. And a lot of these documents that you've just mentioned, okay, they come back nameless. If you, the individual Len, you know, if you log into your own account, a huge friction point in the industry, of course, because, you know, you send me your applicant to go gather these documents. I do that to the best of my ability, try to, you know, navigate CRA online, and, you know, there's 40 different steps between different years that are required for most mortgage files, right? So, I do that, and then I send you the documents, and there's no name on them. It's like, you know, it is a big friction point. So, the formatting as an authorized representative is, you know because you are essentially gathering these for somebody else. It the formatting has names on them, ownership of the documents.
Len 07:32
Right, and which is, you know, all the way through the process, right? Letter of employment, bank statements, all of that has to be identifiable, right? And that's great that we can get them that way from you. I know it's a common conversation in the industry, in the mortgage industry, at least, that authentication of documents is always an issue. It's very hard to spot. When it comes down to somebody wants to be in the business of making fraudulent documents. They get very good at it, I'm assuming. But you know, having them come directly from CRA is going to be a big boost for our lenders, for sure, that they can feel a little more secure in that they're getting an original document. So, Fastkey doing a little bit more than that, though, right?
Dave 08:17
Yeah, yeah. Well, I will just quickly touch on fraud in these documents at the moment, because that is one of the major reasons why we are in this space and why, you know, mortgage brokers would use it. It's our understanding is that it's almost 50% of an underwriter's job per file on the lender side to have fraud prevention activities. So, you know now there's software behind the scenes that can read the metadata of PDF documents to see if it was altered. Was it started in Microsoft Word, or what have you? But you know, if we can prove that these were authentically sourced directly from CRA and ship it to Lender Portal without any possibility of tampering like that level of efficiency, from a lender standpoint, is enormous, and same with the broker side. So, you know, we really can make an impact here and mortgage brokers can, you know, do better business and have more efficient files, just just knowing that everything is authentically sourced. It really is a huge advantage.
Len 09:24
Yeah, no question. And in all honesty, we haven't had a lot of it in our business. But when that does happen, it's really hard to spot. I've seen documents that I've gone over at least four or five times, CRA documents that look like CRA documents, but there would be something, and the lender would usually catch it in seeing that there's a decimal player that's not in the right place, or somebody's added a zero, or something like that. It's pretty hard for as trained as I am after 17 years, it is still very hard to do that. But using the meta information is interesting, that tells them a lot about a PDF, I'm sure. So.
Dave 10:06
Yeah, because, you know, to the naked eye, like you, you really wouldn't like fraudsters have got, you know, they're advanced now, they've evolved. So, you have to look at the metadata of a PDF document. And thankfully, lenders have those readers behind the scenes, but, yeah, I mean, if we can prevent it entirely, and prove that we've prevented entirely, well, you know, we can just try to ideally create that super highway off of speed and an auto adjudication and things like that. As as the industry evolves, you know, OCR technology, optical character recognition technology will be implemented. And because the formatting of all of Fastkeys documents are the same, they're all uniform. You know it would be, it would be really easy to implement. And an optical character recognition tool that would scan line 15,000 for total income, or scan total employment income, or if there's taxes owing things like that. So, you know, we're excited about what's happening in the industry and the future of efficiency, and happy to provide these directly sourced, authentic documents.
Len 11:17
You know, the same where we're now able to get bank documents directly from the bank, as opposed to, you know, doing that step where somebody has to handle them. We've seen so many messed up ones over the years that some of them stand out quite quickly. But again, it's just that one more step that is secure for the lender to accept those documents. Velocity is working on a program called a verified application, where all of this, including your technology, will be part of that, right? Where the bank accounts have come directly from the bank, the documents for CRA came directly from CRA, right? So, there's a lot of things that they're working on in the background that are probably in the works in the next year or so as well.
Dave 12:03
Yeah, yeah, that's awesome. And, you know, like we do need this. We need to take care of our lending partners. It's why we're here, right? Because we've got access. So, yeah, hearing those kinds of things coming from Velocity is really encouraging. And, you asked about additional products, and we're talking about bank statements. So, let's we can touch on our asset report and income report, that is directly sourced from institutions, if you want it as a good segue.
Len 12:35
Yeah, absolutely. That's the next part of it. And, of course, verifying ID for the client as well or from the client, but yeah, no question that you had a different aspect on it, other than just the 90 days of bank statements.
Dave 12:49
Yes. So, our tool does have the historical balances and transaction history, which is, you know, ultimately what a lender wants to see, in terms of the down payment verification, where the funds have been, you know, checking the ongoing payroll deposits and the accumulation of funds. So, that's all there, but we do have a few additional behavioural analysis tools that can be used alongside that history. One is a cash flow calculator, and that's important, especially in the alternate lending channel, where a lender wants to see six months or 12 months of the banking data, and they want to understand what's the cash flow of this individual's business and that could be, you know, from their personal bank account, from a corporate bank account, depending on how they pay themselves, and, you know, newly self-employed people, things like that. So, there's that cash flow analysis tool. There are, the another behavioural analysis tool that goes over the insufficient funds and flags those, any NSFs or unusual account activity that you know would flag large deposits and then debt insights as well. So, to cross-reference against the credit bureau and check for loans that may or may not be disclosed, or if there's anything kind of recurring, but yeah, you know, just showing a bit more of the character profile of the applicant that you are, you know, retrieving this banking data for and those behavioural analysis tools, those are, you know, important for lenders. So, I was actually talking with a lender and you know, they go a little bit deeper, even into kind of behavioural analysis. And my understanding is even, you know, the frequency by which someone purchases pet food as an example, shows, you know, responsibility towards, you know, like getting things on time. So, you know, it's interesting, like, there's a lot of things behind the scenes that the lenders are looking for. But at any rate, you know, these, this behavioural analysis, this cash flow analysis, you know, all these, these kind of things are important in building the character profile of your applicant that you can use to support and, you know, really, I mean, if you just want to use the historical balance and transaction history, like, that's where the data was sourced, and ours is sourced from over 12,000 financial institutions globally. So, I know, you know, a few people have used it in the new to Canada space, where we're looking at history of funds outside of Canada that are being moved over for down payment, you know, from Australia or Mexico or India, you know, wherever overseas because there's over 12,000 financial institutions globally. You know, all the majors are on there. And that's that's been beneficial and really helpful in sourcing where the down payment has come from.
Len 16:05
Yeah, and that is a huge one. We just last two weeks, probably, we had one that came from France. We had one that came from Norway, you know, and making sure, because what happens with that money is, it's got to be an exact amount that gets deposited, right? So, there was one where the bank took their fee out of it. So, what was sent from one hand and what showed up in the bank account was $50 different, right? So, we had to go digging for with the bank to, you know, to verify that they took the $50 and that the numbers weren't just messed with, right?
Dave 16:40
Yeah. And there's a lot of foreign exchange services, like, Wise or Forex, where you know that they'll lower the fees. And I believe that the actual exchange rate is a little bit better than from bank to bank and, but so, you know, we can pick up on those in the history and, you know, it's just, I think it's just important that you know, this report does show, thankfully, you know, everything that a lender needs, right? It's got the entire history. It's got where it was sourced from, the bank account, number, which institution, and the entire character profile, in terms of name, address, email, everything that you would need to cross-reference it. It isn't the same as flanks. I know that, you know Velocity and a few other submission platforms have flanks where it's actually retrieving the bank statements. This is the bank data. So, it's, it's in a report format. Again, it's all uniform, and we want it to be uniform for OCR technology down the road, but it's so it shows inflow, outflow, and ending daily balance. But it's not the actual statement. It just shows exactly where it came from.
Len 17:52
Yes. So, little different detail again. So, I believe part of the program too is ID verification as well.
Dave 18:00
Yeah. So, and, you know, we, actually, we came out with the ID verification tool to couple with our criminal background checks. So, nationally, we are associated with policing agencies to use criminal record checks in the tenant screening or employee onboarding. So, you know, recruiting or mergers and acquisitions new employee would require, at times, a criminal background check. And so, the ID verification tool was originally used for that. The ID verification tool that we use is FINTRAC compliant. So, you know, here we are with October coming around the corner, and in the mortgage broker space, we do know that, you know the, the Know Your Client, KYC compliance. You know that's a major component. And for the most part, my understanding is that most brokerages, previous KYC just, you know, just involved gathering an ID in some way, shape or form, and having a photo of it or a scan of it, you know, into the office. And, you know, most mortgage brokers, you know, we're referral business, you know, I know the person personally that I'm completing the mortgage for, and so, you know, I'll get a piece of their ID for compliance. But you know, if, if FINTRAC, who's now, you know, adding a different layer of regulation to the industry as a whole, if they want to say, okay, Dave, well, you know, I see you did your mortgage for your mom, but you know, how do you prove that, right? So, that's what FINTRAC is looking for, and governing bodies are looking for is, you know, what did you do to validate that ID? And how do you know that it's not an electronic copy and, you know, is it expired, or what happened with that barcode, or has there been any tampering? And you know, I know that identity theft is that's one that's been on the rise significantly, and that's where some of these biggest fraud transactions take place, is somebody steals your identity, and they go out, and they obtain a credit card, or a loan, or a mortgage, or something, right? And they'll try to target people that have a clear title home as well, and it's often very sophisticated where there's a lawyer involved. So, but our biometric ID verification tool would prevent that, right? So, you could not steal Len's ID, and then, you know, without surgery, become Len, right? So, thankfully, you know this biometric ID verification tool, it is used as a huge fraud prevention tool around identity theft. And I know, you know, over the last 15 years, there's so many people that have flags on their credit bureau saying, you know, you have to call this person first, because you know, somebody tried to steal their ID and tried to get a loan out, or, you know, there's often been, like, active things where it's like, hey, you know, let's just go over your credit bureau what's, what's this derogatory line item, and that applicant says, Well, I didn't get that. And then we've got to open an investigation, right? So, you know, I know it's an extra step, and I know that probably the industry is saying, oh, you know, it's an extra step, and I got to pay for it. But really, you know, if you look back at the number of identity theft files you've worked on as a mortgage broker like this is that preventative measure and preventative tool that I do think our industry could have used for a long time.
Len 21:39
Yeah, no question. It's been one of those industries where it's kind of, you know, paperwork was always an issue, getting the right stuff to begin with. Doing a KYC really didn't come into play until two or three years ago, really, for most lenders, right? We're licensed in six provinces, and it's a little bit different everywhere. Yeah, Saskatchewan probably has the most stringent rules about what you need to know and what you say to the client in advance. Alberta, I find to be a little on the borderline. Obviously, it's going to change for everybody next month or in October, rather, but it's like BC, yeah, disclosure of what the commissions are and things like that are different than everywhere else. Ontario's the wild west as far as paperwork goes. But they're coming down very hard on Ontario. So, the FSRA there is really clamping down on because they've had so many huge fraud events happen that it's, it's time.
Dave 22:39
No, I've, and you know what, you're right. Reading fraud articles, there's been a lot in Ontario, so, yeah, you know, I do, you know, I'm surprised that it did take this long, like, ultimately, you know, we are in finance, and Mortgage Finance is one of the largest financial transactions for an individual, right like financial advisors and stockbrokers, and you know that industry that's been regulated as well, and, you know, anti-money laundering, things like that. So, you know these regulations have been around in other industries, our realtor partners, you know they have FINTRAC ID compliance as well. So, you know, it's our turn and ultimately, you know, our ID verification tool, you know, really low cost compared to our competitors. I know that we're less than less than them. And you know our process is pretty simple, straightforward. So, you know, as a mortgage broker, through your Fastkey dashboard, you would simply input name, phone number, email. You'd let your client know, like, hey, heads up, I'm just gonna do this ID verification tool so that you know, I can ensure that you are who, you know, prove that you are who you say you are, prevent ID theft. And then, you know, an email and a text goes out, and they can just do it from their phone. Like our website was built mobile-first, and we always had the consumer in mind. So, you know, if the consumer can have an easy-to-use experience, and they can complete this directly on their phone, or, you know, whatever is easiest for them, desktop is fine too. But if they can have a good experience, then, and the broker can have a good experience ordering, then, you know, hopefully, we can see some success.
Len 24:23
That’s going to be a big part of it, actually, with the MLA coming up. AML, sorry, not MLA. AML, anti-money laundering coming up. It's, we're going to incorporate it as part of our process that you have to have this account, so that we can say, okay, the team has access to this up to them to use it or not, right? But it's just one more step, I think that you think you'll see a lot of brokerages incorporating it into their anti-money laundering process. So.
Dave 24:52
Yeah, I hope so. I mean, so far, you know, we've been around. We launched during MBA BC in, at the end of March, and it's been, it's been really good so far, like the, you know, thankfully, you know you've been really open to having good conversations. And you know you, as a brokerage owner like you, you're looking out for the best interest of everybody at your brokerage, and what can help them be more efficient? What can help them prevent fraud and thankfully, you know, there's guys like you that are of, you know, the same mindset where you know this is only going to improve the client process, right? There's less friction, because the applicant doesn't have to go gather all their documents and then their name list and all these kind of friction points. Well, you know, there's this tool instead. So, you know, thanks for, you know, having us to the broker demo at your office, and this podcast. This has been great. This is exactly what Fastkey is trying to do in the industry, being new to the game. You know, only been around since launched, since March. We've been, you know, building since last, I think August, September was when we started building. But, but the Go Live was about seven months later.
Len 26:03
Yeah, takes a bit of time for technology to get up and running, right, and working flawlessly, or as best you can.
Dave 26:13
Yeah, exactly, yeah. And we've had little tweaks along the way, of course, and micro efficiencies and improvements and, yeah, so, you know, we welcome everybody's feedback. And you know, if it makes a lot of sense, then we absolutely implement it. We're a small enough entity that, you know, the decision-makers and the changes can take place very quickly. So, you know, we had a really good suggestion from another partner at a brokerage, you know, said, Oh, well, you know, why don't you just do this? And thanks, Dave Lacasta for that feedback, and we implemented it like instantly. And it was, there was really good feedback. So, you know, if you know any user out there after, you know, hearing this, and, you know, and using the platform, if you have any improvements that we can make on this like we're all for it. We're here for the long game, and we want to ensure that our customers, whether it's a mortgage broker or an applicant, like, everything goes well for them.
Len 27:11
Great. Okay. Thank you very much, and let's get on with your day. So, thanks for taking the time.
Dave 27:16
Thanks, Len. I really appreciate it. Thanks so much.
Len 27:20
Thanks for listening today. I hope you found the information that we provided to be useful in your mortgage journey and remember, you can always find our associates at www.brokersforlife.ca/associates. Have a great day.