A major mortgage processing system in Canada was hit by a cyberattack last week, temporarily halting loan applications from brokerages already under immense pressure after the central bank slashed interest rates.
Filogix, which acts as a conduit between brokers and lenders, and processes the majority of loan requests from independent brokers, has taken its service offline as it restores its software.
The disruption to Filogix’s services means that many mortgage brokers and borrowers have been in limbo since late last week and unable to secure mortgage rates, loans and refinancings. This is occurring as lenders are raising their mortgage rates and mortgage brokers have been swamped with borrowers trying to renegotiate, renew or get a new loan before that happens.
“This is an absolute horror show for mortgage brokers. During what might be the busiest application month in Canadian mortgage history, 99 per cent of brokers who use the platform have no way to get creditworthy deals to lenders for approval,” said Robert McLister, founder of mortgage brokerage RateSpy.com.
“As a result, broker customers can’t lock in rates and can’t meet financing deadlines. It’s a disaster and many broker clients are outraged,” he said.
Borrowers are racing to lock in rates on new loans after the Bank of Canada cut rates by a total of one percentage point to 0.75 per cent in March.
After the central bank reduced its key interest rate 50 basis points on March 4, lenders cut their fixed and variable mortgage rates and many borrowers rushed to take advantage. But after the central bank’s second 50 basis point cut, on March 16, lenders started to raise fixed mortgage rates as the economy unravels due to the spread of the novel coronavirus. While those rates have increased, they are not yet as high as they were before March 4. Now, borrowers fear that lenders will continue to raise their mortgage rates.
On Sunday night, Filogix said it was starting to bring its servers back online. But on Monday afternoon, it could not say when the system would be working again.
“There is no specific time yet when Filogix services will be available,” according to a statement on its web site. Finastra, the U.K.-based owner of Filogix, did not immediately respond to a request for comment.
On Friday, Filogix said it had learned of “potentially anomalous activity” on its systems and immediately took some of its servers offline to investigate. The company said it believes that the unusual activity was the result of a ransomware attack and did not have evidence that customer or employee data were compromised.
Filogix is the largest mortgage processing system in Canada. Other platforms such as MortgageBoss and Velocity are not as popular. Lenders offer mortgages directly, but also take business from independent brokers who use these processing systems.
“On top of rising rates and consumer concerns, we have been unable to get formal approvals done by lenders,” said Calum Ross, principal broker with the Mortgage Management Group.
“Even if we can get through to lenders, the turnaround time is the slowest in my career. Approval times have doubled and quadrupled in a number of instances,” he said.
The Royal Bank of Canada, MCAP, ICICI Bank and other major lenders have either told brokers they will raise their fixed mortgage rates or have already done so. Scotiabank, which is planning to raise its mortgage rates, has delayed its hike due to the Filogix breakdown.
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Rachelle Younglai