Mortgage brokers perform a delicate balancing act, bringing together lenders and clients in what has been described as the most stressful event in a person's life – buying a home.
So naturally, there can be tension, frustration, frayed nerves – and that’s just on the part of the broker.
It begs the question how exactly are lenders contributing to that stress by pushing broker buttons, hampering their efforts and, effectively, sabotaging their deals. Here’s how some of the industry’s leading players answered that question, providing some of the insight CMP expects to see repeated in Broker Sentiment Poll results. They’ll appear in the March issue of the magazine, along with the kind of analysis only hundreds of online respondents can provide:
Lack of timely communication.
“Some lenders communicate well ,” says Jim Tourloukis, president ofAdvent Mortgage Services, and No. 2 on the 2012 CMP Top 75 Brokers lis, “but many do not.“One lender (one of the big banks) is so bad at communicating that I suggested to the Senior VP that they just cancel all the phones for their staff so as to save them thousands of dollars - as their staff do not know how to use a phone.”
Maria Kyle, with Dominion Lending Centres Vintage Financial, hates being left out of the loop when a lender makes a major policy change.
“Lender makes a major policy change and ‘neglect’ to send out a notice to a broker and you find out when your underwriter declines the deal due to not conforming with the new policy. And you’re like ‘what new policy? When did that happen?’”
Another bone of contention for Kyle is how the internal policies of some lenders can scuttle a deal.
“Some lenders not only follow the insurers’ policies but then have their own internal policies. So you send a deal thinking it fits, say for example CMHC’s policy, and then you get a ‘decline’ because the underwriter advises that although it adheres to the insurer’s policy it does not fit their criteria,” says Kyle. “It’s like what? Two sets of rules?”
Lack of common sense
Tourloukis is frustrated by the lack of what can best be described as common sense.
“Often times, lenders do a poor job thinking outside box,” he tells CMP. They are quick to cite policies in order to decline a deal when in fact the deal is solid and makes sense. If fact, in some cases, a deal declined by a lender's broker channel will be accepted and approved by the same lender's branch.”
But there’s more.
“Some lenders do not allow their staff to make any decisions whatsoever,” he says. “For example, some lenders force their fulfilment department to refer the deal back to the underwriter for the smallest of changes.
“As an example, if a client's income was verified for as little as $10 less than what the application showed, the fulfilment associate has to send the deal back to the underwriter (even if the ratios are well in line!). This not only wastes the lender’s time, but it also delays the progress of the deal.”
Another Top 75 broker is on the same disturbing page.
“Where to begin, where to begin?” asks Collin Bruce, head of the Bruce Mortgage Team at Dominion Lending Centres Mortgage Mentors. “I completely understand that lenders are under serious scrutiny from OSFI and other regulators, but the lack of common sense among some underwriters is what drives me nuts.
“What happens is the strong clients who can walk into their bank and get an instant approval, get put through the ringers by the underwriters.”
Bruce points to an example from his own book, a couple where both had 750 credit scores and a combined $150,000 for a down payment from the sale of their old home, which means they’re seeking a a mortgage with only a 60 per cent loan to value.
“The client is a professional, but has only been at his job for 6 months,” Bruce tells CMP. “So they are asking for a two- year history, which I can understand at higher LTVs, but not at 60 per cent LTV. Just approve the deal with what we have.”
For others, the biggest beef is a lender’s demands for high volumes, at the same time it seeks high octane efficiencies from its broker partners. The contradiction is only compounded by that lender’s gripes about pooling.
“More lenders want a really high funding ratio with a high volume, and it is hard for people to commit to it with the high volume requirement,” says Angela Calla, another Top 75 player with Dominion Lending Centres. “I tend to shy away from that, the high volume. I don’t want to pool; it’s not my style.”
Calla argues that for experienced brokers, there should be an option as to whether a lawyer – and the associated fees – is involved.
“There shouldn’t be a barrier in place if there is an experienced broker involved.”
Lender leap frog
The handling – or what brokers might better classify as interference – of clients can create problems where none exist, say brokers.
“Cross-selling of the client – the big banks are notorious for trying to cross-sell our clients all the time,” says Tourloukis. “Some lenders will do anything in their power to retain a client, at times forcing the client to jump through hoops just to take their business elsewhere. I understand that the lender should try to retain the client and that it is smart business to do so. However, forcing the client to personally call the lender to explain why they want to leave is outrageous (especially if the client has already given their lawyer authority to act on their behalf).”
For Collin Bruce, it is simply a matter of trust and respect, things that he as a broker – and, indeed, his clients – are looking to lending institutions to provide.
“It just makes brokers look so bad,” he says. “It is supposed to be easier, and we have all of these options. But for really strong clients when the lenders ask for all of these extra documents, and the branch doesn't, it drives me mad!”