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Mortgage Broker News | 03 Nov 2014, 11:05 AM Agree 0
When it comes to difficult files some brokers avoid asking for exceptions from underwriters; but, according to one MortgageBrokerNews.ca reader, it can often be the last recourse in trying to get a deal funded.
  • Mike Rice | 03 Nov 2014, 12:37 PM Agree 0
    From a Lender point of view exceptions are fine but don't expect them for nothing. If Brokers want Lenders to increase the risk, don't expect full discounting in rates and maybe a fee as well depending on the application.
  • AnthonyC. | 03 Nov 2014, 03:10 PM Agree 0
    @ Mike Rice

    Risk assessment will determine the deal approval outcome...I totally get that and respect the lender's position when assessing risk.

    However, the argument still exists about the originator's duty to find a solution rather than push a marginal deal, vs pushing a marginal deal at risk of attracting a lender's scorn.

    Although I am of the latter camp, I would guess some hesitancy on a broker's reluctance to escalate a file has much to do with the limited resources available to us. When options are played out, we have little choice left, other than choosing which "B" lender we decide to work with.

    Were negotiating a deal on the "A" side (by reducing lender risk with a higher base rate rather than discounted rates or adding lender fees) an option that was offered by the big banks or monolines, we would be supporting this option daily.

    There are many marginal borrowers who would be pleased with bank branded financing and pay 50-75-100 bps above our broker discounted rates or pay, in addition to slightly higher rates, a reasonable "admin fee" to get the deal done.

    If you are speaking from an "B" lending" perspective, this method of "give and take" is already in place with most alternative lenders.

    I would not be surprised if we see this methodology rolled out by the big banks in the next few years as a way for them to capture a portion of the alternative or marginal markets presently being dominated by the "B" lenders.

    Meridian and B2B, and some other credit unions, although challenging lenders to appease in their own right, apply underwriting guidelines for the marginally impaired borrower and seem to be doing rather well in this segment.

    Since the proof would be in the pudding, it would be great to have the numbers on which clients are more prone to either default or mortgage arrears, when comparing bank/monoline insured and conventional clients vs. alternative lender conventional client profiles. I would risk to guess that there is equal to or marginally higher default or arrears with high ratio insured borrowers than with conventional alternative borrowers.

    Ultimately, we must supporting our clients, in whichever circumstance they may find themselves in.
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