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Mortgage Broker News | 28 Oct 2014, 12:00 PM Agree 0
Tightened lending requirements have forced brokers to rethink some of their client management strategies, and two leading professionals speak about the importance of transparency.
  • Angela Wong-Liao - Invis | 28 Oct 2014, 01:22 PM Agree 0
    I fully agree that it is the responsibility of a mortgage professional to communicate to our clients for any changes in rules and regulations as we are the middle contact between clients and lenders. It is easy to blame the underwriters but they are only following rules and regulations from government and their own financial institution.
  • AnthonyC. | 28 Oct 2014, 02:01 PM Agree 0
    Although I fully agree with Bernie and John that its in our shared interest to better manage client expectations (which in turn better serves our underwriter relationships) by requesting docs in advance and immediately addressing any concerns presented in a file which may cause underwriting delay or decline, I could not imagine not asking for an "exception...within reason", after all efforts to finding a solution become exhausted.

    Provided that you have done your due diligence when qualifying the deal and there is supporting documentation to meet conditions precedent, isn't it our duty as originators to persuade the lenders to see the merits of the covenant, all the while doing so with decorum and without malice towards the lender, should they decline the file?

    For the most part, lender underwriting teams consist not of porcelain dolls but of thick skinned and tough people. They understand we are under pressure to perform...sometimes all it takes is just the right persuasive dialogue (mixed in with chutzpa) to get the lender to review/escalate/approve the deal.

    A little self-diagnosis is good on occasion and please be reminded that we are in the business of selling our deal to the lender...branch level and mobile mortgage specialists know this and argue the merits of their clients to their underwriters every day and that's a main factor as to why we lose business to the branches.

    Good selling to all!

  • Ron Butler | 28 Oct 2014, 03:24 PM Agree 0
    Amen AnthonyC............. the bank reps are eating our lunch getting debt ratio exceptions on every conventional deal where the client has a great beacon score and some assets at the branch. We need to fight for rational exceptions because the playing field is far from level.
  • Keith | 28 Oct 2014, 05:27 PM Agree 0
    This is not a criticism of anyone in particular, but if the banks (TD, Scotia) are as seemingly as difficult to deal with because the branches continue to compete (unfairly according to some) as so many brokers continue to lament on this forum, why do you insist on sending them business?

    I haven't used either for over 5 years, and it has not hurt my business at all. I have never run into a customer that has told me "I must deal with X Bank". Before anyone pops up with a "you probably don't do much volume". When I started in this industry in 2006 I, like most people, did about 5 million in volume. I now do 10 times that, still without sending business to the banks. I send it all to broker only lenders.
  • AnthonyC. | 28 Oct 2014, 05:30 PM Agree 0
    @ Ron

    Ain't it the truth...? The bank reps are taking deals away from us because they push the envelope and some in our field would suggest that this is in bad form...

    A quote from scripture which reads “ask and you shall receive” is perhaps overly-used by optimists, however, it only becomes a faulty assumption when one believes it implies a blanket promise with no conditions. On the contrary...without asking, we are certain never to receive...


    Asking for exceptions should be our collective rule, not the exception...
  • Ron Butler | 28 Oct 2014, 05:42 PM Agree 0
    We deal with banks for product: rentals at competitive rates, clients who insist on SLOCs, ratios exceptions we simply cannot get from monolines, mortgages over a million. We need the banks to supply what the monolines cannot, l send plain vanilla to monolines and lots of it. Don't get me wrong, I wish that the bank reps did not have this advantage but I also wish that that I was 200 pounds lighter, that has not happened yet either. I am not crying about these issues I am just stating facts. The banks are terrific competitors I give them full marks. Let's keep pushing our lending partners for rational exceptions, we cannot give up the fight for our clients, the banks sure won't.
  • AnthonyC. | 28 Oct 2014, 05:56 PM Agree 0
    @ Keith

    Ron's answer covered all the reasons and represents those of us who still need bank specific products which are unavailable or a costlier proposal to the consumer when offered through the monoline...in my case its the competitive advantage banks offer on investment property financing in addition to HELOCS/Bundles...in which monolines cannot compete.
  • Keith | 29 Oct 2014, 05:03 PM Agree 0
    Well I can only speak from my experience, but I haven't had any issues with the products you are referring too. Maybe we just don't deal with the same lenders.

    In my days working for a lender I often found that the reason why the branch was able to approve things brokers could not had more to do with the amount of information presented and the branches superior ability to mitigate the risk on an application. Typically broker notes on a file lack significantly for detail when compared to a bank employees. I saw more than one situation where a broker would put very basic notes like:

    "Good client, excellent job stability with clean credit. Is seeking to purchase with 5% down. Please approve."

    VERSUS a bank employee notes:

    "Client is professionally employed with 5 years at his current employer. He has worked in his field for 10 years with proven base income of $100,000.00. The client also earns an annual bonus, the two year average of which is $20,000.00. Income is confirmed with job letter, last two paystubs and we have confirmed the bonus with the last two years NOA's. The client has clean credit, although there was a couple of r2's reported two years ago. The client explained that while on Vacation he had neglected to set up his auto payment, since then the client has had no issues. The down payment is coming from his RRSP's and this has been confirmed with the latest RRSP statement. In addition we have confirmed closing costs via his savings account and have 90 days history on file.
    He currently rents and has lived there for 4 years and owns no other properties."

    Now when looking at those notes which do you think make it easier to decision a file? Which make it easier to make exceptions on? This is basic underwriting 101 and in my years I have always followed a simple rule... Even if it seems obvious, make notes that effectively explain why this is a good deal and that mitigate any potential risk. Always make sure you have documentation that support the file and your notes.

    That is after all my job as a mortgage broker.
  • AnthonyC. | 29 Oct 2014, 10:46 PM Agree 0
    @ Keith

    You've most definitely conveyed the importance of submitting a file with detailed notes (an altogether important, yet separate argument). However, isn't the contentious issue in this argument about us having to better manage a client's expectations, in the event we are presented with a marginal file.

    This "rub" is only further exacerbated when a bank seems to be able to circumvent issues which pose a challenge to our lender underwriters.

    For example, debt servicing ratios are a steadfast rule strictly enforced in the broker channel (with marginal flexibility offered through the monolines), yet often doesn't seem to present too grave a challenge to a clients banker, once the branch is aware their client may be taking their mortgagee business elsewhere.

    Regardless of your lender of choice or how you choose to deal with fringe files, you have a duty and should support your clients needs with conviction...those who acquiesce to a lender's initial rebuttal for the sake of not wanting to ruffle feathers are either too timid for this business, or far too busy and couldn't be bothered.

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