Are brokers educated enough on Alt-A lending?

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Brokers are increasingly relying on the alternative space to fund deals, but two leaders in the industry believe the educational standard has lagged behind the growth in those deals.
“Today there is a larger cross-section of brokers accounting for the business because they’ve been forced into that space. -- I do agree there has been growth but I am concerned about some of the implications of new issues that may not be on our radar as a result of that,” Albert Collu, president of Mortgage Architects told “One of the things I’m seeing with a lot more consistency is because the alternative space is growing (and) we’re seeing more and more brokers, across the board, embarking on the space with next to no experience.”
In the past, the space was dominated by a few brokers and lenders, according to Collu, who specialized in alternative deals. However, with tighter lending guidelines, brokers who previously focused on prime deals are being forced into Alt-A lending.
“It’s not that the alternative space has always been low penetration, it’s just been dominated, largely, by a few lenders; it’s been largely dominated by a small group,” Collu said. “There are statistics I used to use when presenting this particular space and that is a very small percentage of brokers accounted for 80 per cent of the business in the alt space and that was only five to seven years ago.”
And the number of deals sent to alternative lenders is only expected to increase in the near future.
OSFI released its draft for the B21 guidelines a year ago and they are currently subject to a consultation period that is open until May 23. It remains to be seen how much brokers will feel the effects.
“This is the segment that [brokers] should be concentrating on … but the key factor is simply about what is the alternative space, what kind of lending parameters are required,” Marc Ruttenberg, president and chief executive officer of Paramount Equity Financial Corporation told “Brokers should get to know all the alternative lenders and their individual guidelines.”
Ruttenberg also suggests brokers take a course on alternative lending deals, such as the ones offered by REMIC.
  • Harry on 2015-05-01 10:28:08 AM

    Absolutely agree with Albert and as an alternative lender, we see education as a key ingredient to the success of the broker industry in moving the market share needle in the right direction in future. We provide seminars on how to identify, categorize, process and close more alternative business free of cost. I would also recognize the efforts of other Alternative lenders in the industry in raising awareness and providing educational content to our broker/agent partners.
    As an association at IMBA, we are close to putting together a course on Alternative Business that will be available to our members free of cost as well. As a longtime proponent of further education on Alternative Lending, I am very pleased to see increased awareness and additional dialogue on this matter.

  • Claire Drage on 2015-05-05 9:52:38 AM

    Training is so important and education that goes beyond the licensing exam. I truly believe that a good mortgage broker takes the next step to continue their education beyond the course and is prepared to dig into their pocket a little to take their business to the next level – one of the reasons I started The Lion’s Share Group was because I couldn’t find any education that could get me up to speed quickly and I didn’t waste time trying to “figure deals out” at the expense of the client, my reputation or opportunities. We are licensed to “trade in mortgages” which goes beyond data entry and press submit to a lender. Learning how to finance the more challenging files thru innovative underwriting and packaging is key…That is what we do at The Lion's Share Group.

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