A top TD exec's praise for stated income clients may be cold comfort to brokers no longer able to send those clients for the bank, but could also signal the lender's intention to hold onto that business.
“These customers for every other reason show great credibility,”Farhaneh Haque, director of mortgage advice and real estate-secured lending at Toronto-Dominion, told reporters this week. “They have excellent credit, good cash flow, however they cannot produce the same income documentation.
“You look at that person and, say he’s an IT consultant, there are industry standards on what they make.”
The comments follow the decision by several broker channel lenders this year to pull or pull back on their business-for-self offerings, TD among them.
Analysts have blamed the collective move on the CMHC’s intention to ration bank access to bulk insurance. Lenders rely on that backing to securitize their conventional mortgages and so free up capital for new loans.
That result has been a shift in deals to institutional alternative lenders, although even they has tightened up their own guidelines. TD, itself, opted to fold its B and C lending arm last month, cutting brokers off from that lending source for BFS clients.
Haque’s comments suggest the bank’s branches will continue to accept those types of deals. They also support broker observations about the relatively minor difference between delinquencies among those stated-income borrowers and their salaried counterparts.
Still. TD is among those lenders now requiring more paperwork for BFS deals.
“We are looking for more confirmation of business financials that you are making this amount money,” Haque said.