B-deals take different skill-set

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As lending rules are continually tightened, some brokers may look to diversify their offering by targeting clients who do not fit the typical A-type profile. However, one leading broker in this space believes it takes a whole other skill-set than more traditional deals do.

“The attitude of how to sell has to change; you have to be able to sell a 14 per cent interest rate. Brokers on the B side are used to selling payment as opposed to rate,” Shawn Allen of Matrix Mortgage Global told MortgageBrokerNews.ca. “You have to have access to lenders and product knowledge.”

It’s a trend we noticed in our annual Brokers on Lenders survey, as 40 per cent of those surveyed admitted that the number of non-prime deals they made has gone up year-over-year. For some, it has become a target market that has less competition.

“I’ve started to target that market more because so many people go after the A-business and the competition is more aggressive,” Peter House of Mortgage Intelligence the House Team said. “The banks have started to open up their eyes to what the brokers have been doing for years and they’ve become sharper; we just have to become a little bit more flexible.”

However, it may be a market that not all brokers are ready to infiltrate. And for them, Allen has set up a lending service to help out.

“Brokers should go after B-deals more often but (many of them) won’t because they don’t know how to,” Allen said. “It’s a very niche market – there are less and less A-deals to go around.”

But he’s got a way to help them out.

“We’re on Filogix as a lender, so brokers can register with us via email and they can send us their bad credit, second and third mortgage deals, (as well as those clients with) tax arrears (and) mortgage arrears.”

 

  • Paolo Di Petta | dipettamortgage.com on 2013-10-21 6:44:51 AM

    "Selling payment instead of rate" is oversimplying it a little.

    What we're really doing in the B/Private space is much more thorough than just selling a rate OR a payment - we're taking an even deeper look into someone's finances, crunching the numbers, and trying to find a situation that will save them money in the long run (and hopefully, will put them back into the "A" pool sooner)

    There's many more moving parts in these sorts of deals - lenders are much more specific about the niches they're interested in, there's less competition between lenders, and borrower financial histories are usually much more complicated.

    This is not a high volume business - some (but not all) of the economies of scale that bigger brokerages have been able to find on the A-side are much harder to accomplish in this sort of market - every deal is different and requires more individual attention.

    As the housing market corrects, the pace of bi-annual refi's and new home purchases will slow. I'd be willing to bet that this means the number of brokers is going to shrink proportionally to amount of "A" business in coming years.

    I saw this coming, so I chose this market as my niche. If anyone has any Ontario deals they need help with, just Google me - I make myself very easy to reach.

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