Broker calls for level playing field for HELOCs

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One broker feels last week’s budget was a step in the right direction, though she hopes the path will lead to broader HELOC access through the monolines.

“They have not been given the ability to do (home equity) lines of credit again and I’d love (to see them able to again),” Marvis Olson of Mortgage Architects told “I think it would level the playing field; the banks have so much lobbying power, they lobbied the feds to remove lines of credit from everybody else except themselves. So they took away the competition.”

One way the government is increasing competition among big banks and monolines, however, is broadening accessibility to CMHC insurance for smaller players.

“The Government will improve the ability of smaller banks to access funding from Canada Mortgage and Housing Corporation (CMHC),” the federal budget, released Tuesday, states. “For example, CMHC’s new allocation methodologies have refocused portfolio insurance and securitization programs towards smaller lenders.
“CMHC will consider further flexible funding options for smaller lenders.”

However, the ability for monolines to provide competitive HELOCs has still not been addressed, according to Olson, who hopes the federal government will set its sights on increasing competition in this particular realm.

“I’m hoping that announcement shows that maybe there will be progress in the future as far as opening up what’s available for product lines,” Olson said. “I deal a lot with monolines … when the feds took away the ability for (monolines) to have (home equity) lines of credit, it affected me hugely; that’s why I’m sending so much business to National Bank; they’re getting my line of credit business.”

And while she does admit certain HELOCs can be attained through monoline lenders, the offering isn’t nearly as competitive as those provided by the banks.

“If I want to do a line of credit I have to go to a bank; MCAP has them but they’re separate … but they aren’t an all-in-one type of mortgage,” Olson said. “So many banks aren’t dealing with brokers (as well); the banks get a bigger slice without having to compete.”

  • Okanagan Broker on 2014-02-18 12:00:39 PM

    That's why we have Credit 65% LTVR limit on HELOCS, good rates, great service, & very few monolines have the ability or systems to handle a HELOC's continual changes in rate/balance/interest repayment etc....Almost all my HELOC requests are Credit Union arranged...

  • Niraj Gunanathan, Agent on 2014-02-18 12:49:04 PM

    Some Trust companies offer HELOCs via their B lending side. Rules to qualify are not that strict and for BFS, income can even be stated and contributory income can also be used to qualify. If someone needs fast cash, provided subject property has equity, this is the way to go!

  • DeJong on 2014-02-18 8:26:21 PM

    In order for the monolines to compete with banks and offer HELOCs, they would need CMHC to insure them since their funding mechanism is very different than a deposit-taking institution. Ain't gonna happen. Insuring HELOCs is probably at the very bottom of CMHC's to-do list.

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