Broker frustrations grow

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It’s been a tough but lucrative year for brokers, with many struggling with underwriting delays that have resulted from a boom in business.

“Underwriters seem to satisfy files to audit requirements these days and not common sense underwriting,” Brad Currie, a broker with Verico Coastal Pacific, told “For example, there is one lender that won’t lend on condos that have had problems with leaks, even if the building has been remediated. Who thinks of that?”

Currie says that’s just one example.

“There have been numerous examples; we joke that it doesn’t matter who your underwriter is, but who your auditor is,” he said. “Another example is an issue with verifying large deposits put into bank accounts.”

In those cases, Currie says lenders require brokers to verify where the income has come from, which can delay deals.

“It shouldn’t matter where the client got the funds as long as they can cover the mortgage,” he said. “We have to determine the source of the funds and provide documentation.”

That poses a problem with various sources of income, including gifted down payments and car sales. However, Currie does acknowledge the lender may just be trying to verify that the client hasn’t taken out a loan.

Currie’s complaints join a long list worries about delays voiced by brokers this year.
A number have complained about issues that arise late in the mortgage origination process. They point specifically to last minute audits.

One former lender recently confirmed that challenge and its contributions to delays.

“There is often another level of review after the underwriter signs off on a deal before it gets funded; the underwriters sometimes miss something and it’s a function of underwriters being overwhelmed,” Tim Hill of Dominion Lending Centres Primex Mortgages told in September. “Volumes for lenders are also as high as they’ve ever been, and a lot of documents are being looked at very late in the process.”
  • John Meredith on 2015-11-11 11:14:37 AM

    Why blame the underwriter they are just doing there job and following guidelines.Brokers dont ask for doccuments up front causing there own problems . Down payment source is important to cover Fintrac regulations. All realtors must complete a fintrac form for source of down payments.Don't expect deals to close without proper doccuments.

  • George on 2015-11-11 5:10:32 PM

    Very simple - work with lenders who do not have this audit process.

  • Do you even AML bro? on 2015-11-11 6:27:42 PM

    “It shouldn’t matter where the client got the funds as long as they can cover the mortgage,”

    Er.... Ever heard of AML? Not really something you can circumvent

  • sharon burke on 2015-11-12 8:11:06 AM

    George...and which lenders do not have this process?

  • Mono line lender on 2015-11-12 8:50:04 AM

    John is correct. Sadly, what is referred to as "common sense" has been regulated out of most of our lending practice the past few years. B20 and B21, OSFI and DofF have been highly prescriptive in their notice to lenders. I fear more change is coming. What was once "common sense" is now near or subprime. In the end what was submitted must be substantiated. That's always been true, we all have far less latitude then in recent times. The test is rather subjective but reasonablity is the benchmark now. Documents up front helps us all. Lender, broker and especially client benefit from less conditions and the traditional month end scramble and negotiation. The new normal is enhanced oversight. Multiple audit is our reality and there won't be anyone who will be able to stick handle past it for long.

  • Dave on 2015-11-12 11:08:32 AM

    @ John

    Take the blinders off. You think realtors actually ask their clients where the DP came from ?? LOL

    They don't care about Fintrac when $20,000 commission is on the line.

    Its ridiculous that realtors and mortgage brokers are being forced to do the governments job anyway. Absolute joke.

  • Dan on 2015-11-12 11:51:06 AM

    Brad, You have been a broker (and a good one) for quite some time, so I am surprised at your comments.

    Many lenders do not lend on previous leaky's, and many other types of properties and scenarios; know your lender and don't send them a deal that does not fit their risk tolerances.

    For your downpayment statement; verifying source of funds has been required for years, why is this a revelation? AML: Are you aware of what this stands for, why it is in place and what a lenders legislated requirements are for verifying source of funds? It's, as you said, "common sense".

    How many know their primary lenders requirements are? How many verify ALL documents before throwing them against the wall? If you answer affirmative to both, and still have these problems, maybe you don't know as much as you think you do. Take some time and ask your underwriter, with an open mind.

    As brokers, we need to start taking some of the blame for document issues and stop leaving the underwriter with the burden of figuring out our messes, then passing the buck.

  • Dan on 2015-11-12 2:48:29 PM

    "They don't care about Fintrac when $20,000 commission is on the line.

    Its ridiculous that realtors and mortgage brokers are being forced to do the governments job anyway. Absolute joke."

    This belligerent attitude helps no-one and represents part of the problem. It, in my opinion, also displays ignorance and irresponsibility. You see paperwork, "big brother" going after the little guy and you having to approach the client questions you are uncomfortable asking. Try to remember that you indirectly represent the lender the mortgage is being placed with and, as you should know, lenders are required, by law, to investigate and report unusual transactions.

    It has been an adjustment for everyone. In the end, if you cannot adjust to lender/B20/B21/AML/Fintrac/Etc. requirements, which are not going away, you will not be successful and you will find (sooner or later) that people do not want to work with you. If you want to actually be pro-active so you can comfortably adapt to the changes and thrive, then I would encourage doing some research and taking the time to speak with your lender (not a bdm who, in some cases, may sugar coat the requirements)

    Step 1: Fintrac and AML: (there are many resources out there)

    Step 2: Speak with a lenders experienced underwriting manager/underwriter/auditor - and LISTEN to them; you being successful means they will be successful!

    Step 3: Documents: get them up front, LOOK at them… ask the client questions if you see anything unusual, if needed, ask for more documents. Unsure? See step 2

    Step 4: AFTER you have ALL the documents needed and have carefully reviewed them, send the package to your underwriter with rationale on anything unusual. Try to anticipate any questions and be prepared to answer them – yes, they may need more documents

  • Sean Binkley, DLC on 2015-11-13 1:39:03 PM

    When others have difficulty in the market, it only means one word: opportunity

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