Broker: Stricter credit score guidelines stranding clients

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Brokers may have to shift Realtor referrals to the point of sale, instead of the point of purchase, said an industry veteran, identifying a spike in home sellers blocked from buying new homes because of a rigid adherence to credit score guidelines.

“I haven’t had a single client with a Beacon score of less than 600 get a (A) mortgage approved this year,” Nick Tassone, broker-owner of Midtown Mortgage Service in Sault Ste. Marie, Ont., told “We’re seeing either the lenders or CMHC stick to that recommended 600 score on high ratios. What I’ve also seen is a number of clients referred to me just after they’ve sold their home and are about to buy a new one but because their credit score has taken a hit, there’s nothing I can do for them. They’re stranded.”

The observations reflect those of two other high-volume veterans of the industry, both working Vancouver’s Lower Mainland. They’re also grappling with now-rigid credit score guidelines for clients, regardless of how solid their incomes.

It means that CMHC recommendations are now being adhered to more strictly, with most lenders declining deals that fail to meet those standards. The few willing to submit them to CMHC are finding it all but impossible to win the insurer’s backing, said Tassone.

Under the Crown corp. “recommended” guidelines, homebuyers should have a Beacon score above 600 in order to win CMHC insurance on a loan to value of 80 per cent or higher. It jumps to 610 for LTVs of 90.1 per cent to 95 per cent and falls to 580 for conventional loans with an LTV of 60 per cent to 80 per cent.

Realtors are largely unaware of just how closely lenders and default insurers are now sticking to those recommendations, Tassone, also a real estate agent, told
“As a result, they’re not advising clients who may have taken a hit to their credit scores to not sell their homes, because they may not be able to buy a new one.

“We as brokers have to educate Realtors about the credit score rules now.”

Part of that may be brokers actively inserting themselves in the selling process, with Realtors referring clients to mortgage professionals even as they look to sell their existing homes. Calling a broker in early would effectively save both the broker and the real estate agent’s time at the same time give the client time to repair credit. It also creates the kind of goodwill needed to win that client’s future business, says Tassone, largely supportive of the stricter interpretation of credit guidelines.

“Those with good credit should be rewarded,” he said.

  • Chris on 2011-11-16 6:13:11 AM

    I've been able to get beacon rejects, and scores between 575-600 approved on A rates up to 95% LTV. Just got to know which lender and insurer to use. Hint, it's NOT CMHC.

  • Tom on 2011-11-17 2:52:42 AM

    Sometimes you cannot qualify today for insurance but if take correct actions can position for a future approval There is a new platform that brokers can leverage to grow their bsuiness and help their clients improve their finances. Learn more at and register for a webinar

  • Leo on 2011-11-17 6:43:13 AM

    Hi Chris, care to share with us which lenders you had got approved between 575-600 up to 95% LTV? I have a clue whom the insurer is but not the lenders. I had about 5 rejections last week similar deal with 600 beacon, and lenders didn't even bother submitting to the insurer. Its nice to have everyone as a community helping each other

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