CIBC’s move to continue offering stated-income programs through its branches and road reps -- at the same time it kills them at FirstLine -- has added insult to injury, charge brokers, concerned about a loss of competitiveness.
“As far as I am concerned as a broker who has used FirstLine for 14 years, I am simply sad,” Ron Butler, with VERICO Butler Mortgage Inc., told MortgageBrokerNews.ca. “Although top CIBC executives feel they have done the right thing for their shareholders and they think their future strategy is sound, I believe that what is clearly a move away from support of the broker channel is a mistake.”
He’s not alone with brokers from across the country expressing the same concerns following FirstLine’s announcement it would kill a slew of loan programs associated with stated-income lending and new immigrants hampered by credit history requirements associated with traditional A deals.
“Hello everyone, FirstLine will no longer accept new applications for stated income programs effective end of today also max loan amount is $1 million,” reads an email penned by one of the lender’s BDMs and sent to brokers Tuesday afternoon. “if you have any deals you need to send please do so by the end of today.”
The same does not apply to the CIBC Self-Employed Recognition Program, which the bank continues to hawk on its website. It also remains on the menu for BFS clients seeking as much as 90 per cent loan to value for an insured new home purchase, a CIBC mortgage specialist told MortgageBrokerNews.ca Wednesday.
Brokers outside the MCC family will now have their access denied to that CIBC product, with mortgage professionals worried other lenders – some of whom have already tightened their BFS lending requirements – will effectively close the channel’s door on stated-income product, altogether.
The FirstLine step, in particular, comes on the heels of the release of documents suggesting the Office of the Superintendent of Financial Institutions is increasingly worried about BFS underwriting practices at the country's big banks.
Mortgages often granted to the self-employed and recent immigrants "have some similarities to non-prime loans in the U.S. retail lending market," and banks and other lenders are becoming "increasingly liberal" with mortgages and home-equity credit lines that don't require individuals to prove income, according to a 152-page OSFI document obtained by Bloomberg News.
Still, lenders may want to rethink any plans to just shut off the BFS tap for their broker partners, said Butler.
“I am not angry at the people inside of FirstLine, who are hardworking professionals who really want to support brokers,” he told MortgageBrokerNews.ca. “I understand completely that all of the changes at Firstline in the last year have come right from the top (but) if CIBC management decides that (it) wants to grow the broker channel business again they will find it very difficult and very expensive. Bottom line: they have made a mistake.”