Broker’s mortgage denial story the talk of CAAMP

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Brokers often talk about the hoops they are forced to jump through to verify income, but this one example may take the cake.

During the broker panel at the national association’s conference in Toronto, broker Croft Axsen told those in attendance about a file he lost because a client’s bank account showed $1,600 of unaccounted income that Axsen couldn’t verify.

He couldn’t verify the income because it was made at a garage sale and, as anyone who has ever hosted or attended a garage sale – so virtually every Canadian – knows, there is no paper trail or receipts.

“We can’t do this file,’ the lender said,” Axsen, co-owner and broker at Jencor Mortgage, told the audience. “Because (we) couldn’t prove the income was from garage sale.”

Axsen , along with several other panel members, were critical of recent regulations that requires brokers to spend an increasing amount of time on verifying income.

“Every day, instead of working through improving productivity and how we can do our jobs better, instead we’re in this regulatory environment that requires us to spend hours and hours and hours chasing redundant paper,” Axsen said. “(It’s an) overzealous regulatory environment that turns a two hour job into a 15 hour job.”

And income verification has been a hot topic among brokers recently.

Another recent example that caused frustration from one broker: A lender required Jeff Evans, a broker with Mortgage Architects Canada Innovative Financial, to hand over details from the account of a sibling who had gifted his sister -- Evans’ client – part of her down payment.

“I was asked not only to confirm my client’s account, the lender also wanted three month’s history for her relative’s account (who the gifted funds came from),” Evans recently told
  • Paul D on 2015-11-19 9:13:12 AM

    As a former banker, 27 years in a bank environment, I assure you common sense bank lending went out with the slinky

  • Victor Matos on 2015-11-19 9:27:35 AM

    Yep! I can relate to the 90-day history from an applicant's father's Bank account history as well. I lost that deal because the father refused to provide it, so the client went to a local Bank's branch, and they funded the $460,000 mortgage in Ancaster, without that requirement.

  • Jordi on 2015-11-19 10:15:03 AM

    Or the time downpayment came from the money received at the clients wedding(various cheques). Lender asked me to get a letter from everyone who gave them the gift that the funds were a gift from the wedding.

  • LanceH on 2015-11-19 10:29:33 AM

    Over-regulation is choking our economy, our society!

  • Garry Dicks on 2015-11-19 12:47:28 PM

    I wish I could say I'm surprised, but we need to realize that the Big 5 Banks are one of the largest lobby groups in Ottawa, if not the largest. And if they can make the broker industry jump through hoops...they will.

  • Croft Axsen on 2015-11-19 4:37:57 PM

    Thank you for the mention in your story. Just to clarify, the client’s situation was about down payment. They had sold their house three months prior to taking possession of their new property. The down payment came from the sale, it was over $140,000. We documented sale agreement, mortgage balance, lawyer’s statement of disbursements, bank account deposit records and more.

    The lender’s issue came up when the lender wanted to see as well as all the sale information, a 90 day history of the clients bank account. This did not seem necessary to us but in the spirit of cooperation we started asking for paper. During the 90 day period the $1600 was deposited into their account. The lender questioned other deposits as well but since this was a down payment issue which we thought the sale verified the time chasing the proof of the irrelevant $1600 was a total waste of the client, the lender and our time in my view. The paper chase on this, for all parties was well over 15 hours. We eventually had to switch to another lender who would accept the sale as proof of down payment. Working with another lender led to the expenditure of another 10 to 12 hours to get the file reapproved and funded, all at the last minute with the clients, realtors and lawyers stressed out for no real need.

    The income verification part of the transaction, although equally simple, proved equally arduous had been accepted by the lender.

    Thank you for allowing me to clarify the circumstances.



  • Lorne Rackel on 2015-11-19 7:00:13 PM

    Croft is bang on. He and I attended a lenders meeting a while ago and expressed concerns about policies versus the customer. The process is all about documenting a file and the customer pays the price of inconvenience and then becomes frustrated with us as brokers. They think some of our requests for documents borders on lunacy.The customer has been lost in this new era of policy. It used to be that we worked with lenders to help get a customer into a home or refinance to improve their financial situation. That process has disappeared in Alberta.

    Just last week alone I was trying to resolve numerous issues by lenders requesting irrelevant documents that have never been requested before. There is no trust anymore.

  • Blair Goodman on 2015-11-20 12:14:11 AM

    What I find interesting about this article is that no one has tabled the fact that the big five play with a completely different set of rules. Why aren't our designated associations and representatives lobbying the government to demand the entire industry play by the same set of rules?

  • Eric on 2015-11-20 12:24:14 AM

    When common sense truly erodes along with the faith & trust that brokers put in their underwriters to not make them look foolish, it's a slippery slope of mutual disrespect. Lenders need to adopt the winning FirstLine philosophy "work for the deal", or risk an onslaught of hostile working relationships between underwriters and brokers brought on by broken processes and ridiculous oversight. Originators are in the trenches everyday building client relationships. Underwriters need to understand and appreciate the true cost and importance of a client referral. It's not to be frittered away with nonsense or whimsical requests, or the referral source is gone.

  • Dustan Woodhouse on 2015-11-20 3:14:05 PM

    Every Broker has tales of a lack of logic from this industry, tales that would baffle most people outside of it.

    As far as the desire for a 'level playing field' that would be nice in some respects, but less so in others.

    The Government cannot legislate that one lender offer all of its origination channels the same products and policies, which is why we find ourselves in unfair fights with branch reps that on occasion can do things we cannot do. That's OK, there is much that Brokers can do with dozens of lenders to choose from that the branch rep cannot do.

    Consider a level playing field applied to pre-payment penalties. This would eliminate one of the greatest value propositions a Broker has when it comes to monolines and some credit unions.

    There will always be points of pain, was Croft lamenting this instance as something that comes up in 85% of files? No, it was more likely a 1% of files sort of thing. Perhaps a file from a few weeks ago and still a fresh wound.

    For every story like Crofts, we can tell teh about BFS clients turned down at the bank that we worked a miracle for at a Credit Union, or a Monoline.

    We still have more power than we realise sometimes. Focus on all the good things that Brokers can do, look for the 'file of the month' internal emails from lenders about success stories.

    There are far more wins than losses in our channel. At least when measuring purely the truly win-able files.

  • Matt L on 2015-11-20 10:11:28 PM

    The issue I see with all of this has been brought on by our own industry. We continue to read about broker and agents that are cut off due to falsifying paperwork but I know for a fact that they continue to work in the industry because they are never reported. There is the old saying about the bad apple and this is proof of it.

Broker news forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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