Brokers: Transparency is key in wake of tightened rules

Brokers: Transparency is key in wake of tightened rules

Brokers: Transparency is key in wake of tightened rules Tightened lending requirements have forced brokers to rethink some of their client management strategies, and two leading professionals speak about the importance of transparency.

 “I speak to clients up front and say things are changing but that I will still do my best to get their deal done,” Bernie Klacer of Real Mortgage Associates told MortgageBrokerNews.ca. “I also ensure constant communication throughout the process; from the initial conversation right through to funding and beyond to make sure payments (and eventual renewals) are completely understood.”

It’s a strategy favoured by many, including John Thompson of TMG The Mortgage Group who believes broaching the difficult topics early on is preferable to saddling clients with extra work – and surprises -- once the mortgage process has already begun.

“I just tell clients up front that this is a federal government mandate and we’re happy to help but there are certain things we require from you,” Thompson told MortgageBrokerNews.ca. “I get all the info up-front; some brokers shy away from asking for these requirements because they think it will scare the client away.”

For difficult files, Thompson also avoids asking underwriters for exceptions because he believes finding a solution is just one part of a mortgage broker’s job.

And it’s a philosophy shared by Klacer, who believes it’s become too easy to shift the blame to lender underwriters.

“We really have to manage the expectations of our clients with the new rules,”Klacer said. “I think a lot of brokers aren’t properly educating clients and they are too quick to blame the underwriters.”

Related:
Brokers discuss bank underwriting practices
Brokers: lenders need to address staffing issues
9 Comments
  • Angela Wong-Liao - Invis 2014-10-28 1:22:56 PM
    I fully agree that it is the responsibility of a mortgage professional to communicate to our clients for any changes in rules and regulations as we are the middle contact between clients and lenders. It is easy to blame the underwriters but they are only following rules and regulations from government and their own financial institution.
    Post a reply
  • AnthonyC. 2014-10-28 2:01:10 PM
    Although I fully agree with Bernie and John that its in our shared interest to better manage client expectations (which in turn better serves our underwriter relationships) by requesting docs in advance and immediately addressing any concerns presented in a file which may cause underwriting delay or decline, I could not imagine not asking for an "exception...within reason", after all efforts to finding a solution become exhausted.

    Provided that you have done your due diligence when qualifying the deal and there is supporting documentation to meet conditions precedent, isn't it our duty as originators to persuade the lenders to see the merits of the covenant, all the while doing so with decorum and without malice towards the lender, should they decline the file?

    For the most part, lender underwriting teams consist not of porcelain dolls but of thick skinned and tough people. They understand we are under pressure to perform...sometimes all it takes is just the right persuasive dialogue (mixed in with chutzpa) to get the lender to review/escalate/approve the deal.

    A little self-diagnosis is good on occasion and please be reminded that we are in the business of selling our deal to the lender...branch level and mobile mortgage specialists know this and argue the merits of their clients to their underwriters every day and that's a main factor as to why we lose business to the branches.

    Good selling to all!

    Post a reply
  • Ron Butler 2014-10-28 3:24:31 PM
    Amen AnthonyC............. the bank reps are eating our lunch getting debt ratio exceptions on every conventional deal where the client has a great beacon score and some assets at the branch. We need to fight for rational exceptions because the playing field is far from level.
    Post a reply