“The attack on self-employed clients is really bothering me; you have to make a compelling case to the lender to prove they are good candidates,” Jake Abramowicz of Mortgage Edge told MortgageBrokerNews.ca. “When I have a self-employed client I go to three underwriters who have worked on these types of cases in the past and who are willing to do the work.”
Options for business for self clients – especially those who require a high ratio mortgage – are shrinking. Effective May 30, CMHC will no longer insure self-employed homebuyers who do not have third party income verification.
However, Canada’s other two insurers – Genworth
and Canada Guaranty – have stated they will not be making changes to their respective self-employed programs.
“Upon review of the current Business for Self Program we will not be making any amendments to current product guidelines,” a Genworth
letter to lenders sent in early May read. “There will be no amendment to the maximum number of Genworth
-insured properties per borrower.”
Still, brokers have expressed exasperation at the limitations placed on self-employed clients.
“If you really look at how many people are self-employed in the country they really are the backbone of the economy,” Zoltan Padar told MortgageBrokerNews.ca following the CMHC’s recent changes. “That’s a good product and it has been proven over time that the two (private) insurers can be very competitive.
“CMHC cutting their business for self program will be a lesson to businesses – some lenders only work with CMHC but if I’m a lender I would start supporting the other two immediately."
There are options for brokers with these types of clients, however. Especially for those professionals who are willing to build a rapport with certain lenders.
“It’s all about relationships with lenders, underwriters and BDMs,” Abramowicz said. “I have to work with who I have and who I know.”
Industry players are frustrated by the lack of options for self-employed clients but the best way to navigate this area, according to one broker, is to assemble a solid stable of a few lenders willing to go the extra mile.