CBC apologizes to brokers and monolines…sort of

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CBC business commentator Armine Yalnizyan went on CBC’s Metro Morning Wednesday to distinguish brokers from shadow lenders, a follow-up to a segment in which she lumped both into the same category.
“(Brokers) felt – and I think reasonably – that I didn’t capture the full breadth of what it is that they offer to the market sand that they do offer better deals to some people, particularly if you don’t need to find a great deal,” Yalnizyan told Metro Morning’s Matt Galloway. “If you’ve got great credit-worthiness in the eyes of the banks, they can probably make life better for you.”
Yalnizyan joined the broadcast to discuss what she had learned since Friday’s segment – and from talking to mortgage brokers. That episode drew the ire from brokers across the country.
During that segment, Yalnizyan appeared to lump all non-banking lenders – including brokers and their monoline partners -- into the same category.
“Housing prices have increased … so people need to borrow more; you can’t borrow from the banks so you turn to this non-bank sector and it is an expensive option,” CBC business commentator Armine Yalnizyan said on Friday’s Metro Morning segment entitled Shadow Banking. “Bank mortgages, which average about three per cent for a five year fixed term compared to non-banks which can vary between seven and 15 whopping per cent.”
However, Yalnizyan clarified on Wednesday that brokers – and most of the products they offer – are regulated.
She also discussed the fact that brokers often offer lower rates and penalties than the banks and how monolines operate.
“Monolines are companies that lend money but just in one market; in this case we’re talking about mortgages. They don’t take deposits like a bank, they don’t offer any other service, all they do is lend money from mortgages and the money comes from investors,” Yalnizyan said. “So if you are credit-worthy, in the eyes of the banks, they can offer you a slightly lower rate. They will shave off maybe about 10 basis points.”
  • Debbie on 2015-07-30 10:35:11 AM

    would have been nice if she had covered that first and then the shadow lenders. Damage is done, can't unsay what is said.

  • Jim on 2015-07-30 10:55:53 AM

    Although an apology is nice as well as going back on air to try and to correct some of the misinformed information that was already put out there... I don't understand how a professional news broadcast company, such as the CBC radio, can have one of their professional broadcast radio hosts, go on air and speak freely about a topic that she obviously knows nothing about...it definitely doesn't sound like she did much, if any, research on her article at all...and to be honest...once something like that is aired...the damage is done.

  • Ron Butler on 2015-07-30 11:32:31 AM

    If you listened to her segment, Armine certainly retracted all of her "shadow banking" comments on Monolines and mortgage brokers, in fact I think she gave us a bit of a plug when she suggested mortgage brokers can deliver superior rates and better penalty mortgages than banks. Overall I thought her comments were quite balanced.

  • Ad Lakhanpal,Mortgage Alliance on 2015-07-30 11:48:05 AM

    I am glad to see that CBC received the message loud and clear. Thanks to the coverage by Mortgage Broker News.

    It is not clear if the CAAMP took notice of this or said anything to clarify the matter.

    Having said that, it seems like Armine Yalnizyan was given a "coles notes" version of the lending landscape after her fiasco, and was still floundering in her comments. Why she qualifies as a "business commentator" for CBC is hard to understand.

  • LanceH on 2015-07-30 12:13:51 PM

    How many viewers saw the original, but not the follow-up? How many viewers, once they have something in their head, can't get it out? Well, when it comes to the Lefty's that fall for CBC junk news - ALL OF THEM!!!

    I see that silly, obsessed woman on The Agenda all the time (her think tank sponsors the show). Not much of an economist I can tell you. Her emotions get in the way of her brains. Sorry ladies, but in this case - it's true!

  • Dustan Woodhouse on 2015-07-30 12:28:04 PM

    Kudo's to Ms. Yalnizyan for taking the time to give Brokers some love. Pretty refreshing news for sure!

  • David Larock on 2015-07-30 5:44:49 PM

    It's too bad that Armine is trying to learn about the mortgage industry while speaking into a microphone.

  • Sean Binkley on 2015-07-31 8:06:50 AM

    Right, then they publish a story like this comparing Home Trust cutting off Brokers to the largest ponzi scheme ever ? Here's my comment on CBC on this story... It will be OFSI's iron-fisted rules that will take the housing market down, not "make sense" lending policies, oh and don't think for a moment that there aren't plenty of bank employees that have messed around with income documents, this isn't a broker issue. In case you didn't know, one of the largest producers of Home Trust Mortgages is RBC Mortgage Mobile Reps. A "sky-is-falling" style of reporting like this (I mean really, tell me how Bernie Madoff has anything to do with this story...) is sensationalizing a small news story meant to obviously put the fear of downturn into Canadian's hearts.


  • Samantha Gale, CMBA on 2015-07-31 1:59:28 PM

    The Canadian Mortgage Brokers Association (CMBA) did address a letter to CBC on this issue - see below

    I am responding to your broadcast on the subject of “shadow banking” with guest, Armine Yalnizyan, which aired last Friday, July 24, 2015.

    By way of background, the Canadian Mortgage Brokers Association represents mortgage brokers and many alternate mortgage lenders across the country.

    Admittedly, shadow banking is quite the term – it connotes a sense of mysterious, perhaps even nefarious individuals lurking in a dark background, lending money to hapless victims in a clandestine, illegal fashion, akin to (as you have suggested) “loan sharking”. However, the term lacks clarity and does not do justice to the various “alternate mortgage lenders” in the Canadian marketplace. I shall explain this.

    First off, alternate lenders do not do “banking” and should not in way be characterized as “bankers”. Banks are deposit taking institutions, which take deposits from the public, and then highly leverage those deposits for lending purposes. Of course, in some ways alternate lenders do resemble banks. For instance, both make money off of the spread between funds paid to investors, or in the bank’s case, interest paid to depositors on their deposit funds, and the interest income earned from loans, which for obvious reasons, needs to be higher than the investor or depositor costs. However, banks are much more highly leveraged than your traditional alternate lender, resulting in a dramatic asymmetry in the liquidity structure of a bank.

    In addition, there are many kinds of alternatives to non-bank lenders. These include credit unions, trust companies, and monoline or wholesale lenders. Some of these lenders make equity loans and all follow lending guidelines not too far from those of the banks. They make a massive contribution to the economy by providing mortgage funds, which are generally brokered through mortgage brokers. Are these lenders captured in the term “shadow banking”? This is far from clear. Who is caught in the shadow banking net, and the value of the mortgage loans they fund needs clarification and quantification in order for there to be any meaningful dialogue on this subject.

    Also, did you know that up until the 1960’s, mortgage brokers who sourced mortgages from alternate lenders, and NOT banks, were the primary source of mortgage funds for most Canadians? A 6 per cent cap on interest rates which could be charged on residential mortgages by banks was eliminated in legislative amendments in the late ‘60’s. Non-bank mortgage lenders were the primary mortgage lenders for the majority of Canadian households in the 1960’s as the interests rate rose above 6%, pushing banks out almost completely out of the mortgage market.

    The implication that Canadians who use alternate mortgage lenders in today’s environment of low interest rate, might experience the same fate and catastrophic economic collapse as the US sub-prime mortgage crises of 2008, has no foundation. Alternate lenders existed long before 2008 and there is no reason to think that having alternate lenders in today’s financial environment will put the Canadian economy at any greater risk of collapse than it did in 2008.

    To the contrary, there is no question that alternate lenders are an essential component of the Canadian economy. Alternate lenders play a pivotal role in the financial lives of Canadians by providing:

    • financing for new buyers, who have not yet established credit;
    • debt consolidation loans, which result in affordable debt payments for borrowers;
    • solutions to borrowers with impaired credit, so that they can eventually repair their credit;
    • financing to homeowners who are in the midst of foreclosure or creditor protection proceedings, so they can continue with homeownership;
    • bridge financing for buyers who need temporary financing pending the sale of another property;
    • equity take out mortgages for needed repair and maintenance projects;
    • start-up capital for new developments which banks are not prepared to fund; and
    • funds for business development and expansion.

    If alternative lenders did not exit, the effects would reverberate throughout the country, with the loss of many jobs, more foreclosures and bankruptcies, drastically reduced business and construction development, and a devastating impact on Canada’s economy.

    Please know that we are prepared to discuss this subject with you and your listeners, if you should wish to present a competing perspective from that of Ms. Yalnizyan. You can contact me at samanthagale@mbabc.ca

    Yours truly,

    Samantha Gale, LLB
    CMBA Executive Director

  • John Bargis on 2015-07-31 3:57:59 PM

    Very well said Samantha...Good to have someone like you behind our industry.....I'm curious to hear if the CBC takes you up on your offer.

  • John B on 2015-07-31 10:22:49 PM

    I recently had to chastise a lawyer, who we send a lot of biz to, for telling clients that all monolines were "B" lenders. In their opinion only the big 5 were A lenders. Hate to sound like a broken record but all the millions spent on the AMP recognition marketing, should have been sent to the Greek govt. The only people who can get our message over are us, one by one, to whoever will listen
    It would have been nice for CBC to have had a broker on with her, at the time of the so called apology.

  • Gary W. on 2015-08-01 11:17:53 AM

    According to the Centre for Policy Alternatives' senior economist and her awestruck interviewer, "shadow lenders" ("loan sharks", they clarified) are inflating home prices by lending money to people whom the government wouldn't approve of. Hence those OSFI rules and the public threats of a certain deceased Finance Minister against the Schedule A banks.

    So alternative lenders from publicly traded giants to the local MIC fill the gap--"exploit the loopholes", as the headline writers put it.

    How soon before regulations come limiting this double "exploitation"? Ask Prime Minister Mulcair.

  • Mr. Gotham on 2015-08-02 12:38:10 PM

    @ Sean Brinkley, perhaps you should read the story:
    "Of course the Home Capital scandal is of a completely different magnitude, and there is no suggestion of a possible Madoff-like Ponzi scheme here."

  • Omer Quenneville on 2015-08-02 2:24:26 PM

    I don't care how well worded her retraction statement is. Retracting a statement doesn't remove the damage done. How can someone call themselves a journalist and not take the time to verify the facts. I'm disappointed in CBC.

  • Jube on 2015-08-04 11:33:42 AM

    What's done is done. Move on.

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