CBC paints brokers with same brush as ‘shadow’ lenders

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A CBC radio segment mortgages appears to offer misleading and potentially damaging information about non-bank lenders and brokers.

“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.”

The story -- which reaches 2 million people in the GTA -- may be misleading and, perhaps, detrimental to potential mortgage borrowers who may discount the services a broker could provide.

“This story highlights the continued misconceptions about mortgage brokers and non-bank lenders that still persist,” James Laird, president of CanWise Financial told MortgageBrokerNews.ca. “If a business journalist still thinks that brokers and monolines only exist to service the alternative space, then we as an industry have to educate consumers on all of our offerings including the prime business that the majority of our industry focuses on.”

“Shadow” lending has come under scrutiny in the mainstream media as many borrowers have had to turn to private options because they don’t fit the profile required for more traditional mortgages.

Referencing a Reuters story, Yalnizyan appears to lump all non-bank mortgage options – including monoline products – together. 

“(Shadow banking) is where you turn to when the bank or the credit union turns you down because of a faulty credit rating or … you already borrowed too much, according to your income or maybe your income stream isn’t that steady,” she said. “So that could be the ‘bank of mom and dad,’ it could be an individual; but increasingly they’re investors and, in fact, branch plants of the banks and mortgage brokers.”

And, in a call with MortgageBrokerNews.ca, Yalnizyan admitted she was unfamiliar with monolines and the fact they are regulated and CMHC insured.

She also clarified what she wanted the piece to focus on.
“The concerns that policymakers have is that there is a growing segment of risky loans out there,” Yalnizyan told MortgageBrokerNews.ca. “In the effort to contain risk in the regulated sector, we have pushed a lot of risk into the unregulated sector and we’ve actually magnified the profile of that risk.”

Listen to the interview here.
  • barry on 2015-07-27 10:59:57 AM

    And, in a call with MortgageBrokerNews.ca, Yalnizyan admitted she was unfamiliar with monolines and the fact they are regulated and CMHC insured. Just another example of the nation's broadcaster's personnel making statements without knowing all the facts.

  • Ron Butler on 2015-07-27 11:00:04 AM

    James makes a good point, journalists must do a better job when they make broad statements about a whole industry. Any underwriting attack on monolines is fairly silly.

    I suspect vast majority of monolines are doing more stringent underwriting on deals today than most bank mortgages.

    As brokers we do have to accept some of the blame for the perception of promoting high interest rate loans; let's face it, there has been a huge growth in the "B" lending space in the last 3 years and mortgage brokers originate 97% of that space. We cannot logically say we don't do it, we don't all don't subprime work but some brokers actually specialize in it.

    So as mortgage brokers we have to own it. There does need to be closer look at some of the MICCS and syndicated mortgage investments that are growing so rapidly. Let's face it, most brokers just focus on the commission / sales side of this while governments and journalists focus on the risk to lender / investor side of the equation.

  • barry on 2015-07-27 11:03:36 AM

    Just another example of the nation's
    broadcaster's personnel making statements in the media without knowing all of the facts--but with the CBC, nothing surprises me any more.

  • Glen K on 2015-07-27 11:38:04 AM

    Unfortunately " Armine Yalnizyan" is not being clear in distinguishing between mono-lines who offer the same or better rates than most banks and mortgage investment corporations or private lenders. Is this a misquote or a moment of ignorance. Someone from the CAAMP media department should contact this person and get an interview to post a contrasting article that captures some additional comments and highlights percentage of Mortgage brokers do that is AAA lending wth banks or Mono lines. thoughts..?

  • Mortgage Guy Geoff on 2015-07-27 11:46:50 AM

    Surely this would be a great time for the "new" CAAMP to step up for the entire industry and demand at the very least a retraction from the CBC/Ms. Yalnizyan for their uninformed commentary and perhaps even urge Ms. Yalnizyan to investigate the brokerage industry and report - accurately - on it.

  • jSydneyH on 2015-07-27 12:12:28 PM

    Another example of the quality reporting Canadians are getting from the main stream media - not just about this but everything to do with money and governance.

    Merely trained parrots who are unable to form their own opinions because they have never been to taught to think for themselves.

  • Victor Simone on 2015-07-27 12:32:13 PM

    What is a shadow lender ?

    Odd term that only the general public would understand. Funny thing, it's that public that matters to us.

    Good point by Mr. James Laird, about perceptions. Education on the value of the independent channel is very hard to achieve though and the insurance and the mortgage industry associations have had little impact in my humble opinion.

    For the independent mortgage channel to be at 30% PLUS market share is very good. It would require the Associations to improve our brand to get us the next major uptick.

    A smaller membership fee for part time agents could be a good start to build the war chest.

  • Kent Farnsworth on 2015-07-27 1:42:57 PM

    Leave it to the CBC. It's a sad day when CBC "business commentator" feels the need to sensationalize and mislead the public to keep their ratings up.

  • Lior Hershkovitz, Broker at Mortgage Edge on 2015-07-27 2:15:12 PM

    Yalnizyan should have done better research before taking the story on air and actually understand the subject she is reporting on instead of making up information.

  • Ad Lakhanpal,Mortgage Alliance on 2015-07-27 2:31:02 PM

    Good for Mortgage Broker News to catch this ill informed report by CBC and challenge the reporter!

    If she doesn't even know the main segments in the lending landscape,she should not be broadcasting a report on it.

    I wonder if CAAMP caught this and if they have taken up the issue with CBC to demand a retraction or a supplemental report with correct information.

  • Jeff Sparrow - Winnipeg on 2015-07-27 2:51:38 PM

    Another commentary by someone admittedly "unfamiliar" with the lending criteria of legitimate alternative lenders in Canada being featured by our uneducated and biased Canadian media? Shocking...

    Why is it that the mainstream media and academics like this feel that the Canadian banking system is in place to provide a higher standard and be a financial conscience than any other alternatives? Why does there exist this fierce loyalty to the big 5 or 6 banks in our Country when it comes to lending on property? Should we rely on them to set the standard by which we should expect to handle our affairs or should we be given the opportunity to actually think on our own? These banks are for-profit companies, with their own agendas, just like any other business in our Country. They answer to their shareholders - not a higher power.

    When commenting on such things, why would these "policymakers so concerned with risk" not discuss predatory consumer lending companies that affect all Canadians that are of age that deal with them - not just homeowners? Where is the discussion about double digit interest rates and the average balances carried by Canadians (not just home owning Canadians) on credit cards from these same "trusted" institutions? I'm pretty sure they are doing their best to increase the borrowing limits for us all on a regular basis...where are these "concerned policymakers" in regards to the credit card companies?

    Where is the discussion by these "policymakers" on the "clearly governed by a different set of lending rules" divisions of these same trusted banks and credit unions when it comes to the automobile industry and their lending practices? Why is it I can fog a mirror and leave the dealership with a $1000 monthly payment on one of the worst possible assets I can own and then inquire about a mortgage at the same bank and get turned down based on "credit criteria and score"? What kind of smoke and mirrors are being used at the dealership to get the same exact banks to lend to almost anyone with a pulse on a vehicle?

    I'd love to see the income statements of the CBC and find out the amounts of the annual advertising budgets paid to them by the big banks every year. I'm sure they are richer that you think...

    But I'm sure that doesn't play at all into the reasons why articles like this appear without balance or intelligent comment.

    Just saying...

  • Ross Kay on 2015-07-27 2:53:34 PM

    As Realty Advisors not Agents we EXCLUSIVELY use MBs for all our clients Equity Management programs. MBs make it possible for our ability to guarantee a 62.5% higher Equity Growth Rate than what the banks offer.

    What is happening is the same setup that happened in the US where false blame was placed on the Mortgage Broker industry after years of irrational decision making by others.

    There are over 1 million Canadian Home Owners today without Mortgages that should be placing them on their homes right now, to protect their homes equity. Instead you hear 1990 year appropriate statements about your fellow MBs.

    There will be a scapegoat sought as the final two housing markets in Canada reverse.

  • John Greenlee on 2015-07-27 10:55:06 PM

    This would be an opportunity to extend Ms. Yalnizyan to CAAMP's national conference so she can meet with lenders, brokers. An opportunity even for CBC and Ms. Yalnizyan to do another story from a different perspective with more accurate information.

  • Henry on 2015-07-28 12:33:22 AM

    CBC was telling the truth. Lots of people have to take the expensive private mortgages because they have no choice, This is a very bad sign,

  • Maclin on 2015-07-28 8:29:54 AM

    TD Bank even uses a monoline lender for their mortgage underwriting... Now why would they do that?...

  • Bert Czombos on 2015-07-28 1:47:41 PM

    Armine Yalnizyan is a regular panel guest on the "Exchange with Amanda Lang" - and if you have watched the show for any time - you know that she leans about as far left as you can without falling off the chair. So no surprise that she thinks we are out there "gouging" poor defenseless Canadians because we all know that the only ones to trust in our industry are the banks.... what is a surprise is a) the lack of knowledge / research about an industry that she knows little about
    but feels compelled to comment on
    b) the further lack of research as to the reasons for the rapid growth of non-bank mortgages. She assumes it to be simply weak credit. There have always been (and will always be) clients with weak credit - What has changed is the insurer guidelines and the lending parameters around a host of other underwriting criteria such as income confirmation, down payment validation, loan to value maximums, how TDS is calculated etc etc. - all having little to do with credit scores / history, and most dictated by B-20 & B-21 - which are agreements that are set up to among other things protect taxpayers worldwide from the potential fallout from bank failures brought on by weak underwriting practices - which I'm guessing she is in favor of (protecting the masses from the evil banks) - well - THIS is the fallout from those agreements. You can't tighten lending restrictions across the board and then expect that all applicants are still going to qualify, and that those affected aren't going to seek a financial solution elsewhere.

  • MortgageM on 2015-07-28 2:30:04 PM

    It is sad that people who have influence on others provide misleading information; coming from the traditional financial institution system, I was told that "brokers were bad". Just a way for my superiors to get me to scare clients from actually getting the best deal out there. As an agent, I now feel that I can TRULY help all of my clients to get the absolute BEST product out there to suit their needs...nothing scary about that!

  • Deepak Bansal on 2015-07-28 3:42:55 PM

    A reminder of why we shouldn't believe everything we hear on the news.

    @ArmineYalnizyan I think the industry deserves an on-air apology for painting all brokers with the same brush, and the public, clarification that many non-Bank (monoline) lenders are in fact regulated.

  • Ron Price/DLC on 2015-07-29 7:46:17 AM

    Great comment Jeff. I'd like to see our monoline
    'partners' respond in kind to the CBC to set the record straight, better yet get an opportunity to speak on the radio and make sure the rebuttal hits mainstream news.

  • Ron Price/DLC on 2015-07-29 7:49:14 AM

    I'm not 'scratching my mind' I've got a headache and I'm hopping mad. Sick of how our industry gets knocked and does nothing about it. All the national brokers should ban together and make a formal statement.

  • james on 2015-07-30 10:50:40 AM

    1. Do brokers directly control what MICs charge?
    2. If the client/broker have exhausted all avenues to get a better deal; should they avoid the "B" lenders?
    3. Are all "B" lenders the same?

  • Gary W. on 2015-07-31 9:43:09 PM

    "The shady world of shadow banking," according to the Centre for Policy Alternatives's senior economist Armine, is a big factor in raising Toronto home prices. (http://www.cbc.ca/video/news/audioplayer.html?clipid=2672394526)

    Unregulated, uninsured, ("loan sharks," as her interviewer says) they lend money at outrageous rates to people whom the banks can no longer lend to due the sage policies laid down by Ottawa.

    Don't quite hear the CPC's solution though. And who are they seeking to "protect"? Insuring the borrowers, the investors (who are already covered by Provincial legislation). Or impose limits on their "outrageous" interest rates and charges.

    Oh, heck, just outlaw those "shadowy" men on a "shadowy" planet altogether.

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  • Jennifer Coy on 2015-08-05 7:47:35 PM

    Even her retraction needs a retraction.
    Setting the bar REALLY low for 'apologies' everywhere....
    Have we learned to expect more? Or is this just one more nail in the Canadian Broadcasting coffin? How CBC and Ms. Yalnizyan chooses to deal with it will tell.

  • Ron Butler on 2015-08-05 9:30:52 PM

    @ James

    We do not control anything about the rates and terms MICCS offer, it's free enterprise. I actually worry more about whet risks their investors may or may not understand .

    Maybe some clients should sell their houses if they are in trouble. Maybe the hey would have eventually have been better off selling, press pause and reboot later.

    I think it is good for all of us to realize that many people in Canada think when they hear about 8.00% interest rates on mortgage they think it is virtually theft. We should all try to understand public perception.

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