Clients feel lender demands are ‘lunacy’

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Lenders have had to adapt to changing guidelines, which have caused tighter underwriting resulting in delays – much to the mounting frustration of clients as well as their brokers.

 “ … I attended a lenders meeting a while ago and expressed concerns about policies versus the customer (sentiment),” Lorne Rackel, general manager with Jayman Financial, wrote in the comments section of MortgageBrokerNews.ca. “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.”

Of course, document demands are neither the fault of the broker nor the lender. As industry players point out, they’re merely the result of stringent underwriting guidelines that seem to apply specifically to the broker industry.

“What I find interesting … is that no one has tabled the fact that the big five play with a completely different set of rules,” Blair Goodman, financing specialist with Dominion Lending Centres in British Columbia, wrote on MortgageBrokerNews.ca. “Why aren't our designated associations and representatives lobbying the government to demand the entire industry play by the same set of rules?”

The comments come on the heels of a number of brokers expressing frustrations about income verification requirements that have delays – and in some cases spoiled – deals.

Brokers have struggled with gifted funds, as well as seemingly insignificant bank account balances that resulted in delays while trying to verify.
  • SWK on 2015-11-23 10:10:28 AM

    We had a 480k mortgage declined after the approval. It was very legitimate as a full time purchaser went casual to return to school. This was found at time of telephone confirmation with employer. CIBC obviously did not get phone confirmation or ignored it. Mortgage fraud?

  • Brian Matthey on 2015-11-23 10:13:56 AM

    I am sure it is the various investors used by Monolines, which in many cases happens to be the banks.Thoughts?

  • Jivan Sanghera on 2015-11-23 10:38:38 AM

    I'm of the opinion that anyone trading in mortgages whether branch or Broker should be licensed. Personal Bankers aren't allowed to sell stocks as they are not licensed. They should not be allowed to sell Mortgages either. I agree that our associations should be fighting to level the playing field. The "my bank never asked me for that" conversation has to be my least favourite of all.

  • Robert Clancy on 2015-11-23 10:50:55 AM

    It has definitely being a tough year. I have personally experienced lenders last minute audits on the day of closing and then asking for more documents. Very scary. The lender will tell you it is the investors doing these audits who just so happen to be the bank. It does make you wonder.

  • Ron Butler on 2015-11-23 11:02:34 AM

    I have posted comments on this forum for the last two years that bank branches and mobile specialists do not have the same level of document scrutiny that mortgage brokers are encountering. It is something we need to keep reminding our lenders and constituencies about but we are fooling ourselves if we think this is ever going to change in the near term.

    The banks operate under federal mandate and we are provincially regulated. That is likely not to change in the next decade. We need to stop rehashing the rehash on that point. We should all start to get used to the idea that the banks who operate directly in our channel like the idea that we deliver ultra compliant files and the monolines simply have no choice but to insist on super compliant files.

    So, it is what it is, in a somewhat surreal change in the lending cycle; banks now look to brokers to supply an even more perfect file than their own captive channels provide them.

    If you stick around long enough you will see everything.

  • Sheldon S. on 2015-11-23 12:07:18 PM

    There are no "designated associations" in the mortgage brokering industry, only voluntary ones. Members who support the associations the most probably can be more demanding but members who do very little can't really demand that much. Non-members who can't be bothered to support the associations at all ... well ...

  • broker on 2015-11-23 1:07:21 PM

    The regulators don't trust commission based brokers and have put huge barriers on the lenders dealing with them. The regulators love the banks because the banks have enough cash to bail out any consumer issue and keep problem away from the regulator.
    Big regulators love big banks and neither like commisioned salespeople. The associations, especially MBABC, are too broker oriented for their liking.

  • Lisa on 2015-11-23 2:03:05 PM

    The worst part is the investors that help fund the monolines are The Banks...So why do they make it so difficult? They are making money as investors.

  • Hugo on 2015-11-23 2:27:23 PM

    You are right "broker" as banks can easily pay to make mistakes go away and on the broker side our pockets are not deep enough to eat the cost of anything at all. It is ridiculous that banks have the ability to go rouge but that has always been the case and will always be. I don't find this a new phenomena, it's been happening for years. Not being able to get a client approved and losing it to the branch when the only way you know it got done was fraudulently is unfortunately the reality.

    With respect to what Robert Clancy is referring to, those specific lenders do not get my business from the point of view I would actually rather buy down a rate an extra .05bps and go to a lender I know will close than to go for these lenders who have a slightly lower rate but 100 hoops to jump through just to close. I would have to have 2 or 3 extra staff members if I sent all of my business to these lenders who are doing these last minute audits. The stress alone is not worth dealing with them. It isn't a conspiracy against brokers but more likely the product of the lender having a few bad audits and having the reins pulled back bu the investors.

  • Matt on 2015-11-24 8:13:13 AM

    Just an FYI that our goft letters require a 90 day history verification as part of the gifting process. Either 90 history on the gift or the letter to be brought and notarized as to the legitimacy of the funds from the giftors bank.

    All whining about the inequalities between banks and brokers is laughable.

  • Dave on 2015-11-24 9:51:11 AM

    There should be NO last minute audits. That is a ridiculous process and is completely unacceptable when clients have already waived financing conditions, etc. Our brokerage heads, CEOs, associations need to make this clear with lenders.

  • James on 2015-11-27 2:24:17 PM

    I have to wonder... at what point will brokers, and through them their customers, understand one simple point... Owning a home is a privilege... it is NOT a right.

    Canadians have the right to housing, they have the right to have access to housing... owning that housing is not a human right - never has been... never will be.

    And just in case anyone has any other slams about the lenders, here is a key point to remember... it is THEIR money. Not yours. They get to decide what level of risk they take when lending, they get to set the rules, etc. If you don't like it - you are in the WRONG business.

    It is NOT up to the lenders to cater to brokers or the consumers... WHY? Because the brokers are not the ones TAKING THE RISK, neither is the consumer. It doesn't matter what the level of risk is, that risk is still heavily slanted to the lender.

    The reason why lenders do the last minute audits... because too many brokers are trying to push through exceptions, and there are too many shady documents and deals being sent via the broker channel. That's why.

    If you don't like the rules, then lend the customer your own money without doing the due diligence. Put up or shut up.

    As for lenders, they are required to do the same verification on DP and income. The big difference - the banks - for the most part - have existing relationships with the client, they ALREADY have the information on hand.

    Brokers need to grow up and give themselves a reality check.

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