“Documentation tells us a lot about which solution will be most suitable for the client,” says Tom Hickey, vice president of operations with B2B Bank. “We need know as much as possible about the documentation available to prove the client’s income.”
This challenge to meet the lending guidelines is driven by a number of variables, says Hickey.
“For instance, reductions in loan-to-value, increased documentation requirements and higher loan rates,” says Hickey. “The steady decrease in mortgage options such as extended amortization also plays a factor. As a result, fewer lenders are offering flexible options in this sector.”
The issue of industry accountability came to the forefront recently when a major lender severed ties with 45 brokers who allegedly had falsified income documents, after an investigation pointed to falsified information about borrowers’ income.
Some industry players are arguing that in cases of accusations of fraud, the borrower should be held accountable more so than the broker.
“Everybody talks about fraud but nobody does anything about it,” Mortgage Alliance
’s Ad Lakhanpal told MortgageBrokerNews.ca
. “My recommendation is that they shouldn’t go after the broker who signs the documents; (focus on) the borrower who signs off on the information saying it’s true.”
For Hickey, brokers need to be vigilant and aware of exactly who their clients are, and what their business is all about – and to understand what the lender is looking for in an application.
“I can’t stress this enough: do your research about the lender you are submitting your applications to,” he says. “Take some time to learn about the product offering, and specifically name the lender’s product in your applications.”
Recent fraud concerns have highlighted the industry’s growing emphasis on accurate and up-to-date client documentation, especially for self-employed clients, say broker channel veterans.