Lender paperwork frustrates brokers, lawyers

Lender paperwork frustrates brokers, lawyers

Lender paperwork frustrates brokers, lawyers

A leading broker is asking channel lenders to look at standardizing their instructing documents for lawyers, a way of easing the headache for legal and mortgage professionals, alike, but also creating a competitive edge for the industry.

“Anytime that we, as brokers, have to intervene because there’s a question about what the lender is asking for in terms of documents creates extra work for us,” Dan Eisner, CEO for True North Mortgage, told MortgageBrokerNews.ca. “It definitely occupies a certain percentage of our time and it’s growing as lenders attach more conditions to their deals. I’d like to see that come off my plate, and broker channel lenders coming together to standardize their instruction documents would help do that.”


Ostensibly, that move would address concerns shared by brokers in all Canadian markets, from Toronto to Trois-Rivières. The problem is likely heightened for mortgage professionals working in small markets where real estate lawyers may be unfamiliar with the specific requirements of some monolines.


“I have had complaints from lawyers that the paperwork for monoline and non-bank lenders took more time,” said Mike Missere, a mortgage agent with Mortgage Intelligence in Thunder Bay, Ont. “There was one lawyer that threatened to charge the client more for having to do their mortgage documents because of it. I was able to stop that, but from my standpoint I have to field more queries from the lawyers about the legal paperwork when the lender’s not one of the chartered banks.”


Eisner isn’t himself hearing more complaints about broker channel lenders outside the Big Five, and the challenges Missere faces haven’t prevented him from sending the majority of his applications to monoline and other non-bank lenders. Still, a move by those lenders to standardize mortgage forms could strengthen their hand as they looks to protect market share.

 
It would also increase efficiency in processing broker channel mortgages, said a lawyer heading one of Calgary’s busiest real estate legal firms.

“I would love it if lenders would get together and take a listen to what the lawyers have been saying on a number of issues,” Jeff Kahane, of Kahane Law Office, told MortgageBrokerNews.ca. “Absolutely, if they could standardize document requirements, it would make life much easier. As it is now we are presented with different pay-down and payout terms, consent of spouse requirements that aren’t even required in Alberta, and conditions that aren’t even spelled out in the documents, but that we later find out are being asked for. If every lender had the same format, or even if a lender standardized the format for just its own mortgages, that would speed up things for the client and reduce the likelihood of things being missed.”


Any efficiency resulting for standardization might also lend brokers a helping hand as they content with increased competition from the banks, said Eisner

2 Comments
  • Gord McCallum - First Foundation 2011-08-19 4:06:05 AM
    Good suggestion Dan. I think most brokers have heard these complaints before. I do find that the law firms that have most of the trouble handling non-bank instructions are those that only dabble in real estate or who don't have sufficient volume to see every lender all the time.

    That said, if Jeff Kahane still thinks it's an issue worthy of consideration, then I suspect he's right as his firm does lots of business and he's well respected.
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  • Kim D, British Columbia 2011-08-19 6:41:14 AM
    As a former conveyancer turned Mortgage Broker in BC, I can relate. The biggest culprits are the Monolines who use a 3rd party companies, like First Canadian Title to issue their instructions. Because they are based on Ontario, their instructions tend to be based on the Ontario Land Title system and laws. The terminology and documents associated with conveyancing is slightly different in each of the Provinces. The companies issuing mortgage instructions SHOULD be aware of this, but tend to have an Eastern snobbish attitude to any province except Ontario!
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