“I see (the changes) as good for brokers because when you introduce complexity into a particular product or commodity, it increases the value of consultants and the mortgage broker happens to be a consultant,” Dan Putnam, senior vice president of business development with CMLS
Financial, told MortgageBrokerNews.ca. “It’s just become more complex; you have to explain to customers why they’re qualifying on a rate that’s double the rate they get, why rental properties cost more in interest, why conventional loans may cost more than a high-ratio loan when there’s less risk.”
Putnam -- who spoke at length about various issues the industry faces for an upcoming Industry Icon feature, which will appear in the next issue of CMP – admits there are challenges that will come along with the new rules.
Part of the new guidelines include a revision to low-ratio insured mortgages, which require they meet the same criteria as their high-ratio couterparts.
As a result, Putnam believes rates will increase but that lenders are all out looking for alternative funding sources with the hopes that they will have to rely less on bulk insurance.
The effects will be felt by lenders and brokers alike, but but both will persevere, according to Putnam.
“I wouldn’t say I was thrilled to see the changes on the bulk insurance … but the reality is that it’s what we have to deal with and we’re all going to work through it. I don’t think that this is catastrophic by any means; this is what we do as non-banks,” he said. “I think the non-banks are fine through all this but it’s probably going to be a few months before the private sector finds a way to backstop this. But it will happen.”
As for how brokers will manage, Putnam argues their role as advisors just became much more desirable. Though a little more hard work and determination may be required.
“And the fact that mortgage brokers can deal with every type of lender out there, I don’t see this hurting the mortgage broker community at all,” Putnam said. “If volumes drop, then they’re just going to have to work harder in terms of market share if they want to keep driving the same levels of volume that they’ve had in the past few years.
“But otherwise I think the mortgage broker is fine through all of this. And their non-bank partners will be fine through all of this too.”
Watch out for CMP 11.11, featuring an in-depth profile on Putnam
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