“Recent regulatory changes have created a further need for flexible lending options,” says Jennifer Coy, mortgage specialist with Invis. “Many consumers will experience a circumstance to which alternative lending can offer a short-term solution, placing them firmly back on their feet. These alternatives may also help someone self-employed, or in employment where consistent income is not readily provable, to begin building equity.”
That represents an excellent opportunity for brokers to educate the client on what a broker can do, says Coy.
“Mortgage brokering can be a misunderstood profession,” she says. “That lack of understanding paired with word-of-mouth communication or more formal reporting can result in dim light being shed on our industry. Ultimately, our focus is filling an existing need for the consumer.”
It is the tightening of regulations that have contributed to the growth of private deals, says Wayne Campbell, a broker with Campbell Mortgage Brokers.
“The increase in private deals stems from the tightening of mortgage rules,” he says. “I’ve identified a number of transactions since 2012 that could once have qualified for an A-deal but wouldn’t now.”
While private lenders may be pricier, it is a more attractive option than telling the client that they should sell their home, says Campbell.
Tighter regulations are pushing the envelope for more creative lending options – especially for clients with less than stellar credit histories.