UPDATED: Broker points to cancelled preapprovals

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UPDATED: At least one monoline appears to have cancelled pre-approvals written before the CMHC announcement last week, said one broker, raising concerns that other lenders will follow suit.

“They basically cancelled all of the pre-approvals; I had nine of them and they were cancelled with no explanation,” one broker, speaking on condition of anonymity, told MortgageBrokerNews.ca. “On Monday they basically cancelled every pre-approval I had with them.”

MortgageBrokerNews.ca is now reaching out to that specific lender for comment.

While the broker isn’t entirely sure why the pre-approvals were cancelled, he has now had the underwriter and his broker of record confirm that the CMHC's move to cap goverment guarantees for mortgage securities was the driving force behind the decision.

Also of note, the lender has now come back with a compromise that would see the five-year terms reduced to four and the previous rate protected. That would still leave one client stuck "between a rock and a hard place," said the broker.

Last week, CMHC announced it would limit each lender in its mortgage-backed securities program to $350 million in guarantees for August given it was quickly approaching the fund’s ceiling.

Any cancellation of pre-existing preapprovals could hamper broker efforts to capitalize on the rush of fence-sitting clients now eager to cash in on those promise notes.

Cancellations are also likely to test broker loyalty.

“If they break their word, do you want to send them business again?”  said the source. “They went from the top of my list to the bottom. Why would I send them another deal when I got screwed over?”

Another broker, Deepak Bansal of Dominion Lending Centres Mortgage Village, told MortgageBrokerNews.ca that he has struggled with underwriting on some deals this week, although not on preapprovals.

“They have been stricter this week,” said Bansal.  “I have had one declined and on the other two, the underwriters were a lot stricter than they had previously been.”

He pointed to apparent contradictions between what the underwriters said and the lending guidelines..

“It’s been corrected now,” said Bansal, “but I had to get our business development manager involved to send them their guidelines to get it rectified.”

Other brokers are concerned some lender may want to hold off on writing new business until rates go up.
 

  • David Larock on 2013-08-14 9:14:21 AM

    So you're saying that an unnamed broker says that an unnamed monoline lender cancelled 9 of his pre-apps last week and while he isn't sure why he thinks it might have something to do with the CMHC changes?

    Wow.

    We have just reached a new low in what passes for mortgage-industry "journalism" today.

  • Paul J Rocha on 2013-08-14 9:27:51 AM

    I agree completely with David Larock no substance at all in this article, although I agree that these types of scenarios will become more prevalent as a result of the governments, past, present and future anti-stimulus efforts, this particular article is just fluff.

  • P.B., Broker, from Mississauga on 2013-08-14 9:36:49 AM

    And I've unsubscribed from Canadian Mortgage Broker News, don't need to waste time with junk like this article in my inbox

  • Kim Mortgage Broker on 2013-08-14 9:38:00 AM

    I also had Pre-Approvals cancelled prior to the expiration of the Rate Hold.
    BTW, I am curious if Paul and David have a personal vendetta against someone at Mortgage Broker News?

  • Paul J Rocha on 2013-08-14 9:42:38 AM

    I don´t know anyone at mortgagebrokernews.ca. Kim there is always someone blaming someone else ore something else for their situations, that´s not news.

  • Kim Mortgage Broker on 2013-08-14 10:01:25 AM

    I admit that not every news story they send out is earth shattering news. If I don't think it is relevant, I delete it. FYI, there is a really cool button at the bottom of each mortgagebrokernew.ca email that will allow you to Unsubscribe. Then you wouldn't have to read anything from them again

  • Dr. Grammar on 2013-08-14 10:08:27 AM

    In other breaking news, someone, somewhere may or may not be happy/sad with some incident that may or may not occur today.

  • Ron on 2013-08-14 10:09:24 AM

    I'm with you Kim, no idea why people like to post negative comments about an article to make themselves more relavent to whom I don't know. Not interested delete the email like everyone else does my friend.

  • Paul J Rocha on 2013-08-14 10:15:48 AM

    Folks I think that we just missed the entire point of having a social site. The concepts is for users or fans of that site to interact by sharing opinions. If all everyone ever did was agree 100% with stories then there would be no need for social sites.
    Just because I disagree with this article does not exclude me from liking other articles, thus why I am still a subscriber.

    This is just my 2¢.

  • BC Broker on 2013-08-14 12:06:34 PM

    This whole situation is ridiculous, from the first story printed that talked about CMHC “tightening” lending to this story. First of all they did not restrict lending, they did what they have been doing for decades – they announced a cap on the insurance amount due to them coming closer to their annual cap – which for the record is 10 billion more in 2013 than 2012. 350 million per lender might seem like a drastic cut, but there are very few lenders who fund more than that in a month outside of the big banks. There are also two other insurers in this country – or have they suddenly closed up shop?

    As for cancelling pre-approvals… well given that there is less than a 30% close rate on preapprovals, this really should not be that big of an issue. People forget that when a lender issues a pre-approval they have to hedge funds to hold the rate, that impacts their ability to lend in some cases. This should be a perfect opportunity to pick up the phone and have a discussion with your clients – make a decision on what they want to do, and do it.

    As for the negativity – lay off – you just make yourself look bad.

Broker news forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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