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Mortgage Broker News | 27 Mar 2017, 08:15 AM Agree 0
In an opinion piece, once advisor is suggesting the government should crack down on the alternative lending market
  • Ron Butler | 27 Mar 2017, 09:44 AM Agree 0
    How perceptive of this gentleman, if a group of people exist that wish to finance houses and a bank will not do the deal these people will seek out alternative financing and look to mortgage brokers to supply that need. Wow, I can see how he got to be an advisor based on that brilliant insight.

    It is laughable to blame the well for supplying water to thirsty people, the right question is why are they thirsty. The massive growth and proliferation of MICs in the last 2 years is a response to a market need. Mortgage Brokers are the intermediary but we did not create the need for the product. In our culture today there is an incredible need to blame someone for something, nothing can ever be the confluence of trends and events there always needs to be a "villain". Well not this time, mortgage brokers are just doing their job of bringing together borrowers and lenders. He needs to find out WHY there is such a need for non-bank lending before he points the finger at mortgage brokers.
  • Bev Gay | 27 Mar 2017, 10:16 AM Agree 0
    Well Said!
  • Ron | 27 Mar 2017, 10:31 AM Agree 0
    More homes, is the only move that will bring the market under control, to many Buyers not enough product.
  • Brian | 27 Mar 2017, 10:50 AM Agree 0
    The private lending sector (i.e. those not influenced by CMHC insurance) are the only lenders truly pricing risk. If you want an unbiased, market reflecting risk assessments on loans - and hence pricing (i.e. interest rates) - then one needs to look no further than the private lenders, which are de facto the "real" lenders. The banks and other CMHC insured lenders are simply playing the lending game with no skin in the game. The author spouts non-sense. If he wants to see true, risk considered lending... If he wants to reduce government influence in the real estate market... Then the solution is simple - reduce CMHC's distortion of risk shifting from the banks to the taxpayer. Have all lenders join the private lenders in taking the risk with the reward, and properly analyzing and pricing the risk.
  • Private lender | 27 Mar 2017, 11:01 AM Agree 0
    Brian, I agree with you completely. The alternative lenders are true lenders and true underwriters who lend on a case-by-case basis, where brokers face disclosure requirements and regulatory requirements to a higher level than on a simple bank transaction. It takes a knowledgable broker to put together an alternative financing package for a client. The writer of this article is very naïve and doesn't understand this space very well.
  • nick | 27 Mar 2017, 11:07 AM Agree 0
    Soheil Karkhanechi's comments are self serving as an investor. He does not like the competition and wants to see the market values drop. If you reform institutional alternative lending , clients will go to the private market which brokers also serve. Does the writer also want the government to tell private individuals how to lender their money. Brokers don't set the rules and the products, we service the market perhaps mr. Karkhanechi should put his own agenda aside and think before he posts such nonsense.
  • Amber | 27 Mar 2017, 11:10 AM Agree 0
    Who is this guy? He is a private investor, which means he is one of the people supplying to that "alternative lending space" he finds so hideous! I have seen private lenders take advantage of people down on their luck or who have gone through divorce or made mistakes in the last 6 years that need time to correct. This is who we are helping! The banks aren't interested in them and they certainly aren't the reason for soaring housing prices. Supply and demand. It is basic economics! If there was enough supply on the market it wouldn't matter how cheap you made money the price wouldn't continue to go up because no one would want the extra houses. How is this getting looked over?
  • Julie Stamp | 27 Mar 2017, 02:18 PM Agree 0
    Agree completely, advisor to whom? The alternate market deals that I have placed are a much needed commodity in a market that since 2008 has become increasingly difficult for the average Canadian to qualify through A or bank lenders, Equifax has tightened their credit rating policies, allowed phone companies to report to peoples credit bureau's, recent unfortunate changes last year to the Mortgage Rules effectively bolstered the Big Banks reach and reduced their competition in one fell swoop. Now Canadians that behave fiscally responsible and have equity in their homes or are putting large equity into a new purchase are penalized at higher interest rates than those that do not, this is just another example of knee jerk reactions being made to a situation without the full understanding of what is going on. What is transpiring is supply and demand, if the government wants to reduce home prices and slowly cool off the market then supply must increase and quickly. Trying to blame any other singular segment for the increased housing costs is simply a witch hunt, rates are low right now true, however qualifying for mortgages has changed dramatically since the 2008 USA crash. Amortizations were reduced dramatically, from 40 years to 25 years, qualifying rates are at Bank Of Canada posted rate, Down payment requirements have increased on purchases above $500k, investment properties require 20% down payment, credit score requirements with A lenders have increased dramatically for the main applicants, refinances are now capped at 80% of the value of the home, appraisers are now the norm on most deals unless high ratio insured. All of the above combined has made it much more difficult for Canadians to qualify through traditional A lenders, and while it might be considered prudent, let's not forget the crash in the US was mostly due to greed and a lack of any morals by the highest banking officials all to line their own pockets at the expense of the public. As a Mortgage Broker I can say my clients that require alternate lending are not out there buying up other properties, in point of fact they have to have the alternate lending for the self employed, divorced/separated individuals, sick or other life impacting events that have led to a credit situation that leaves them no other alternative. In an alternate universe let's suppose the Alternate lenders are removed from the table, who then is going to provide mortgages to all of these people? Private lenders??
    This seems like another case of someone saying something perhaps with the goal of lining their own personal pocket. Options need to exist for all types of clients, and many Alternate lenders do not lend on Rental properties or also have increased rates and other prohibitive conditions on the products. In my opinion this is another fake news story aimed at trying to reduce the competition in the market the same way the banks do, to further their own ends, which always comes down to how much profit they can post.
  • Bruce Hale | 27 Mar 2017, 03:11 PM Agree 0
    I agree totally with Ron Butler and Brian. This so called Investor should probably look elsewhere to put his money. Try G.I.C.'s No Risk Mr. Investor and they are Insured by the Government! C.D.I.C.
    I would suggest that there is more Fraud and Shady Practices in the Branch Banking system than anywhere else. They should start there first.
    Hasn't anyone been reading the latest on "Bank Employees" and there exaggerated Sales Targets and the lies they tell there customers and information they omit to reach those targets.

    March 15th 2017
    Financial Consumer Agency launches review of business practices at banks.
    The review, which is set to begin next month, comes after the CBC reported that some employees from Canada's five biggest banks alleged that they felt pressured to upsell, trick and even lie to customers to meet sales targets that were unrealistic.
  • | 27 Mar 2017, 05:43 PM Agree 0
    well said by a private investor who is probably losing business to the alternative mortgage availability. so I guess he wants the rates to match what he charges. Really one sided
  • Mike Samson | 27 Mar 2017, 06:16 PM Agree 0
    So Soheil Karkhanechi is a private investor but is complaining about private lenders in the mortgage market. Hmmm. Sounds like Soheil is a little sour because he is not getting any business. Perhaps his rates are too high and his loan amounts are too low? Since when are his investment requirements the arbiter for the lending market? This is sour grapes all day long. Go make some vinegar my friend.
  • Kash Toor | 28 Mar 2017, 01:46 AM Agree 0
    Agreed with Ron Butler on this one and well said!
    I also agree that banks need more enforcement and to provide the correct tools prior to having thier staff sell or upsell any type(s) of products, they need more "cracking down" not us.

    I mean, in all honesty we as Mortgage brokers are providing so much disclosure, sound financial advise, transperncy, including risks, material risk, cost of borrowing etc.

    We didnt create the "thirst"
    We continously find solutions to an ever changing industry, which quite frankly, the majority of consumer can appreciate

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