Why B20 is a blessing, not a curse

Why B20 is a blessing, not a curse

Why B20 is a blessing, not a curse The mortgage industry was rocked by updates to Gideline B20 last month, and while many expect the sky to fall, others believe 2018 can be a fruitful year if brokers learn how to diversify.

Claire Drage told Mortgagebrokernews.ca that business will be especially lucrative next year for brokers who diversify their access to lenders and products.

“For example, a mortgage broker right now that only focuses on A business will need to expand into B business, private mortgages, alternative financing solutions and vendor take backs,” said the Mortgage Alliance broker.

“Brokers will need to start diversifying into more financing solutions that are outside the box.”

Drage’s 56-agent team has spent the last two years expanding into the private mortgage market so that their clients have every available option presented to them. “If an agent right now is only using three lenders, that scope has got to expand in order to better serve the need of the consumer,” she said.

Expanding lending networks aside, Drage noted that consumers will be relying on brokers to help them navigate the new terrain, and therein is a unique opportunity for the latter to set themselves apart from competition.

“More and more consumers will need the extensive resources and education that only a mortgage broker can provide,” she said. “And that involves everything from figuring out why they don’t qualify and fixing credit to saving for larger down payments. Brokers also need to help people with their budgets and spending habits.”

Marcus Tzaferis, founder of Morcan Direct, agrees with that sentiment. Although he believes a dire consequence of the underwriting rule changes is that charter banks will control the interest rate environment, he nevertheless thinks a strong consumer impulse for information will carry the day.

“I think whenever large amount of uncertainty gets introduced, it drives them for more information and that’s led the consumer to rely on good mortgage brokers more now than ever before,” said Tzaferis. “It’s going to differentiate the value added that brokers can provide. That’s what we’re trying to do. We’re trying to use every lender and every source of capital we have to help our borrowers get the best product.”

Both Drage and Tzaferis agree that brokers returning to basics will help them succeed in the new landscape.

“There’s a huge opportunity for mortgage brokers, at least for the good ones,” said Drage. “Telling clients what they need to hear, not what they want to hear, and positioning it the right way is important. There will be a bigger need for brokers to spend that extra time with budgeting and education.”

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