Media targets brokers

Media targets brokers

Media targets brokers In yet another mainstream media article about rising housing prices, brokers bare the unfair brunt of the blame.

Brokers weighed in following an opinion piece in the CBC that argued for a clamp down on alternative lending – and suggested brokers were to blame for its proliferation.

“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,’” Ron Butler, a broker with Butler Mortgage, wrote in the MBN forum in response to the article. “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.”

Butler was responding to a CBC opinion piece by a financial advisor who argued the government should target alternative lenders in a bid to address housing affordability.

“If we want to address the underlying causes of irrational price increases in housing, we should stop looking for convenient bogeymen like ‘foreign buyers’ and ‘house flippers.’” Soheil Karkhanechi, a private investor, writes in a recent opinion piece for the CBC. “Instead, we need to tighten credit conditions for speculative transactions in a targeted manner that does not negatively impact other parts of the economy. The best way to do that: make nonconforming mortgages more expensive.”

Karkhanechi suggested the alternative market is less prudent than the A side and that brokers have a vested interest in offering alt-A loans.

“Much of the nonconforming loan market is brokered and there is often no direct contact between the borrower and the lender, but there is significant economic incentive for the broker to complete the transaction,” he writes.

The article, understandably, drew the ire of MBN readers.

"If you reform institutional alternative lending, clients will go to the private market which brokers also serve," one commenter wrote. "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."

Related stories:
CBC paints brokers with same brush as ‘shadow’ lenders
CBC apologizes to brokers and monolines…sort of
  • Appraiser 2017-03-28 10:19:25 AM
    If you want to help curb the rising prices, go after the Real Estate Agents who bare ZERO responsibility other than collecting a fat commission check. Have the agents responsible to their clients for the entire transaction including the end sales price. You would quickly see the crazy multiple offers and unrealistic over asking sales prices drop dramatically.
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  • Paul Mangion 2017-03-28 10:50:02 AM
    The only way this will stop is to try to curb the speculation from many multi home purchasers. All the rule changes done so far really doesn't do anything to stop the speculators and only hurts the first time home buyers. Bigger taxes on single unit third, fourth and fifth home buyers might help slow this down. After all why would anyone invest in real-estate with such low cap rates unless they were speculating on a price increase? It is 1999 al over again! Clamping down on alternative lending will do nothing but hurt the most vulnerable.
    On another note I don't approve of my tax dollars funding sub rate broadcasting corporations with too many un informed opinions so maybe that would be a good place to start to make changes for the better.
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  • LanceH 2017-03-28 11:16:30 AM
    Hi Paul. I have to disagree with blaming speculators. Nobody buys a house at today's prices and leaves it empty. They live in it or rent it. There's a huge demand for both types of accommodation right now. The prov gov's caused this with their Places to Grow Act, the Greenbelt Act, Toronto Land Transfer Tax. Additionally might be the huge influx of ppl to the city and low interest rates.
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