An opportunity for monolines?

An opportunity for monolines?

An opportunity for monolines? When it comes to second mortgages, there aren’t enough viable options in the broker – and bank – space, argues one player who is calling on his lender partners to distinguish themselves by focusing on this segment.

“I think there should be better options for second mortgages; there should be more avenues for clients with good credit to obtain second mortgages from A-lenders,” Steve Gilmour, a broker with Dominion Lending Centres Alliance, told “Most of the time these products are costly and I would like something with a competitive interest rate; people with good credit shouldn’t have to pay exorbitant amounts of interest.”

Gilmour says clients who require a second mortgage often have to turn to the private segment and face high interest rates and argues high qualified clients are being let down by lenders.

So should lenders offer lower rate second mortgages?

Not so fast, says another leading player.

“No, (monolines) are not built for that kind of risk; some already engage in B-lending so they already have some exposure to risk,” a broker, who spoke with on condition of anonymity, said. “Why would they getting into that space? Second mortgages are highly risky and the regulator wouldn’t approve it.”

The broker argues that the most clients who require second mortgages are risks; those with credit issues or who are highly leveraged.

“I don’t run into prime clients who require second mortgages a lot,” the broker said. “Usually it’s people with financial issues.”
  • OkanaganBroker 2015-10-19 10:58:10 AM
    If they are an A client needing a 2nd mortgage, I simply take them back to their existing lender, get paid on the new money...?? Obviously we are talking non A clients ??
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  • Kristin Woolard 2015-10-19 11:16:59 AM
    I do run into A+ clients requiring - or more accurately - wanting a second mortgage. These are prime, sophisticated clients and the request is to leverage their equity as an investment tool. More often than not I set them up with a HELOC with a credit union and they invest and pay off as needed. More selection of stand alone second mortgages would be beneficial.
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  • Gerald D 2015-10-19 11:24:23 AM
    Mortgage financing is like painting. 1st mortgages and monolines are like house painters. 2nd mortgages are more like canvas painters. There is so much more to understand about the client, and I don't think the volume business will ever really fit it.
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