Broker: Deals require more planning to protect efficiency ratios

Broker: Deals require more planning to protect efficiency ratios

Broker: Deals require more planning to protect efficiency ratios The push to efficiencies has slowed file processing down, with brokers having to more carefully plan and execute each deal before they even begin the paperwork.

“All the lenders are really looking at are your ratios, meaning the ratio of the number of files we send to an institution to the number of (deals) that actually go to the notary or the title lawyer,” John Dunford of Dominion Lending Centres Centre Ouest told “So if you send 100 files in and 50 per cent of those go through, the lender doesn’t really want you to refer them leads because each one of those files costs them about $600 to look at.”

To avoid a glut of rejected deals – and a negative impact on broker/lender relationships – Dunford is having to spend more time meticulously pouring over each deal, ensuring everything is in order before starting the submission process. And when it is ready, he is mindful of which lender he sends it to.

“We try not to send a file to more than one lender so we’re spending more time having to go to the lenders themselves; either the mortgage underwriters or the BDMs spending more time trying to ensure their lender will take that file,” Dunford said. “We’re spending much more time on the phone anticipating whether a mortgage underwriter will accept (a file) or not.”

And this pickiness is another facet of the ever-chaning regulatory environment.

“I think really what’s happening is the criteria that all the lenders are using are similar but not the same and it’s an ever-changing business on a day-to-day, week-to-week, month-to month basis and you either jump in with both feet and learn everything there is to know about each lender or your ratios are going to hurt,” Dunford said. “If, for example, you have three lenders that are lending at a 3.29 per cent for five year fixed, who are you going to send it to?

“Well, because of something in the file you may not be able to send it to two of the three (lenders).”
  • Doing it Right 2014-02-06 4:25:51 PM
    This article points out a valid step in the right direction. For years, Lenders have been receiving poorly put together applications and wondered if the broker even thought about it before they pressed the submit button. This is wasted time and effort on both ends of the application and lenders are less likely to be forgiving when report cards come around.

    You should not be selling a mortgage if you are unsure how to underwrite a mortgage or the steps involved in the adjudication process. Before submitting an application, agent's should fully review what they are submitting and be aware of any questions they are likely to be faced with after the underwriter reviews it. Does it make sense? Will the lender/underwriter be able to see the "picture" and put the puzzle together with the pieces I am or will be including with the application? Would I fund this mortgage as presented? Is there anything I am assuming that might result in me changing the information initially presented?

    Having these answers in advance of submitting the application will save your reputation with your customers, underwriters, and your BDM's. Do it right the first time.

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