Broker frustrated by tightened lending

Broker frustrated by tightened lending

Broker frustrated by tightened lending Monoline lenders in Alberta are becoming more strict with income qualification in the wake of the plummeting oil industry.

“Lenders in Alberta don’t want to use the full two year average for income (anymore) and they often only want to use 25 per cent of bonus or overtime income (for qualifying),” Jean-Guy Turcotte of Dominion Lending Centres Regional Mortgage Group, a broker based in Red Deer Alberta told “More of the monolines have been cutting back on income allowances.”

As a result, Turcotte admitted he has had to send more deals to the big banks, which have been less conservative with underwriting in the wake of falling oil prices.

“And it’s the investors pulling the strings, not the underwriters,” Turcotte said.

It’s understandable that mortgage lenders are becoming more conservative.

Between January 1 and May 7 of this year, Alberta employers notified the province of plans to terminate 9,342 jobs, according to Global News.

And according to Jason Gilmore, a StatsCan analyst, 13,000 jobs were axed in the province’s energy sector between September 2014 and January 2015.

Add that to the fact that at least one mortgage default insurer believes delinquencies are expected to spike in Alberta.

“Our expectation is we’ll start to see [mortgage delinquencies] potentially in the second half of this year, so third quarter, fourth quarter it will start to pick up,” Stuart Levings, chief risk officer with Genworth MI recently told Business News Network.

However, not all Alberta-based brokers are noticing the same trend.

“I haven’t noticed any changes like that,” Calgary-based Matt Leggett of CanWise Financial told “All the non-bank lenders I have dealt with still consider bonuses and two year average income.”
  • John W 2015-05-28 11:35:02 AM
    He makes a key point here. It is the investors driving the bus. They get whatever they want and don't have to answer to anyone. Not a good situation for us. We don't have the opportunity to reason with them.
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  • Jo 2015-05-28 11:42:26 AM
    It's an uphill battle all the time now.
    Lenders that no longer want to lend, insurer's that refuse to take any risk, underwriters whose job it now seems is to find a way to decline a deal rather than find ways to make the deal work. Regulations on mortgage financing gets tighter every day while high interest credit card companies are left alone to gouge customers as they see fit. Every lender has their own twists on policies and differ on what types of deals they do or what documents they will accept. Its becoming more than frustrating, its becoming a damn joke.
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  • RANJIT DHILLON Centum 2015-05-28 11:47:08 AM
    I think the lenders are very particular about the documentation now a days, it make sense to have rules of verification of Incomes but sometimes they are unreasonable and that is where the broker frustration comes in.
    In 2015, I have been looking at spending 3 to 4 times the time I use to spend on a deal in 2011. the frustrating part is that when the lender has given us guidelines about documentation and then they ask for much more on A Plus deals,
    The Lenders should understand a experienced and professional broker is competing with the banks who would do a deal in a jiffy.

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