Mortgage professionals have been quick to praise Home Capital (Home Trust
's parent company) after it suspended 45 brokers for allegedly falsifying documents. Still, they've been just as quick to put the case in context.
“I don’t think there is ever an excuse for taking shortcuts; there has certainly been some mortgage rule tightening and the guidelines can be difficult to get a client qualified, but they are there for a reason,” Janet McKeough of Verico
Success Mortgages told MortgageBrokerNews.ca. “Whether or not we agree with the guidelines, we have to abide by them and I applaud Home Trust.”
Home Capital announced Thursday it had severed ties with 18 independent brokers and two brokerages – a total of 45 brokers – after an investigation pointed to falsified information about borrowers’ income.
The contracts were suspended between September and March and the lender attributes these suspensions to a loss in mortgage originations. Still, the company is not alleging brokers falsified property values or credit scores.
But while tightened guidelines – especially for certain borrowers requiring alternative mortgages – may have enticed brokers to take shortcuts, industry players believe that is no excuse.
“Doing this is doing a disservice to your clients by putting them in a mortgage they can’t afford,” said McKeough, one of the founding members of the Canadian Mortgage Brokers Association.
, president of Dominion Lending Centres
, said in a release early Friday that it is not an industry-wide issue.
“The fact is, Canada has the most highly regulated lending sector in the world,” Mauris said. “This clearly appears to be an issue of a small group of people choosing to go outside of the laws that govern the lending space and the system did what it is designed to do – it caught them before any losses were sustained. I think this underpins the high level of oversight and stability of our industry.”
Brokers are already applauding Home Trust for its due diligence. Its announcement was made along with the release of its second quarter earnings.
Home Trust made a net income of $72.3 million in the first half of 2015, down 1.9 per cent year-over-year.
FSCO has yet to release the names of the brokers Home Trust has suspended.
MortgageBrokerNews.ca has called both Home Trust and FSCO and we will update the story as it develops.