A growing number of files are being sent back by lenders with demands for additional information but with too little time to meet closing, argues one industry veteran.
Lenders are sometimes informing brokers of issues with files after it’s too late, according to one industry player who has lost deals as a result.
“I don’t mind if I’m told by the lender two weeks before closing if there is an issue with a file, but they sometimes tell you the day of closing that the application needs something changed,” Ross Taylor of Mortgage Intelligence
told MortgageBrokerNews.ca. “In one case they raised an issue at the closing about a problem.”
In one case, Taylor had worked on a client file for two months only to have the deal fall apart at or near closing – something that took all parties by surprise.
According to Taylor, the lender informed him on the day the property was meant to close that the lawyer who had signed off on the deal was on their “do not work with” list.
“It was a refinance deal and I lost a $5,000 commission on a $480,000 mortgage,” he said.
Taylor suspects the fulfillment specialist didn’t read the documents closely enough and only caught it when it was too late.
And although the BDM tried to get an exception to allow the deal to go through, nothing could be done.
It could be a case of high volumes forcing underwriters to spend less time on each file, according to Taylor.
Another reason for the uptick in last-minute requests could be the mortgage rule and underwriting changes that brokers – and lenders – have grappled with over the past few years. They have underwriters crossing their Ts and dotting all there I’s, especially in light of recent broker fraud allegations by a leading monoline.
But losing a deal in the home stretch, for whatever reason, is something players can guard themselves against, argues one broker.
“You have to have a checklist and you have to review your documents before sending them to the lender,” John Panagakos of Dominion Lending Centres
Home Financial told MortgageBrokerNews.ca.. “Scrutinize everything because we shoot ourselves in the foot by not reading every single line of a document.”