When the recession hit, brokers turned to the B lenders to bridge the gap during the lean years.
But for Vic Lehan, a broker with Mortgage Architects
in hard-hit southwest Ontario, even the ‘B’ lenders were few and far between, and only now are they coming back to an area still feeling the effects of a depleted auto industry.
“Southwest Ontario is heavily auto-influenced,” says Lehan. “When the recession hit in 2008-09, First National didn’t want to do business, Home and Equitable
Trust basically disappeared, and Optimum said they weren’t going to do deals west of London.”
Lehan, who operates out of Essex County in the primarily rural area around Leamington, has been living in the north shore of Lake Erie for 35 years – but those years immediately following the recession left him scrambling for lenders willing to fund a mortgage.
“In 2008-09, I dropped 50 per cent in business; it was quite difficult,” he told MortgageBrokerNews.ca. “I heard other brokers say ‘You can switch to the B business’, but the ‘B’ business wasn’t here. I almost considered taking on a second job – but that sends the wrong message to clients.”
The ‘A’ lenders were still available, Lehan says, but in an area hard-hit by a decimated auto industry in Windsor, there were too many people with damaged credit who simply didn’t qualify.
“Sure there were great deals on homes – one house in Windsor sold for $35,000,” he says. “People were coming to buy, but it scared off a lot of lenders at the same time – the bargain-basement prices and depressed economy.”
Lehan says there are some lenders who are there to do a deal – even if that deal comes with a lot of restrictions.
“First Swiss Lending are showing to be a reliable ‘B’ lender,” he says. “Sure, there are a lot of restrictions, but they are funding deals and are eager to do business. And Bridgewater will do a bruised deal, an ‘A minus’ deal.”
For Lehan, his bread and butter is the Mennonite community, who are heavily invested in the greenhouse industry growing fresh vegetables for the Toronto market.
“The bulk of my business are the Mennonites; in fact, I hired a Mennonite at my office, and he is doing very well,” he says. “After those years of holding on by my fingertips, business is making a comeback. I expect to make this year what I had lost in the previous two years combined.”
But the road back will not be easy, Lehan admits.
“Lenders like Equitable Trust are still doing some business in thearea – but it takes a long time to get a response. And Optimum, especially around Windsor, you are looking at a maximum LTV of 65 per cent,” he says. “But we are definitely on our way up now.”