Less than a week following fresh mortgage rule change announcements, OSFI is expressing its concern over inadvertent mortgage risk in the channel; for their part, many brokers are already doing what they can to avoid the issue.
“Just this week we had a client who provided documents, and we could tell the income had been, should we say, adjusted,” Len Lane, broker/owner of Verico
Brokers for Life, told MortgageBrokerNews.ca. “It’s something we’re always aware of.”
And while brokers have set their sights on minimizing the risk of submitting inaccurate income documents, the issue is also on OSFI’s radar.
“It has come to light that institutions have been, I would say inadvertently, making mortgages to people whose income has been falsified,” Jeremy Rudin, superintendent of financial institutions for OSFI, told The Globe and Mail
. “One of things we’ve been doing is encouraging sound risk management.
“And as we set out in our guideline on mortgage underwriting, income verification – checking to make sure the borrower has the ability to carry the loan – is an important part of sound underwriting.”
For their part, many brokers verify income, themselves, before sending files to lenders.
“If it’s a smaller company, and especially if the letterhead looks fishy, we make calls to the company to verify,” he said, “even though the lenders don’t like us doing that.”
With that one particular client, Lane severed the business relationship.
“That file hadn’t been submitted to the lender, and there is really no real place to report things like that,” Lane said. “Lenders have become more diligent with their underwriting and they’ve started asking for more documents.”