The double standard that loses clients

The double standard that loses clients

The double standard that loses clients It’s a necessary step in the origination process, according to industry professionals – but only in the broker channel.

Brokers are asked by lenders to verify funds conspicuously placed in accounts by clients prior to closing, and some are arguing the big banks aren’t held to the same requirement.

“The lender requires us to verify where gifted income comes from in a client’s account,” Jeff Evans, a broker with Mortgage Architects Canada Innovative Financial, told “I don’t mind that, but all lenders should be held to the same standard.”

Evans told about a recent client he lost to the bank, when the bank wasn’t required to go to the same trouble to confirm the history of not only her account, but the account of the person who had gifted her the funds.

“I was asked not only to confirm my client’s account, the lender also wanted three month’s history for her relative’s account (who the gifted funds came from),” Evans said. “She walked into the bank and got approved.”

As brokers have pointed out, verifying the source of a down payment comes from is required to cover regulations.

“Down payment source is important to cover Fintrac regulations,” broker John Meredith wrote in the comments section of “All Realtors must complete a Fintrac form for source of down payments. Don't expect deals to close without proper documents.”

But brokers can arm themselves against last-minute deal issues by ensuring the income – and account history – is verified early in the origination process, say industry players.
  • Sean Binkley, DLC 2015-11-16 8:50:01 AM
    Stop using a lender that wants to see the account of Mom and Dad gifting the funds, there's lots out there... Seems to me the broker interviewed could have just changed lenders instead of losing the deal?
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  • Jake Abramowicz 2015-11-16 9:32:34 AM
    I could be wrong here however if a client of TD is dealing with a TD Branch, that branch has access to all sorts of information we are not privy to. Say I send my deal to monoline X who has never met the client. Of course they'll ask for much more info than the branch would, since the branch can dip into the accounts to see what's happening where.

    This is indeed a double-standard but one that is a hard fight to take up because of this access to information.

    (I'm using TD as an example of a branch-based lender)
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  • Jim T, Advent Mortgage 2015-11-16 9:41:06 AM
    Simple solution - use lenders that do not require to see 3 months history of the giftor's account.
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