The difference between a loan approval and a rejection may rest more on the experience of the broker and the underwriter than the credit rating of the client.
“I think there are two different groups of brokers out there now – the newer broker, and the more mature broker,” says Andrea Haines, regional manager, Eastern Ontario, Magenta Mortgage. “When they (mature brokers) are sending through deals, they aren’t just aiming a dart at a dartboard; even though lending guidelines are tougher, they know which lender is going to be able to do that deal.”
The advantage held by the mature brokers comes down to having honed their skills during the lean times, before rock-bottom interest rates became the norm, she says.
“The more experienced brokers who have done ‘B’ business, who know ‘B’ business – they know what an exit strategy is – they have really quality conversations,” Haines told MBN
. “There are a lot of really great brokers out there who can help make that transition.
“I think a lot of the newer brokers who have gotten into the business in the last three or four years when things have been a little easier, a little more transactional, rates have been low – they haven’t got that experience on the ‘B’ side,” she continues. “I think they are struggling more with deals that are more complicated and selling that commitment because they haven’t seen or lived through what some of the more mature brokers have.”
The difficulty doesn’t just land on the broker’s lap, but on that of the underwriter as well, adds Haines.
“I think it is harder for the underwriters too, because you don’t want to be responsible for taking wrong documents,” she says. “I think there is a hesitancy to put yourself out there; the (loan) exceptions just aren’t being made.”
But whether the broker or the underwriter is a seasoned veteran with decades of experience, or a neophyte fresh out of college, there is one simple method to ensuring that a difficult deal can be done.
“The relationship between the underwriter and the broker is so important. Underwriters need to pick up the phone – stop emailing, just pick up the phone” says Haines. “Otherwise you are emailing back and forth and it just escalates.”