alternatelenders
MortgageBroker mbabc.ca spring 2014 | 31
Alternate Lending –
10 Questions
Ask the right questions to secure faster approval of your 'B' deals
By Grant Plunkie
Banks and alternate lenders
require different information to make their
decisions. ere have been many times when
I have spoken with a broker, or read an email
and thought: "at was a great presentation…
for a 'bank' deal." e only problem is:
Alternative Lenders are not banks.
Presenting a deal incorrectly wastes
considerable time, especially yours. I was a
broker for 12 years, so I know how much time
it takes to put the package together properly.
If the underwriters don't have the information
to make prudent lending decisions, they are
frustrated and the brokers are no further ahead.
While it takes a bit longer to put together a
very good application, it saves you countless
hours compared to following up on a mediocre
application. A good application also gets your
deal to the top of the underwriter's pile.
Answering these 10 questions will clarify
what Alternative and Private Lenders look for
when underwriting an application. e better
you know your lender and its criteria, the
better you can tailor your application to give
you the highest possible chance of getting your
deal approved and funded.
As equity lenders the priority for us is
obviously equity. at doesn't mean that
income and credit are unimportant, rather,
we look at them differently than an 'A' lender
would. Many brokers start out by telling an
equity lender what the borrower's Line 150 or
T-4 income is. Of course I'm curious, but most
private lenders don't require those documents,
nor do we use
GDS/TDS ratios. I would rather
hear the 'story' of the file: for example, that the
borrower has employment, what they do for a
living and their ability to make their payments.
e same goes for credit. Again, I'm
curious about how the borrower handles
their obligations, but we don't have minimum
beacon requirements. For us, credit history is
an indication of default risk and is used more
for pricing or
LTV decisions rather than for
approval decisions.
If you can answer these questions and
understand how your lender underwrites
using the answers, your deals stand a far better
chance of being approved in less time and with
fewer follow up questions. is is a win-win
for everybody!
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p30-35_10Questions.indd 31 14-05-08 2:30 PM
