Mortgage Broker is the magazine of the Canadian Mortgage Brokers Association and showcases the multi-billion dollar mortgage-broking industry to all levels of government, associated organizations and other interested individuals.
Issue link: http://digital.canadawide.com/i/309414
alternatelenders 7 8 9 10 34 | spring 2014 mbabc.ca MortgageBroker tolerances; so again, get to know your lenders. Even pricing can be tied to LTV. Some lenders will give great rates at 50 per cent LTV but not even look at a deal at 80 per cent LTV so if you pick the right lender, everyone wins. What is the financial strength of the borrower? What work do they do? What is their credit like? Do they have assets? If it is a construction loan, do they have the necessary experience and a record of success? Whether it is a $25,000 loan or a $1,000,000 loan I am underwriting, I want to know the borrower I am dealing with and that there's more than just a hope that they can make their payments. Either way, mortgages represent significant sums of money and we have investors that want to know we are lending their money wisely. What are the twists to the deal? We all know there is at least one, that's why your favourite financial institution didn't fund this deal and now you're calling me! How did they get into a situation requiring alternative financing and how will they get out of that situation? Just because they need money from an alternative lender doesn't mean they're bad people; they just ran into some challenges that made them "un-bankable" for a while. We've been able to work through some seemingly impossible deals because the broker was forthright about the twists of the deal. is way we knew what we were getting into when we issued our Offer to Loan and were able to find a solution that benefitted the borrower, but still protected our investors. How will the loan be repaid and when? e exit strategy is important to an alternative lender. Private lenders like their funds to be loaned out, but also like to see them come back in. We generally favour shorter-term loans in the six-month to two-year range rather than longer terms such as five to 10 years. e borrower usually has a specific issue that brought them to us, such as lack of verifiable income or bruised credit. One to two years should allow them to get back on track and hopefully you will work with the borrower to get them to an 'A' lender as soon as possible. at way, you have another loan to place for that borrower! Good for them, and good for you. What are the intangibles? Quite oen these can save the day and the deal. Do they have another property to use as collateral or perhaps an inheritance or an insurance settlement that can be verified? New work or a new spouse to add to household income? is is where you have to understand your borrower's total situation so that you can tell us why we should fund he deal. We don't meet the borrower personally, so we rely on your ability to tell us honestly and accurately – the good and bad points – about the deal. If you answer these 10 questions you will find your applications give the underwriter the facts they need to understand and fund your deals. ese questions are a valuable starting point and with experience you will learn how to dig deeper into a file to find important and necessary information to get your alternative applications funded. Don't be afraid to ask these and additional questions when you're meeting a potential borrower. e borrower will understand you are being thorough and working hard on their behalf. Better questions lead to better information which leads to more funded deals! • Grant Plunkie has been a licensed mortgage broker in B.C. since 1998 and he brokered residential 'A' and 'B' mortgages and small commercial loans for 12 years. In 2010 Grant joined Paradigm Mortgage, a Western Canadian MIC, as Paradigm's Business Development Manager and Senior Underwriter. p30-35_10Questions.indd 34 14-05-08 2:30 PM