Mortgage Broker

Consumer Guide 2015 mbabc.ca | 33 so mortgage brokers are able to get deals approved with credit unions that may not fly with banks." Just as most customer savings held in Canadian banks are protected by the Canada Deposit Insurance Corporation, deposits held in credit unions are protected by the Credit Union Deposit Insurance Corporation. Additionally, credit unions are community oriented and have a mandate to serve members and local communities. They are also not-for-profit entities that return profits to their own members, which is an added advantage to borrowers who hold a mortgage with them. Trust companies Trust companies are similar to banks but, like credit unions, offer a bit more flexibility due to less stringent regulations. For example, Home Trust, a public Canadian trust company that holds $25 billion in mortgage assets under administration, offers a range of financial products and services, including mortgages, home renovation loans and credit cards. "Home Trust differs from a traditional bank in that we focus on homeowners who typically do not meet all the lending criteria of traditional financial institutions," explains Ron Cuadra, vice-president of national sales. Specifically, Home Trust caters to self-employed entrepreneurs, people with past credit issues, and borrowers with equity in their property but who do not qualify due to lack of provable income or limited credit history. Wholesale lenders Wholesale mortgage lenders, also referred to as monoline lenders, such as MCAP, First National or Street Capital Financial, is one that focuses solely on mortgages and works exclusively with mortgage brokers. Because they don't deal with the general public, they avoid the cost of retail stores. However, this also forces them to be more competitive in the mortgage market – to the benefit of borrowers. "Our only distribution network is through mortgage brokers across Canada – no direct-to-consumer model," explains Ben Kawa, national director, sales and strategic relationships, with First National. "By aligning ourselves to mortgage brokers who provide choice to Canadians, we have to keep sharp in terms of our offers to our distribution network." In fact, with over $83 billion in mortgage assets under administration, First National is the biggest non-bank lender in Canada. And by specializing in mortgages, monolines are able to offer flexibility that non-specialists may not. For example, says Megan McDonald, VP of sales for MCAP, a monoline with $43 billion in mortgage assets under administration, MCAP offers a wide range of mortgage terms relating to prepayment options, refinancing and renewals, "and the flexibility offered by MCAP can result in any associated penalties being significantly lower." In addition, she points out how specializing in one product improves customer service. "We have an online portal designed for customers to review their mortgage details 24/7, at times that are convenient for them. Our call centre agents are mortgage experts specifically trained for mortgage-related questions and they receive customer satisfaction ratings of over 90 per cent." Kawa agrees: "Everyone here at First National is wired for mortgages. Customer service calls are picked up by people who know mortgages and have not had to try to learn a myriad of bank products . . . We are mortgage specialists." Private mortgage lenders Mortgages can also be privately funded. When two or more investors join in funding a mortgage, it's called a syndicated mortgage. Companies that connect borrowers with lenders to fund these loans are called mortgage syndicators. As private lenders, they generally have higher rates, but offer greater flexibility in their loan terms. They are also able to make quick decisions about applications, structure loans creatively as needed and fund on very short notice. Mortgage brokers have exclusive access to this type of private funding, which is not just used by residential mortgage applicants, but also by developers, builders and commercial mortgage applicants. Lanyard Financial, named one of Business in Vancouver's biggest asset- based lenders in B.C. for the last five years running, is one such company syndicating tailored, private mortgages. "As a private lender, we are free to assess every loan request on its own merits," explains account manager Sam Fogell. "While we are regulated, we lend capital based on different criteria than a traditional lender. While a bank or credit union is typically very concerned with borrower/guarantor income and credit scores, we focus on the value of the real estate. By focusing on the value of the real estate, we are able to provide solutions for borrowers who cannot satisfy traditional banking requirements." Lanyard Financial's products are primarily designed as short-term "bridge" solutions – often with interest-only payments instead of the amortized payments required by most banks. "On the residential mortgage side, our typical borrower is 'property wealthy' but does not show sufficient income to qualify for the loan with the bank," explains

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