Consumer Guide 2015 mbabc.ca | 41
A
nyone who has applied for
a mortgage recently knows
that the Canadian lending
landscape has changed in
the past few years. The U.S.
mortgage crisis in 2008/2009 prompted
many Canadian lenders to tighten up
lending requirements, and borrowers
today must meet stricter guidelines and
provide more documentation than just a
few years ago. Many borrowers have been
frustrated to discover that they no longer
qualify for mortgage financing from their
previous lenders.
However, niche mortgage lenders have
grown to fill the gap and are lending where
others have pulled back. The problem for
consumers is these niche lenders are not
always high profile and many do not have
storefront operations, so they are not always
readily available to the average borrower.
Mortgage brokers continually monitor the
mortgage market and have lists of these
lenders to approach when an application
requires thinking outside the box.
Some of the common reasons a
borrower may need to obtain their
mortgage from one of these niche lenders
include credit issues, income verification
issues and property issues.
Credit issues: Many people have
had their credit tarnished during divorce, job
loss, illness or even just youthful indiscretion.
At one time, many lenders would still work
with these borrowers, but today most
lenders have raised their credit requirements
substantially. This can be frustrating for
potential borrowers but there are often
still options. This segment of the market
has always been served well by mortgage
brokers who work with specialty lenders.
Each of these lenders has its own specific
requirements, and mortgage brokers keep
up to date with the changing guidelines and
can assist their clients in obtaining financing
from the appropriate lenders.
Income verification
issues: Another area where
borrowers will find a big change in lending
requirements from a few years ago is
income verification. While variations of
"stated income" or "low documentation"
lending were common at one time, now
most lenders require tax returns, pay
stubs and other documents to verify an
applicant's income. And there is less
flexibility on the amount of qualifying
income required by many lenders, too.
This combination leaves many borrowers
– self-employed entrepreneurs,
subcontractors and even workers who
receive tips, bonuses or overtime pay
– struggling to meet the new lending
requirements. Mortgage brokers deal
with this regularly and have lenders
with alternative and low-documentation
requirements for this type of application.
Property issues: Even when
the borrowers themselves meet all of
the lender's requirements, they may still
encounter difficulties securing mortgage
financing on certain types of property.
Vacant land, farms, rural properties,
older homes, recreational properties,
construction, land development,
commercial properties and rental
properties all pose unique problems, and
many residential mortgage lenders do not
Look to mortgage brokers for financing solutions
By Karl Madsen
Niche leNders
fill gApS in THE MArkET
