Mortgage Broker

letters to the editor update A "predictive" failure? Here is a letter that I forwarded to Consumer Protection BC yesterday. "I have been working with a client to secure a mortgage. In the course of doing so, there was a need for me to move the client to a new lender. Upon doing so, the new lender requested a new credit report, as the one attached to the file was now over 30 days old. When the second report was pulled, one of the client's beacon scores had gone from 791 (which Equifax would consider 'excellent') to 597 (which Equifax would consider 'fair'). No lender will grant a mortgage to a client with a score under 600. "I have spoken with Equifax twice about this issue (once with my client's participation). Initially, I was told that the reason the beacon fell was because they were now including mortgage balances and… that the balances on my client's mortgages were high. In addition, they indicated that they were now also considering per cent of credit limits being used. "While there was a change in the per cent of usage of credit limits, this should not have made such a significant drop in the bureau. My client has been on the credit bureau for 28 years. She has only had two minor late payments, which in no world would be considered an issue. e credit facilities that had the so-called 'usage' issue have been successfully operated by the client for 27 years and were both issued to her by her employer, CIBC. "ese clients are hard-working [and] pay their bills, [yet] based on a new 'predictive' rating system are now not eligible for a mortgage. Credit reporting should be credit reporting, not looking into the crystal ball of credit. is is reporting to protect lenders, not an accurate report of a client's history. "is arbitrary number is now preventing my clients from obtaining the financing that they deserve. I would like some guidance in how to proceed." I feel very strongly about the new rating system that Equifax is operating. [It] no longer is a reporting of the consumer's credit history, but a predictor model, which is destructive. While a predictor model may serve a purpose, it should not be to destroy a client's ability to secure mortgage financing based on a number. What Equifax cannot see about these clients is that they have $1.475 million in property, $155,000 in RRSPs, one has job tenure of 31 years (the other 14 years) and they have had the same two rental properties for well over 10 years. In their case, I don't see that the predictive model is working. On the other hand, I have a client who came to me to see if he and his wife could qualify for a mortgage. ey needed to pay down some consumer debt to get the TDS to work, so they did; they approached the bank of Mom and Dad and paid out one credit card. His beacon score went from 624 on July 6 to 691 on August 22… One credit card and the money was borrowed, but he somehow is better than my far more mature client. In addition, between this client and his wife they have over $71K in unsecure consumer debt and the down payment is gied, and [yet] they qualify for a mortgage. In this particular case, I would say the predictive model is not working. I tried to speak to Equifax about it directly; unfortunately, they were not willing to help. In fact, they kept insisting that we speak to the lender who turned the application down, so we would understand why the file was declined. We know why… We were just asking for an explanation of why a client's beacon could take such a dramatic dip. I was told they didn't have the old report and couldn't see the details (????). I offered to fax the old one to them, at which point the Equifax employee hung up the phone. As found on the Consumer Practices and Consumer Protection Act website: "What is a credit report? 1) Identifying information about the individual (name, address, employer, etc.) 2) Information about the financial obligations of the person (including name of the creditor, amount owed, details regarding payment history, etc.) 3) Financial and legal information about bankruptcies, court judgements, debts assigned to a collection agencies, repossessions, etc.) and 4) Requests for information about the individual from credits and others." Nowhere does it suggest that a credit report is predictive. Nowhere does it provide any indication of seeing the other side of a client's financial picture. Equifax has a monopoly in the credit world, based on the number of brokers and lenders who use it. is style of reporting is not in the consumer's interest and I believe, in my client's case, the "reporting" is negligent. Linda Slader Broker Status report: Do you know what is happening to the BCSC [BC Securities Commission] exemption for syndicators and mortgage investment companies, which permits them to raise capital without exempt market dealer registration? J.M. Vancouver, BC Reply: e BCSC has extended what is known as the Mortgage Investment Entity (MIE) exemption for the next two years plus. e Commission has now extended BCI 32-517 so that it expires on December 31, 2018. We understand that the BC Ministry of Finance is still working through the OM exemption, along with all the other prospectus exemptions, with Ontario and the other participating jurisdictions, which is why we have not yet published them. Please send letters to the editor to info@cmba-achc.ca letters CMBA MEMBERS' VIEWS 10 | fall 2016 cmba-achc.ca CMB MAGAZINE

• Cover