Much to our surprise, MCAP has pulled its outstanding FlexStar mortgage from the market.
In a statement today, MCAP said:
FlexStar has generated excellent activity for us and acceptance of the product has been increasing. Unfortunately, FlexStar has not met our expectations in terms of its overall profitability and we have therefore made the difficult decision to withdraw it from the Canadian market temporarily.
The company says it expects to bring back FlexStar “to the market as soon as possible” and existing client commitments will be honoured.
It’s disappointing news because the product is so new and has features no other mortgage has. Perhaps it was “too” flexible to be securitized (resold to investors) at good returns. If so, there’s a chance FlexStar will be stripped of some features when it returns to the marketplace.
The other questions is, how long will MCAP take to work out the kinks. A lot of times when lenders pull products they don’t come back for a very long time. Hopefully that doesn’t apply in this case.
That’s to bad……Canada could really benifit from new and inovating products, but it looks like we have lost a potential winner.
We’re hearing unconfirmed rumblings that FlexStar may be back sooner than later. MCAP is rumoured to be making enhancements to it and fixing a problem they had with its broker compensation model–which is apparently a big reason they paused the product.