What Lenders Are Approving

approvedIt’s often instructive to look at a lender’s recent applications to see what kind of deals they’ll approve. That’s especially true on the “B”-side of the business where lender guidelines are much less clear-cut.

It’s not surprising then that B-lenders are often able to grow volumes simply by educating more brokers.

Newer brokers that do mostly “A” business are a prime target. Sometimes they’ll have only a rudimentary understanding of the types of non-prime deals that can get done.

One lender that invests heavily in broker education is Home Trust. Among other training methods, it actively uses webinars to illustrate what sorts of deals it will approve.

According to Home’s SVP of Mortgage Lending, Pino Decina, a favourite webinar feature among brokers is “Deal Scenario” profiling.

“That’s where we review a range of everyday deal scenarios, discuss our underwriting rationale and present a common sense lending solution,” he said.

Pino provided this real-life borrower scenario as an example:

Consumer Proposal

  • Type: Refinance
  • Challenges: The couple in question was unable to get approval at a major bank because:
    • One spouse suffered a job loss and the other spouse was left to manage the bills with a reduced income.
    • They were, therefore, forced into a consumer proposal.
    • Their consumer proposal was active and had to be paid out
    • After three months, the unemployed spouse finally found work but the new employment was still in the probationary period.
  • Primary Applicant Credit Score: 545
  • Home Trust Solution: With the equity in their home and new income to service their debt once again, Home Trust approved a LTV of 75%. That paid out their existing first mortgage and entire consumer proposal.

*******

Good equity, a marketable property and gainful employment can make up for a lot of credit problems.

For brokers who are interested, Home Trust has several upcoming seminars where it’ll run through mini-case studies like this. Here’s a list: Upcoming Webinars


Lenders:  If you’d like to share your own deal scenarios to illustrate the niches you’ll consider, feel free to email them to: info@canadianmortgagetrends.com


Rob McLister, CMT

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