Canadians are losing another non-prime mortgage lender.
Effective March 31, 2012, TD’s specialty lending division, TD Financing Services, is exiting the non-prime mortgage business.
A spokesperson said, “With today’s announcement, we have eliminated any non-prime lending in mortgages.”
The move was made “As part of a regular review of TD’s secured lending risk management strategies.”
“Ultimately, we decided it wasn’t a core part of our focus on building a franchise business,” he said, adding that “The (TDFS) portfolio has not grown to an economically viable size.”
TDFS mortgages comprised just 0.2% of TD’s overall mortgage book, he noted. TD says its TDFS customer base was not in the “tens of thousands,” but rather in the “thousands.”
Abnormal defaults were not an issue in this decision. “Our existing (non-prime) portfolio has performed quite well with minimal losses.”
“To remain competitive, it would have required us to increase (that) risk profile, something we’re not prepared to do.” (The spokesperson suggested that some non-prime competitors have been doing increasingly higher-risk lending and TD has chosen not to follow.)
Brokers were the main source of volume for TDFS. In an email it sent out earlier today, TD said: “TD Canada Trust remains committed to the mortgage broker industry and this announcement does not affect TD Broker Services.”
For existing customers, “renewals will be offered in the normal course of business.”
That said, as with any borrower approaching maturity at a non-prime lender, we’d strongly advise TDFS customers renewing after March 31 to contact a mortgage planner to survey alternative options.
This move has no effect on TDFS’s non-prime auto lending business.
Rob McLister, CMT
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