In a recent series of panel discussions put on by Mortgage Professionals Canada, a cross-section of some of the country’s top lenders and insurers provided updates on how the COVID-19 pandemic has impacted operations and shaped their outlook.
Similar to the previous sessions, the overwhelming message continued to be one of empathy towards struggling borrowers, as well as resilience and positivity for the future.
Here are some of the key takeaways from the additional panel discussions…
Adapting to the New World
- Boris Bozic, Founder and CEO, Merix Financial: “We executed our business continuity plan with great efficiency. In 48 hours, we had 98% of our staff working from home and fully functional. Just as we settled in, the universe decided to conspire against all of us. A global pandemic, a major technology failure (Filogix denial of service attack) and rising interest rates. The fallout was a little messy.” Bozic added that at the same time they saw submissions subsequently reach “unprecedented” levels.
- Yousry Bissada, President and CEO of Home Trust: “Like every other lender, we were inundated with 300-400% more calls right off the mark. The number one question initially was ‘If I got in trouble, would you take care of me?’ and the answer is ‘absolutely’…Home is in a good position. We are well-capitalized…and in our case, having gone through what home did in 2017 unintentionally trained a lot of our employees on how to, as soon as you hit the alarm, just say ‘battle stations everybody’ and you know where to go.”
- Stuart Levings, President and CEO, Genworth Canada: On the subject of mortgage deferrals and the role brokers can play, Levings said, “Absolutely it’s important for brokers to be thinking through what’s the right counsel for borrowers. And right now, it’s not a given that six-months deferral is the right answer for every borrower. It’s not free, you are going to be paying more interest and there is capitalization of that interest.
- Andy Charles, President and CEO, Canada Guaranty: In terms of working with the other mortgage insurers (CMHC and Genworth), Charles said, “I have never seen this level of cooperation in terms of ensuring consistency of policy, consistency of messaging and overall working in a manner that helps streamline the current operational challenges some of the lending institutions are feeling right now…”
Adoption of e-signing and other technology
- Andrew Moor, President and CEO, Equitable Bank: “We’ve had an electronic signature platform in place for about a year now, and frankly it’s been a frustration to me that there hasn’t been the same uptake from brokers that I would expect, and this has changed that.”
- Rene Quercia VP, Mobile Mortgage Specialists & Broker Sales at TD Canada Trust: “We’ve had e-signature for a while, but frankly our challenge has always been in the authentication process and ensuring we’re dealing with the actual customer that we think we’re dealing with…we’ve come a long way in a matter of the last few weeks of initiating this so we can now go completely digital on the application process.”
- Chris Brossard, CEO of CMLS Financial: “We’re seeing some very creative uses of technology (when it comes to appraisals). With digital signatures, we are certainly willing and able for certain documents, such as renewal letters, commitments, and others. But I think everyone’s aware that the Electronic Commerce Act prohibits certain things like powers of attorney, documents of title, wills, and certain other things, they require a wet signature. So, I think for the here and now, we can all get by. But I think we also have to ask ourselves as an industry, where do we go from here.”
- Stuart Levings, President and CEO, Genworth Canada: “We still get about close to 90% of our collateral decisioning done by an electronic medium, so for that 10-ish percent that we do still appraise, we’re absolutely looking to try and do drive-bys or accept a modified appraisal if we require that. So, 100% in line where I think the industry has gone with this.”
Changes to underwriting criteria, appraisals:
- Andy Charles, President and CEO, Canada Guaranty: “Technology has changed where we can all be working from home, so I think we can all be comfortable that the modified appraisal approach gives us values that are certainly good enough and probably our approach to appraisals will change after this incident.” Charles added that only about 10% of Canada Guaranty’s business requires appraisals. “I’m pleased that 90% of our adjudication process for property valuations is leveraging data, but for that 10% where we do require an appraisal, we’re being very open and flexible on.”
- Boris Bozic, President and CEO, Merix Financial: “We have modified appraisals now that we’re accepting, and virtual inspections. This is all based on the guidance that was provided to us by all the insurers…so yes, we have fully embraced the ‘peekaboo’ approach that’s going on today, and I say that a little bit facetiously, but these circumstances require some creative ways of getting this done. Quite frankly, at the end of the day we still have to verify the valuation of the property.”
Looking Forward
- Boris Bozic, President and CEO, Merix Financial: “For the next 90 days, I think it’s going to be uncomfortable for all of us…whatever challenges we face, Merix Financial and Paradigm Quest will execute with care and understanding.”
- Andy Charles, President and CEO, Canada Guaranty: “I am very confident that once we flatten that proverbial curve, all the underlying economic financial programs to ensure the smooth running of our industry will start to kick in. I’m optimistic on that front and we’re doing everything possible to support that as well.”
- Stuart Levings, President and CEO, Genworth Canada: “There is definitely a bit of a calm before perhaps the future storm, which is when some of these measures run out, some of the payment deferrals come to an end. We are definitely looking at how we increase our resources around the home ownership assistance program in our company and the teams that will be there to really help borrowers who are in need as we transition out of some of these bridging efforts that the government has implemented.”
coronavirus Lender Insights mortgage professionals canada
Last modified: April 14, 2020
What happens in 6 months when existing highly leveraged households have to start paying? What happens if their company can’t afford to rehire them or worse the company no longer exists. You can only kick the can down the road so far. This virus is going to expose massive cracks in many household finances. I would expect to see large increases in consumer proposals and bankruptcies. Banks will likely collateralize unsecured debt where the borrower has a collateral mortgage with the same institution to avoid immedite losses. Its going to get much worse economically before it gets better gradually. 12 to 18 months for a vaccine then add another 6 months to produce and inoculate and another 6 months for confidence to return. Bottom line is it will be 2 to 3 years before we see a new safe normal. Buckle your seat belts.