privatelenders
WHY EVERY MORTGAGE BROKER NEEDS A PRIVATE LENDING PARTNER Canadian brokers contend with a sharp drop in number and value of deals – and prepare for more private mortgages Submitted by Canadian Mortgages Inc. (CMI)
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ith housing sales set to drop 25 per cent over 12 months, it’s increasingly important for brokers to partner with private lenders to maximize the number of available deals and address growing consumer demand for private mortgages. Since the 2008 financial crisis, federal mortgage rules have progressively mandated tightened lending regulations for banks, with credit unions voluntarily following suit. Due to this conservative regulatory framework, various borrower segments have been categorized as high risk
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despite having high equity in their property and otherwise sound financials that indicate a low likelihood of loan default. As a broker, you’ve dealt with enough clients who are rejected for traditional loans simply due to their low credit score. You’ve most probably experienced first-hand the increasing number of self-employed or gig-economy workers who don’t qualify for traditional loans due to non-traditional or unverifiable income sources. Most likely, you’ve also had clients who, although they qualify for all mortgage requirements, are unable to meet the standards for stress tests, and are thus rejected for a mortgage solely based on a
hypothetical and highly unlikely scenario. And then, of course, there are the deals you haven’t been able to close simply due to short-term loan requirements or unconventional properties that conventional lenders are unwilling to finance.
BORROWERS FLOCK TO PRIVATE MORTGAGES AS A-LENDERS BECOME INCREASINGLY INACCESSIBLE These restrictive A-lender guidelines have excluded large segments of borrowers who are, in fact, well-equipped to pay back their loans, which has resulted in droves of Canadian mortgage consumers turning to private lending options. CMB MAGAZINE
CMBA-ACHC.CA SUMMER 2020 I
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