Who Do You Represent?

Who do you represent?

In Alberta, at least we have very clear guidelines about who we represent in the mortgage transaction, so clear in fact that we have three different forms that can be presented. The core duties are the same for all three, be honest, exercise care and skill, gather the required information, disclose and explain options to them, complete and submit information to the lender and keep all parties informed of progress.

The first is where we act as an intermediary, this means that we do not represent the borrower or the lender. In fact, it also means that we are merely the paper shuffler between the client and the lender, we do not verify any of the documents and we are technically not allowed to advise the client either. We can discuss and explain the options but we must leave the final decision to the borrower and for that matter to the lender.

The second is very different and that is when we are acting for the borrower, here things change and we are agreeing to represent the borrowers best interest, recommend a particular mortgage solution, advocate on their behalf, provide accurate and clear information so that our clients can make an informed decision. Our core responsibility is to the borrower but does not reduce the responsibility to lenders, as we still have the core responsibility to them to be honest and efficient.

The third is where we as brokers represent the lender, this is more relevant in the private lending world. If you represent individuals who lend their own money through you then you must represent the lender. Clients need to be advised to seek independent advice from either a lawyer or another broker who is skilled enough to advise them on the offering. This doesn’t necessarily apply when dealing with MIC’s or Syndicated lenders, at least in Alberta, as most of them are already brokerages and under the same guidelines.  This scenario also comes into play, in my personal opinion, when you send all of your business to one lender and do not shop around or at least research for the best rates and features for your client.

In my brokerage, we have chosen to represent the borrowers as we feel the team is skilled enough to take on that responsibility.

Who do you represent or do you know?

Len Lane, Mortgage Broker
Dominion Lending Centres
www.brokersforlife.com

Check out more great blog content from Len – http://www.brokersforlife.ca/blog

‘Efficiency’ is the new keyword for 2017

In late November I had the good fortune to attend the MPC conference in Vancouver. The conversations that I had with our lender partners all came back to the same topic.…. efficiency. You may have noticed that many of the lenders have moved their numbers up to where they are expecting 75% efficiency before offering any bonuses to the brokerage. Here are some of the best practices that you can follow as a broker?

  • KYC, know your client. We teach that collecting paperwork in advance of submitting a deal will always allow you to have exact information in the file. The list is quite long sometimes but the basics will always be, letter of employment and a pay stub, 3 months’ bank statements for down payment. If there is over time or they are self-employed or if they own rentals then plan on collecting T1 generals, Notice of assessments, property taxes and leases. The more information you have up front the better and the more accurate your submission will be to the lender.
  • KYL, know your lender. While CMHC guidelines are fairly straight forward, knowing what the lender will accept as income or property or what their rental offsets are will highly increase the possibility of the deal being accepted by them. When I first started in the industry I had minimal support but I knew one thing from my sales background and that was that we have a product to sell. I spent most of my time researching the lenders guidelines. Good thing because in my first full year in the industry I did 42 million dollars by myself.
  • KYR, know your rates. The industry has become so complex in the last three months that we stopped publishing our own rate sheets. We now use head offices rate sheet and I suggest that the team research the lenders before submitting. This way they will have the right rates if it is insured, insurable or conventional, I’m still sorting those ones out personally.
  • Last but definitely not least, stop shotgunning files out to multiple lenders, I know we have a lot to choose from but this just creates confusion and can destroy what should be good funding ratios and efficiencies among the lenders. If you do the required work as above, you should only need to send it to one lender.

Len Lane, Mortgage Broker
Dominion Lending Centres
www.brokersforlife.com

Check out more great blog content from Len – http://www.brokersforlife.ca/blog