Are brokers powerless when it comes to insurers costing them deals?
It may be frustrating but it’s a reality brokers must face every day, according to players dealing with tightened underwriting from mortgage default insurers.
“The two insurers are independent businesses that are allowed to make their own approval decisions; one very odd decision cost me $818,000 mortgage yesterday, the client was so mad they did not even give me a chance to switch lenders and insurers, they felt insulted that the insurer had rejected the property,” Ron Butler of Verico Butler Mortgage wrote on MortgageBrokerNews.ca. “Yes, insurer decisions cost us money -- I get it -- but these are the companies that are on the risk if a mortgage goes sideways; they must be allowed to make their own underwriting decisions.”
The comment stemmed from an article about the increased tightening among mortgage default insurers – causing even approved deals to fall apart at the last minute.
And the insurers are especially conservative with self-employed clients, who also have to deal with stricter underwriting from lenders.
“The insurers aren’t listening to the lenders,” Morris Briglio of Verico The Mortgage Advantage told MortgageBrokerNews.ca. “I had a case where two lenders approved the deal but the insurers wouldn’t … it is increasingly difficult for self-employed buyers.
Briglio told MBN Monday he has noticed this sort of pushback from the mortgage default insurers since 2011, but that they have become stricter recently. He believes the B-20 rules are partly to blame.
“CMHC and the private insurers are the ones dictating policies to lenders which shouldn’t be the case because the lenders know how to [underwrite],” he said. “We might as well send applications straight to the insurers; it’s no longer the lenders who have the power.”
“The two insurers are independent businesses that are allowed to make their own approval decisions; one very odd decision cost me $818,000 mortgage yesterday, the client was so mad they did not even give me a chance to switch lenders and insurers, they felt insulted that the insurer had rejected the property,” Ron Butler of Verico Butler Mortgage wrote on MortgageBrokerNews.ca. “Yes, insurer decisions cost us money -- I get it -- but these are the companies that are on the risk if a mortgage goes sideways; they must be allowed to make their own underwriting decisions.”
The comment stemmed from an article about the increased tightening among mortgage default insurers – causing even approved deals to fall apart at the last minute.
And the insurers are especially conservative with self-employed clients, who also have to deal with stricter underwriting from lenders.
“The insurers aren’t listening to the lenders,” Morris Briglio of Verico The Mortgage Advantage told MortgageBrokerNews.ca. “I had a case where two lenders approved the deal but the insurers wouldn’t … it is increasingly difficult for self-employed buyers.
Briglio told MBN Monday he has noticed this sort of pushback from the mortgage default insurers since 2011, but that they have become stricter recently. He believes the B-20 rules are partly to blame.
“CMHC and the private insurers are the ones dictating policies to lenders which shouldn’t be the case because the lenders know how to [underwrite],” he said. “We might as well send applications straight to the insurers; it’s no longer the lenders who have the power.”
