Common-sense underwriting has gone out the window, according to one industry professional
It’s been a tough but lucrative year for brokers, with many struggling with underwriting delays that have resulted from a boom in business.
“Underwriters seem to satisfy files to audit requirements these days and not common sense underwriting,” Brad Currie, a broker with Verico Coastal Pacific, told MortgageBrokerNews.ca. “For example, there is one lender that won’t lend on condos that have had problems with leaks, even if the building has been remediated. Who thinks of that?”
Currie says that’s just one example.
“There have been numerous examples; we joke that it doesn’t matter who your underwriter is, but who your auditor is,” he said. “Another example is an issue with verifying large deposits put into bank accounts.”
In those cases, Currie says lenders require brokers to verify where the income has come from, which can delay deals.
“It shouldn’t matter where the client got the funds as long as they can cover the mortgage,” he said. “We have to determine the source of the funds and provide documentation.”
That poses a problem with various sources of income, including gifted down payments and car sales. However, Currie does acknowledge the lender may just be trying to verify that the client hasn’t taken out a loan.
Currie’s complaints join a long list worries about delays voiced by brokers this year.
A number have complained about issues that arise late in the mortgage origination process. They point specifically to last minute audits.
One former lender recently confirmed that challenge and its contributions to delays.
“There is often another level of review after the underwriter signs off on a deal before it gets funded; the underwriters sometimes miss something and it’s a function of underwriters being overwhelmed,” Tim Hill of Dominion Lending Centres Primex Mortgages told MortgageBrokerNews.ca in September. “Volumes for lenders are also as high as they’ve ever been, and a lot of documents are being looked at very late in the process.”
“Underwriters seem to satisfy files to audit requirements these days and not common sense underwriting,” Brad Currie, a broker with Verico Coastal Pacific, told MortgageBrokerNews.ca. “For example, there is one lender that won’t lend on condos that have had problems with leaks, even if the building has been remediated. Who thinks of that?”
Currie says that’s just one example.
“There have been numerous examples; we joke that it doesn’t matter who your underwriter is, but who your auditor is,” he said. “Another example is an issue with verifying large deposits put into bank accounts.”
In those cases, Currie says lenders require brokers to verify where the income has come from, which can delay deals.
“It shouldn’t matter where the client got the funds as long as they can cover the mortgage,” he said. “We have to determine the source of the funds and provide documentation.”
That poses a problem with various sources of income, including gifted down payments and car sales. However, Currie does acknowledge the lender may just be trying to verify that the client hasn’t taken out a loan.
Currie’s complaints join a long list worries about delays voiced by brokers this year.
A number have complained about issues that arise late in the mortgage origination process. They point specifically to last minute audits.
One former lender recently confirmed that challenge and its contributions to delays.
“There is often another level of review after the underwriter signs off on a deal before it gets funded; the underwriters sometimes miss something and it’s a function of underwriters being overwhelmed,” Tim Hill of Dominion Lending Centres Primex Mortgages told MortgageBrokerNews.ca in September. “Volumes for lenders are also as high as they’ve ever been, and a lot of documents are being looked at very late in the process.”
