Deals that were funded only two years ago in the A space are now alternative deals due to new regulations, says one industry expert
And it is those same regulations that are nurturing the alternative lender/broker relationship.
“I am a big advocate of partnerships between lenders and brokers,” says Steve Lydon, national sales manager at Eclipse. “It goes back to B20 & B21 and the more restricted guidelines with lenders and insurers. The alternative space will continue to grow with more lenders entering the space.”
It is this influx of new clients to the alternative space – business for self, those with beacon scores under 600, those with a consumer proposal and clients who have discharged bankrupts less than seven years – that are benefitting from the close relationship developed between mortgage brokers and these same lenders.
“There are so many restrictions now with the mortgage insurers,” says Lydon. “Deals that were getting funded two years ago are now alternative deals.”
However, that relationship can be quickly derailed if the right information isn’t being provided to underwriters, Lydon told MBN, such as when unrealistic property values and the actual appraised values are at odds – or even if the property is not in a good state of repair or pride of ownership isn’t evident.
But what has proven itself in the past few years is the desire on the part of both the broker and the alternative lender to work hard in making the deal viable – and bringing the client back to be a part of the A lending space.
“My belief is the alternative lending space is more about helping the client repatriate back to the prime space,” says Lydon. “Rates should not be an issue but more the benefits for the clients and how they can get their credit back on track.”
“I am a big advocate of partnerships between lenders and brokers,” says Steve Lydon, national sales manager at Eclipse. “It goes back to B20 & B21 and the more restricted guidelines with lenders and insurers. The alternative space will continue to grow with more lenders entering the space.”
It is this influx of new clients to the alternative space – business for self, those with beacon scores under 600, those with a consumer proposal and clients who have discharged bankrupts less than seven years – that are benefitting from the close relationship developed between mortgage brokers and these same lenders.
“There are so many restrictions now with the mortgage insurers,” says Lydon. “Deals that were getting funded two years ago are now alternative deals.”
However, that relationship can be quickly derailed if the right information isn’t being provided to underwriters, Lydon told MBN, such as when unrealistic property values and the actual appraised values are at odds – or even if the property is not in a good state of repair or pride of ownership isn’t evident.
But what has proven itself in the past few years is the desire on the part of both the broker and the alternative lender to work hard in making the deal viable – and bringing the client back to be a part of the A lending space.
“My belief is the alternative lending space is more about helping the client repatriate back to the prime space,” says Lydon. “Rates should not be an issue but more the benefits for the clients and how they can get their credit back on track.”
