Brokers make a Difference

While many people will go to their bank to obtain a mortgage or line of credit they often feel betrayed by their favourite bank if their application is rejected. One big advantage that we have over banks is that we can send underwriter notes along with the application. Our questions and speaking at length with the borrower give us insight that the underwriter will never get from the facts and figures on the application.

 A while ago, I had an application at a lender for a young man who wanted to buy his first home.

He worked in the construction trades and his income history was up and down over the past 3 years. He needed overtime to support his application and the two year average wasn’t there.

I went back with 3 years of Notices of Assessments, his recent pay stubs and pleaded the case for my client. The underwriter finally asked for an exception based on my confidence in the client. She trusted my judgement and the mortgage was approved.

     This leads me to the idea that underwriter notes are very important and can mean the difference between an approval and a decline. If you have a chance, ask your underwriter how they like their notes; in point form or in paragraphs . Do they prefer emails or phone calls?

   When a successful mortgage broker writes notes they start by stating what product they are asking for and giving their contact information. I put my contact info at the top of the notes and at the bottom so they don’t have to go searching for it if they have a question or need clarification.  I then state what my client is trying to do; purchase their first home, refinance, a renewal or if it’s’ a switch, that they want to benefit from lower interest rates.

I then list the areas I want to highlight: Income, Credit, Property , Down payment and start with it their weakest link first and explain their situation. I had a client who had her down payment in a joint account with her father in Japan. I started with that knowing that a paper trail would be important. If the credit score is low, is it due to a past illness, divorce or job loss? I tell the underwriter right away. As  a result, underwriters trust me and have given my clients a second look or asked for an exception.  Finally, I finish up by summarizing the strong points in the file and thanking them for their consideration of my file. 

     I never yell or give my underwriters a blast if they decline a file. I will , however, ask why the file was declined so that I can better prepare my client for the disappointment and plan on how we can remedy the situation.  Just as a FYI,  a manager at a major bank told me that at one bank he worked for after hitting the send key he received a simple message back – either APPROVED or DECLINED with no explanation.  Now who do you think mortgage clients should deal with? A bank or a broker?
for more information visit my website at http://davidcooke.ca 

Building a Custom Home with less than 20% downpayment

Are Gift Letters blowing up the Real Estate Bubble?

Recently a National Post article brought up an interesting issue. Are parent's fueling the real estate boom in Toronto by giving their children a down payment to purchase a home now rather than let them take time to save it up on their own.
    IN a recent blog, Garth Turner, a former MP, said that this is running counter to the government's attempt to cool the real estate market by getting people into the market before they normally would be entering it.
   He felt that this was throwing the natural forces of the market off. I'm not so sure about that.
 When I got married and started looking at our first home, my parents gave us some money for the down payment. I found out years later that my grandparents did the same thing for my parents when they bought their first home.
   If this has been going on for 3 generations in my family, I think it probably is going on in plenty of other Canadian families.
  Sometimes people look for a problem when there isn't one.
 

Mortgage Fraud:How to protect yourself when purchasing or refinancing a home.

CMHC recently published a number of article meant to educate the public. I want to share this information with my readers. Here is the CMHC article in its entirety.

What is Mortgage Fraud?

Mortgage fraud occurs when someone deliberately misrepresents information on a loan application, to obtain mortgage financing that likely would not have been approved if the truth had been known. There are several different forms of mortgage fraud. One of the most common is when a con artist convinces someone with good credit to act as a “straw buyer.” A straw buyer is someone who agrees to put his or her name on a mortgage application for a home that someone else will be buying.

Mortgage applications for straw buyers also often misrepresent other important information as well, such as their income, occupation and the real source of a down payment. In return for their participation, straw buyers may be offered cash or promised high returns when the property is sold. While the promise of an easy payday may be tempting, consumers should be aware that in most cases, the fraudsters are the ones who walk away with all the profits, while the straw buyer is left “holding the bag” when the mortgage defaults. Consumers who knowingly take part in these frauds will also be responsible for any shortfall when the property is resold, and could even be held criminally responsible for their misrepresentation.


What Can You Do to Protect Yourself?

To protect yourself and your family from becoming victims of, or accomplices to, mortgage fraud, be an informed consumer. This means: Never accept money, guarantee a loan or add your name to a mortgage unless you fully intend to purchase the property. If you allow your personal information to be used for a mortgage, even for a brief period, you could be held responsible for the entire debt even after the property is sold. Always know who you are doing business with. If you are buying or selling a home, use only licensed Real Estate Agents and other industry professionals. And never sign anything until you know exactly what you are signing.
 Determine the sales history of any property you are thinking about buying, and consider having it inspected and appraised.
Ask for a copy of the land title search.
Find out if anyone other than the seller has a financial interest in the home
. If a deposit is required, make sure the funds are held “in trust” by the Vendor’s Realty company or lawyer / notary.
Get independent legal advice from your own lawyer / notary.
 Talk to your lawyer / notary about title insurance and other alternative methods of protection.
Be wary of anyone who approaches you with an offer to make “easy money” in real estate.

Remember: if a deal sounds too good to be true, it probably is.

 There are also several simple steps you can take to protect yourself from another common form of fraud: identity theft.
These include:
 Never give out your personal information until you know who you are dealing with and how your information will be used.
This includes requests for information in person, by mail, or over the phone or Internet.
Never reply to e-mails or phone calls that ask for your banking information, credit card details, passwords or other personal or sensitive information, particularly if you did not initiate the exchange.

Review your mail, bank statements and other financial statements on a regular basis to look for any inconsistencies.
If you don’t receive a bill on time, follow up with your creditors or service

David Cooke
 DLC Westcor Calgary, Alberta
Tel: 403-836-1201

 The information is provided by CMHC for general illustrative purposes only, and does not take into account the specific objectives, circumstances and individual needs of the reader. It does not provide advice, and should not be relied upon in that regard. The information is believed to be reliable, but its accuracy, completeness and currency cannot be guaranteed.

Neither CMHC and its employees nor any other party identified in this Fact Sheet (Lender, Broker, etc.) assumes any liability of any kind in connection with the information provided. CMHC stake holders are permitted to distribute the materials at their expense.

 The above mentioned stake holder organization is responsible for the distribution of this document. providers.
Shred or destroy all personal and financial documents before you throw them away.
 Inspect your credit report on a regular basis by contacting Canada’s two credit-reporting agencies: Equifax Canada at www.equifax.ca and TransUnion Canada at www.transunion.ca.
Find Out More If you suspect that you or someone you know has been the victim of mortgage fraud, contact your local police department immediately.
To find out more about mortgage fraud,
 visit the fraud prevention section of the Canadian Association of Accredited Mortgage Professionals (CAAMP) website at http://mortgageconsumer.org/lookup.php?q=protect-yourself-from-real-estate-fraud&lang=en. For more tips, visit CMHC’s Homebuying Step by Step Guide at www.cmhc.ca. CMHC is Canada's largest provider of mortgage loan insurance, helping Canadians buy a home with a minimum of five per cent down
. Ask your mortgage pro
To contact me on how to protect yourself or any other mortgage questions contact me via my website.

Twitter vs. Blogs

I am trying to keep up with the times.
I have started a Twitter at
twitter.com/davidcooke1 where I make up to the minute announcements about rate changes and
mortgage related news.
However, I find that 140 characters is limiting and a blog allows space to properly explain concepts and ideas.
What do you prefer? Blogs or Tweets?