Mitigating your lender’s risk is critical when it comes to managing your relationships. When brokers bring deals that have been properly underwritten, trust is built. This can lead to greater flexibility with your lender, and sometimes even less strict scrutiny of your applications.
We often talk to lenders and brokers about the reasons that deals fall apart and even the types of things that come up on delinquent files that may have been identified before the deal ended up on the books. This led us to compile this list of steps that you can take at the application stage to ensure that you are bringing forward a good quality deal. This list assumes that you have obtained consent from your client to verify information with third parties like their bank and employers, and that you have the necessary tools to perform property related searches.
- Telephone verifications. Making a few phone calls can go a long way. Call the employer to verify employment, if it is a condo, contact the condo corporation to confirm if fees are up to date, etc.
- Validate:
- Homeowners – especially important with refinance mortgages, sometimes unanticipated people can pop up on title.
- Registered mortgages – this can help you to flag incorrect mortgage balances as well as undisclosed mortgages.
- Property value – before even ordering an appraisal, take a step that your bank will – request an AVM (automated valuation model) on the property. This is something that you can do in a couple of minutes from your office to validate if the stated property value on the application is accurate.
- Request a mortgage or discharge statement from the bank – request mortgage or discharge statements as soon as you take the application to identify mortgage arrears, unanticipated penalties, incorrectly estimated balances, etc.
- Ask for the Notice of Assessment whether you need it to verify income or not. If the applicant has tax arrears, this can interfere with your closing and raise the possibility that there is even a lien on the property. People can end up with tax arrears for a variety of reasons – asking for this document can be eye opening.
Credit report issues, tax arrears, condo fee arrears, multiple mortgages, etc., are all credit risks that could suggest that there is a lien on a property. In these instances, it may also make sense to request a Parcel Register online to check as of the date in question if there is a property lien on the property.
As a mortgage broker, there is a certain level of risk inherent in every application you accept. However, you can greatly mitigate that risk by tackling these 4 items at the very beginning.
Purview has the tools that make completing this task easy. Find out more by visiting https://www.purview.ca/, and for more information about how to obtain a Parcel Register please visit https://www.teranetexpress.ca/csp/.
