This year has been a challenging one for individuals and businesses.
Many households across Canada were hit by unemployment and loss of business income earlier this year.
Though, government and financial institutions were quick to step in and provide some breathing space to those affected.
Lenders were caught in the middle, trying to find ways to help customers avoid defaulting on their mortgage payments.
Many lenders found themselves offering payment deferrals to borrowers impacted by the pandemic. In fact, Canada’s biggest banks offered mortgage and home equity line of credit deferrals of more than $180 billion.
Lenders had to quickly pull together guidelines on how these deferrals would work and what the borrowers should know. TD Bank, for instance, created resources to help people understand more about its Mortgage Deferral Program.
What Happens When These Deferrals Are Up?
Some Canadians are back at work, some have seen their jobs disappear, and some had to change jobs as a result of layoffs.
As the deferral period is ending for many of their customers, lenders also have to start preparing for what’s next. For lenders, it is essential to have a strategy in place to work with the customers and reduce the potential of soaring delinquency and default rates.
This may seem like a daunting task but what you may not realize is that you probably already have the tools and resources you need. These include property valuation technology like the Purview AVM.
What Strategies Can You Leverage?
Here are some of the strategies you can look into:
- Forming a deferral team:
Some lenders are appointing teams to manage the challenge that deferrals will represent in terms of delinquency rates.
Doing this enables you to have a focused team of underwriters who are carefully looking at the accounts where deferrals have been issued. They are also responsible for reviewing and assessing the overall risk level the customer represents and checking if refinancing is an option for the borrower.
- Got lemons? Make lemonade!
Now, it is more important than ever to use all your tools together. For instance, use AVM to ascertain your customer’s equity position and review their last credit report to identify other debts that may be tapping out their cashflow. This will help you uncover useful information.
- Rely on your partnerships:
If a customer no longer fits your target buyer profile, that doesn’t mean that another lender wouldn’t want to work with them. Why not let another lender who wants to work with your borrower, pay you off?
If you have assessed the customer’s loan and have determined that being paid out is a better avenue; forming a partnership with another lender or super broker can help. Rather than letting the loan go into default, this solution can help all parties involved.
- Be prepared:
As the situation is so unpredictable – anything can happen. So, you have to be ready for what comes your way – even the possibility of deals starting to blow up.
Some customers will go into default and there is not much you can do about that. However, you can have contingency plans in place.
This is another place where AVMs would come in handy. For instance, when looking at enforcement options and how to proceed, evaluating your risk position will help your team make smarter and more effective choices.
To be prepared for what comes your way during these uncertain times – equip yourself with the right information. Stay updated about the current state of your customers’ financial profiles. Quickly validate information about your customers and their properties.
Purview AVM helps you do all this … and more! Call us today for more details on 1-855-787-8439 or visit www.purview.ca.