TD is reminding brokers that it will remain in the business of providing equity lending for self-employeds, at the same time cautioning them to observe both the letter and the law of new more-stringent guidelines.
In an email communication last week, the big bank’s broker arm moved to reassure broker partners it would continue to accept business-for-self business, that despite the move by several other channel lenders last week to either cut or effective limit their own programs.
TD is eager to hang onto the conventional lending business that helped it grow broker market share, especially in Canada’s new immigrant-rich urban centres. But it has tightened up qualifying terms and demanding more paperwork from brokers.
Effective Feb. 7, brokers have had to input all stated gross income, complete asset and liability details for equity clients regardless of loan-to-value thresholds. It has also capped LTVs at 75 per cent.
Brokers have traditionally balked at having to submit that level of paperwork, although are likely to be more flexible given a dwindling number of options.
Those choices will likely get further eroded following the CMHC’s warning earlier this month, the Crown corp. telling lenders that they will face increasingly limited access to bulk insurance for their conventional loans as the CMHC’s $600 billion fund comes within 10 per cent of its government-set ceiling.
Non-deposit taking institutions are most likely to be affected because they rely on that insurance to facilitate the securitization and sale of those mortgages – a way of taking them off their books and freeing up cash for more lending.
Some brokers are also concerned that could further concentrate the broker channel’s BFS business in TD’s hands.
Other lenders aren’t so sure.
“This really is an opportunity for brokers to take a look at other lenders,” Robert Leaker, VP of emerging markets for Meridian Credit Union, told MortgageBrokerNews.ca. “And quite frankly we are that other lender, with the products, the services and the common-sense lending guidelines to accommodate that business.”
If Leaker gets his way Ontario’s largest credit union will pick up much of FirstLine’s business.
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