Identifying a Bad Deal - Addressing the Top 5 Reasons that Deals Fail to Close

Bad deals - the Achilles heel of most mortgage agents and brokers. You may take painstaking measures at the point of application to ask your client many questions to uncover bad deals – but some seem to always slip through. So how can you tighten your closure rates? What more can you do? Leverage technology to investigate your customer’s disclosure.

While some customers innocently misstate information, others do so intentionally. Fraud is rampant in the mortgage industry. Let’s look at some of the most common examples of why deals go bad – and what you can do when underwriting your deal to ensure that the information you need is uncovered sooner so that you can stop wasting time on bad deals and focus on the ones that can close.

Why deals go bad as it relates to the property being financed:

Someone else is on title – This is very common and often not done intentionally. Validating who is the legal homeowner of the property at the point of the application is the best way to stop this from coming up later.

The mortgage balance is more than stated – You can run a search to see when the mortgage was registered and what it was registered for. You could also ask your client to sign a 3^rd party consent form and simply request a current mortgage statement from the bank. This will enable you to validate not only the balance but also the payments and current mortgage standing (whether or not the mortgage is up to date).

The property value was overstated – This one is tough because, in the absence of an automated property valuation, property value will be validated one of two ways 1) by appraisal 2) by the insurer. The issue here is that, if your bad deal gets to the point of appraisal or submission to the insurer, so much time will have been wasted and your client (if an appraisal is involved) will have spent up to $400.00. You can mitigate deals lost as a result of value by performing an automated property valuation to validate the property value.

The current mortgage is in arrears – This can be addressed by requesting a current mortgage statement from the current mortgage holder at the point of application as discussed in the solution for how to ensure that the mortgage value isn’t overstated.

The property is under construction – There are different ways that you can go about identifying if a property is under construction externally. Aerial and street view imagery will enable you to view the property being financed both from above and from the street as though you were standing in front of it.

Taking the steps to do extra due diligence is the best way to identify bad deals, maximizing your time spent on deals and making you more competitive.

For more information about tools to identify bad deals please visit www.purview.ca/brokers or call 1-855-787-8439.