Improving Lender Relationships – Catch Fraud Before Your Lender Does

One of the biggest strains that impacts lender/broker relationships is fraud. Fraud in fact is one reason that some lenders don’t even accept mortgage applications at all.

While obviously some forms of fraud are blatant like omitting or falsifying documents or information to obtain mortgage financing for a client – others are not.

Many times lax underwriting procedure within brokerages can lead to fraud deals slipping through the cracks. These points outline types of common fraud and how you can catch it:

·         Income fraud - Review income documentation very closely for the slightest discrepancy. Make a quick phone call to verify employment and the employment information presented.

·         Undisclosed non arms-length transactions - This can be uncovered many ways: Compare names on documents and review the sales history on the property.

·         House not in the name of the applicant or other people on title - While you can ask the client for their deed, it will only be as good as the date provided. To accurately verify home ownership information, ask the client for their ID and then run a search to verify who is on title.

·         Manipulated property values - Generate an AVM to ensure that the stated value is accurate.

The challenge is that once a deal gets to a lender and the lender uncovers fraud or worse a deal goes on the books and fraud is detected post-funding, the relationship between the lender and broker can be severely damaged.

Never mind your closing ratios being impacted by deals that don’t close as a result of fraud, how about the fact that some lenders can completely decide to stop dealing with you?

Mortgage fraud costs the industry as a whole. The cost to a brokerage that becomes known for fraudulent deals is devastating – mortgage fraud can put a brokerage out of business.

Like a car dealer wouldn’t purchase a car without running a vehicle history report on a vehicle purchase, there is tremendous value in making a minimal investment to ensure that you know everything about the property being financed and the person requesting the financing.

Be prepared and protect yourself with these tips and more for mitigating mortgage fraud from Purview For Mortgage Brokers: 1.855.787.8439. 

Trusted Advisor Series Part 3 – Long Term Plans Mean Long Term Relationships

In the third part of our TrustedAdvisor Series we want to expand upon what it means to forge long term relationships with your clients. How do you demonstrate to clients that you want to be their trusted advisor for life?

A lot of this has to do with not looking at your client as a single transaction but as a series of transactions over time. When a client is looking for financing, simply securing the financing for them at a rate that is acceptable to them is not forging a long term relationship.

Long term plans mean long term relationships.

What you can learn from your client? Ask your client about their short and long term financial goals. This information could change the term and amortization you recommend to your client. Look at your client’s other debts and discuss with them their plans to become debt free in the future. Look at your client’s goals and dreams – what do they want in life: a cottage, to renovate their home, to pay their child’s way through college? Perhaps their goal is to pay off their mortgage as soon as possible so they want to explore ways to leverage accelerated amortizations and pre-payment privileges.

Learning everything there is to know about your client positions you to sculpt their mortgage to open up at the right time. You can also look at other complimentary financial products that they may qualify for now or in the future after taking your financial advice.

Notes, notes, notes – documenting what your client tells you about their financial goals enables you to know them on a personal level and have those details top of mind when the time comes to reach out to them.

As important as it is to track your mortgage renewals, it is equally important to do an annual or even semi-annual (if you work in major centres like Toronto and Vancouver) review of your past mortgages. You could run an automated valuation model (AVM) to identify points in time when your client may take advantage of new equity to go after some of the financial objectives they shared with you.

Timing is everything when it comes to long term planning. As a rule of thumb, timing your client’s second mortgage renewals to coincide with their first mortgage renewals pretty much guarantees you that if you do an excellent job, you should have them again to refinance their first and second into one mortgage later. When the time comes to help the client with that second deal, you can review your notes from the previous one and review an AVM to see if there is new equity to help the client not just combine their mortgages, but pay off debt or finance big ticket purchases at the same time.

Being a trusted advisor means caring about more than just the deal you are funding at the moment and the client’s value long term. Long term relationships mean big revenue and success to the brokers who see this and adapt accordingly.

Establish a long term plan for long term relationships with Purview For Mortgage Brokers – this tool makes it simple. Contact us today at 1.855.787.8439. 

The True Value of a Mortgage Broker’s Time

To truly place a value on your time let’s look at the evolution of a mortgage deal

 This is why when considering what investment you make in underwriting and due diligence you should compare the cost of the tool/service against the true value of your time. In the above example you may have invested 10-15 hours into a deal by the time it reaches the lawyer for closing. One deal that doesn’t close could have been 2-3 that you could have landed had you not been working on the one that failed to close!

Make the most of your time with Purview For Mortgage Brokers. Call us today for more info: 1.855.787.8439.

Types of Liens and What They Mean to You

Over the course of a mortgage transaction there are a number of different liens that can arise. For brokers who don’t invest time in performing preliminary searches on their deals before submitting them into the mortgage application process, this can often come up on closing.

Some liens are much easier to overcome, but on the other hand, depending on the lender, the type of lien or even the mere presence of a lien can significantly impact your commitment for financing.

Let’s review some of the different types of liens that commonly come up:

• Tax Liens – CRA liens can be a huge problem. If the deal is an A deal and a purchase mortgage a bank may refuse to fund without proof the tax debt is paid (even if there are proceeds in the mortgage to pay the tax debt). In addition, sometimes a tax lien can total more than the equity available in the house. The only saving grace is that if the tax debt exceeds the equity available for financing and your lender is a higher risk lender and not a bank it is possible that you can negotiate a lump sum payment to CRA on behalf of your client for a “postponement” so that they allow your mortgage to go on title in front of their lien.

• Condo Liens – If a client gets behind on their condo fees or for some other reason owes the condo corporation money and hasn’t paid – the condo corporation can put a lien on the condo. Condo liens can typically be overcome by paying the debt. Condo liens are less impactful to a mortgage closing than a tax lien.

• Property Tax Liens – Much like condo liens, property tax liens can be applied when property taxes or water bills are not paid. Unlike tax liens, the likelihood of obtaining a postponement related to property taxes are slim to none and property tax liens can actually supersede the lien related to the first mortgage.

The best way to overcome a lien on a property is to uncover it quickly. You can search encumbrances on a property to learn about liens as well as any other registered encumbrances. Discovering a lien even before your application is submitted to a lender for financing allows you to help your client come up with solutions to resolve this issue. To your client this could mean the difference between securing their financing or not and can even result in your client paying a higher interest rate and cost to borrow. Going the extra step to investigate your application at the point of application shows your client you are the expert and their trusted advisor. The best way to achieve this is by pulling an instrument image.

Identify and mitigate issues related to liens before they become a real problem on closing. Contact Purview For Mortgage Brokers today for the tools to achieve this: 1.855.787.8439.