Five Tips for Best Practices for Lenders

Lenders are always asked for tips on structuring and how to best present a deal. Brokers want their deal to fund smoothly.

Here are Five Top Tips to make the process move swiftly from the start.

#1. Put notes on the application. This may seem like an easy decision, but many applications are sent without any notes on the app. You should use a variation of this long sentence: Asking for 75% ltv, first mortgage on owner-occupied single-family residence in Calgary, purchase, closing date, exit strategy, interest only or P&I with 35 yr am, use of funds, your name, cell number and broker fee amount.  

Your underwriters will need this to complete the commitment on the first go.

#2. Pull Title:  Prior to submitting, you should have a current copy of title. With this you can verify who owns the property, have accurate spelling of the name(s) and have the accurate civic address. It is not unusual to find liens or caveats, CPL or Lis pendens, old mortgage/charges that should have been removed or see collateral amounts registered. These all effect or delay future borrowing potential. If you have not looked at this prior to submitting, be sure to check title prior to having the client pay out of pocket for an appraisal.

Know what you are working with.

#3. Reply to your underwriter. When your deal is picked up by the lender, they might find a typo or have a question for you. Responding as soon as possible helps the process move forward without unnecessary delay. 

Deals waiting for follow-up can lose priority.

#4. Exit Strategy. Talking with your clients about the exit strategy will help you to request the type of mortgage terms that are most suitable. A shorter term, interest only, with little or no prepayment penalty is preferable for clients who plan to sell their property or if aligning payout dates for a first and second mortgage. A longer term with P&I could be a better strategy for clients needing time to re-establish themselves. Think of the exit strategy when talking to your clients about open or closed term mortgages, for plans such as aligning payout dates of first and second mortgages. Ask your clients what their plans are upon renewal and make a note of this for future reference.

Explain fees and penalties if clients were to change the exit strategy.

#5. Cancel your commitment if not needed anymore. There are times when your client changes their mind, disappears from your radar, or gets a better solution. Please (always) contact your underwriter and cancel any unneeded commitment as soon as possible. This is a best practice and that shows your knowledge and respect for the lender.

No lender can commit twice on the same dollar; do not need it…release it.
 
Paula Hutton has been licensed in the mortgage industry for over 20 years. She started her career as a mortgage broker and has spent most of her time on the private lending side of our industry. She is the Western Canada Broker Relations Manager for Fisgard Asset Management Corporation.

If you would like any additional information contact [email protected] or [email protected]
Or visit the website at www.fisgard.com