905.537.8815 FSCO No. 10420
Banks and "A" Lenders pay us for your residential service. EXCEPT bad credit mortgages, some self employed mortgages from "B Lenders", private mortgages or multi-use and commercial loans - broker fees are payable by clients. Lenders change their products and interest rates without notice.
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Residential mortgages changes to conventional financing effective January 1, 2018 – how does this affect you? How will the private mortgage lenders come in to fill the void in the market place?
On October 17th 2017, Office of the Superintendent of Financial Institutions (OSFI) published its final version of B20, called Residential Mortgage Underwriting Practices and Procedures. This guideline, which comes into effect on January 1, 2018, applies to all federally regulated financial institutions (FRFI). This changes how mortgage applications are assessed, how property appraisals are managed, how much money the lenders will lend for various property types and quality in different real estate markets and quality of applicant covenant (income and credit).
This increases the likelihood of private lenders stepping in to fill in the residential mortgages void that will be created.
Here is the effect of these changes on the residential mortgage market:
The changes to residential mortgages guideline B20 emphasize OSFI’s expectations that federally regulated mortgage lenders tighten their mortgage qualifying practices.
Many of these rules exist now for insured high ratio mortgages to buy a home (less than 20% down payment) - lenders already qualify your insured application at posted rates and 25 year amortization, even though the actual contract mortgage rate you get may be about 2% lower.
The guideline focuses on the minimum qualifying rate for conventional uninsured mortgages, loan-to-property value (LTV) frameworks and limits, and restrictions to all those in the industry attempting to circumvent those LTV limits – with focus on property appraisals.
There are 3 parts to this new guideline:
Lenders are still interpreting these new guidelines. They have some insight into how they will handle each issue individually, but it is still work in progress and only time can tell how some of these will play out.
“B” lenders are still interpreting this component, and it should become clearer in the coming weeks. All alternative mortgage or “B” applications prior to December 31, 2017 can still utilize the 85% program as available through our broker channel. This is subject to availability.
Axcess Mortgage and Loans Financing Co. Ltd. Website can be used as your residential mortgages online resource. You can also ask me questions using the Questions and Answers link on this website. Check back on our website for my answers in about 48 hours after submitting your question.
We will continue to ensure that you, a mortgage consumer is more educated on the mortgage industry.
Clients are aware of the ‘A’ rates that are out there.
However, they often don’t understand why these lower rates aren’t accessible to them and what industry terms, such as LTV, stated income, and TDSR mean. As brokers, we are your trusted advisers by explaining to you why you may not currently fit in the ‘A’ market.
We’ll provide you with a game plan that will get you back on track to qualify for the lower rates at the earliest opportunity, even if today you are a private loan bad credit borrower or you need no proof of income mortgage - income where documents other than your CRA tax returns are used to qualify. As a result of regulatory changes, more and more clients are now entering the alternative and private mortgage market, and I suspect the new changes will push even more clients this way.
We will guide you through working with your lender, and packaging your application properly, to put you ahead of that curve. We will manage your expectations and keep you and your lender aware of every single step in the process.
By taking these steps, we can significantly improve our clients’ closing ratios, and most important of all, reduced stress for you. These steps will allow a hassle-free experience that is smoother and faster.
Call 905-308-8063 for home mortgage help or,
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