It’s hard enough getting certain clients approved by lenders, and now brokers are having to deal with more conservative mortgage insurers as well.
“I did a number of files [last] week where the lenders wanted them approved but the insurers wouldn’t insure them,” Morris Briglio of Verico The Mortgage Advantage told MortgageBrokerNews.ca. “The insurers aren’t listening to the lenders.”
According to Briglio, he has noticed this sort of pushback from the mortgage default insurers since 2011, but that they have become stricter recently. He believes the B-20 rules are partly to blame.
“CMHC and the private insurers are the ones dictating policies to lenders which shouldn’t be the case because the lenders know how to [underwrite],” he said. “We might as well send applications straight to the insurers; it’s no longer the lenders who have the power.”
According to one broker, this is becoming increasingly common in specific areas.
“It’s a moving target at all times,” Jeff Attwooll of Verico K-W Mortgage Inc. told MortgageBrokerNews.ca. “Insurers in Alberta are looking at deals in a Microscope.”
Indeed, at least one mortgage default insurer has already admitted it has tightened its underwriting in the oil-rich province.
“We haven’t pulled out of the market by any means,” Levings told an investor conference hosted by National Bank in late March. “What we’re doing is we’re looking at the stacked risk factors a lot closer — so people that have higher debt service ratios, that are employed in the oil and gas sector, that may be dependent on one income versus two, that are buying a home with five per cent down — we’re going to take a lot closer look at that deal.”
Still, Briglio – a B.C.-based broker – is noticing the trend outside Alberta.
And even Attwooll, whose business is in Ontario, is encountering similar problems.
“I’m hearing from lenders that insurers are being a lot pickier,” he said.