The new B20 guidelines are set to come into effect on January 1, 2018. It is essential for Mortgage Brokers to understand lenders and their niches, and what impact these changes will have. Accordingly, we have compiled Brokers’ most commonly-asked questions to help you understand Magenta’s lending posture.
Will borrowers have to re-qualify at renewal?
Magenta has always been a short-term lender and will continue to offer short-term loans. We have always re-qualified mortgages based on payment history and current lending posture, with the goal to move borrowers back to the federally regulated space.
How will it affect your income-verification process?
Magenta has always had a rigorous income-verification process; however, our underwriters are encouraged to apply judgement to each file, and are well versed in identifying and verifying alternative sources of income.
Will Magenta be affected by the restrictions on co-lending and bundled mortgage products?
Although Magenta has previously participated in bundled products, we have always offered our standalone second mortgage product. We anticipate our second mortgages becoming more popular in 2018.
Will the loan-to-value limits be affected?
Magenta continually evaluates and reviews its LTV posture, and we do not foresee any changes at this time.
Will Magenta still be able to cap their fees?
Yes, this is a key feature of our product offering.
Will the minimum qualification rate (stress test) affect Magenta’s rates?
Although federally regulated financial institutions will be required to qualify clients at the greater of their contract rate plus 2%, or the Bank of Canada posted 5-year rate, this is not the case for Magenta. We will continue to lend to our clients at our contract rate. In most cases, this will be equal to, or less than, the qualifying FRFI’s rates. Our servicing ratios have already taken this rate into consideration.
At Magenta, our goal is to support our Broker Partners during these changes, as well as, help as many people as possible to achieve their home ownership goals.
To find out more about B20, call us at (613) 230-5014.