Brokers

Five Discussions to have with your Clients

As a new Mortgage Agent there is a lot of information to take in including processes and regulations. Learning how to conduct a thorough client interview and submit an application in good order is key to hitting the ground running. Successful Mortgage Agents provide full, detailed applications and clearly demonstrate that they know their client. How do you do that effectively? You ask the right questions, listen and take notes.

Here are 5 basic conversations to have with your client to help you gather the information you need:

Question 1: “Tell me about your credit history.”

Your follow-up questions should cover:

• How long they have had credit
• How they pay their credit, i.e. paying minimum payment or full balances
• Whether they have missed payments
• If they have co-signed any loans
• If they have had any collections, judgments, support payments, bankruptcies
• Whether they have filed/paid their income taxes and are they up to date on property taxes

Question 2: “Tell me about your income.”

Your follow-up questions should cover:

• All sources of income
• If they are self employed, how the business is set up, i.e. sole proprietorship or incorporated
• How long have they been at their current and previous jobs
• How stable and consistent is their income?

Question 3: “Tell me about your property.”

Depending on whether it’s a new purchase or refinance, your follow-up questions should cover:

• What type of property is it, i.e. owner occupied, rental, mixed use
• How long have they lived there
• Any improvements they have done or improvements needed
• Unique features of the home
• Known negatives, e.g. previous fire or flood damage

Question 4: “Tell me about your future plans and goals.”

Your follow-up questions should cover:

• How long they intend to stay in their home
• Whether they expect lump sums of income, e.g. work bonuses, inheritance etc.
• Any anticipated job changes
• Expected changes to family, e.g. newborn children or college costs

Question 5: “Tell me what’s important to you about your mortgage.”

Your follow-up questions should cover whether their priorities include:

• Flexible payment options
• Prepayment penalties
• Portable/assumable
• Lowest payment vs quickest payoff

An effective Mortgage Agent will take the time to have a thorough conversation with their clients, personalize the experience by asking the right questions, and then listen. Once you have a complete picture of your client’s situation, you can readily place them with the lender with whom they have the best fit.

Three tips to packaging your deals

Are you doing all that you can to package your deal for success?  Making your deal ‘lender friendly’ is the easiest and quickest way to get an approval.

Here’s what your lender wants to see:

• Documents up front. Sending most of the needed the documents right after you hit submit is one of the best things you can do to make your deal a success. This is especially true if you’re submitting a purchase.
• Clear broker notes. By telling the underwriter exactly what you’re sending and requesting exactly what you need on a submission, you’re more likely to get the answer you want.  What’s more, you’ll probably get a faster turnaround time too! Want a rate special? Ask for it! Have unusual income? Acknowledge it in the notes!
• Accurate details. Ensuring that there are no typos in the borrower names or property address is crucial to putting together a successful package. For instance, a typo in a postal code can mean your deal is rejected for being outside a lender’s preferred lending area.  The details definitely matter, so take the time to get them right!

Lender Top Tip:  Use the borrower’s ID to enter their details into your system. This will minimize any spelling or numeric errors.

Taking the time to cover these 3 steps for every deal should mean the pathway to a successful closing is smooth. Try it!

Talking to your client about Damaged Credit

Buying a home can feel like a scary process for some. In all the hustle and bustle of the housing market, brokers need to remember to take a step back and empathize with their clients. This means having difficult conversations.

You may feel your questions to your clients are intrusive or confrontational. You are careful not to offend your clients by asking tough questions that could make them defensive. The reality is that this is the exact information you need to get the best possible deal for your client.

Questions to Ask:

What caused the bankruptcy/consumer proposal?

Bankruptcy is a very difficult experience and it is usually the end result of an arduous period in someone’s life. The circumstances leading to this outcome are important to know because it allows you to provide the lender with the details and determine whether those same problems are likely to reoccur.

Why did they change jobs so often?

Frequent job changes could be a sign of your client taking advantage of better opportunities. It can also be a sign that they cannot hold a job.

Understanding the reasons for job changes and knowing how long the periods of unemployment were between them is a key part of you better understanding your client’s current and future income sources.

Why are they behind on credit card/loan/cell phone payments?

Was it forgetfulness? Is there a dispute with the credit provider? Is this a shared or co-signed account?  Or perhaps this is an early indication of larger financial problem that is just beginning to surface…

It’s best to ask for an explanation for all trade lines that are currently R2, R3 or worse. Don’t ignore past arrears. 

Just because everything is current today does not eliminate the need to explain what happened in the past. You need to know if this is reoccurring or simply a blip.

What is the status of their legal separation/divorce?

You need to understand your client’s legal marital status because if they recently separated or divorced, they may be required to provide additional documentation. For example, they may be asked to provide a separation agreement or seek independent legal advice.

It’s important to know up front what you are dealing with and the level of cooperation that a separated applicant is expecting from their ex. Non-cooperative ex-partners may derail a mortgage application.

Staying Top of Mind with Clients

An agent or broker like yourself is the bridge between a client and a lender. That is both a rewarding and time-consuming position to be in whether you’re using your customer service skills or tackling your administrative tasks.

As a lender, we understand that you are sometimes swamped. Here are some tips we’ve learned along the way to nurture client relationships and stay top of mind, with the goal of always being your client’s first call!

Client-Centricity

“The most important single thing is to focus obsessively on the customer. Our goal is to be earth’s most customer-centric company.” – Jeff Bezos

Leverage Social
Keep in touch in creative ways like following and engaging with your clients on social media. Post relevant topics to spark discussions on your social media! Have a TikTok account yet? It’s a top social media trend in 2022. Click the links below for current trends and best practices.

Lend an ear
People need to tell their story and love an active listener. Active listening is a crucial part of building relationships and is rare in the hustle and bustle of our busy society. Let your client tell their story and take lots of notes!

Evolve
Chat with your clients so you’re always finding opportunities to better yourself and keep their business. If you’ve lost some clients, simply ask why

Follow up strategies to stay top of mind

Deals

Past Deals
Review your files from the past year or two. Check your calendar for files that may be renewing and reach out to those clients to help them make their next move.

Deals that didn’t close
Understand why your deal didn’t close so you can grow professionally. Reach out to the lender’s BDM and ask them why your deal wasn’t processed so you know what to look out for next time. Understanding what makes the lender unique is key.

Future Deals
Remain diligent! Continuous communication with the client and the lender is vital to the success of future deals.

Funding

Before Funding
Talk to your clients about exit strategies. As your deal is being processed with the lender, it’s important for your clients to know their options for the medium to long term. Do a pulse check with them: Is your client happy? How do they feel? Are they nervous?

After Funding
Follow up with your clients after funding is completed. This is a great way to find out what went well, as well as, an opportunity to address any outstanding concerns. Send them a housewarming gift! This can help you grow the relationship. It also creates an opening to ask for a recommendation!

Magenta Answers Broker Questions About B20

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.

For more information, please visit Magentainvestment.ca.

Top 4 Tips for Mortgage Brokers to Effectively Package Deals

You create solutions for your clients by addressing their unique circumstances. The process of packaging the deal is ultimately communicating your client’s story and the proposed solution to the lender.

By remembering these four tips, you will be able to package deals effectively:

Tip #1: Understand your client to provide strong lender notes.  

• Hear their story: ask open-ended questions and probe for explanations
• Identify the challenges of their situation
• Document the complete picture, providing strong lender notes

Tip #2: Know your lenders and the niches in which they operate.

• Know your lenders’ niches, lending areas, and special programs
• Match your client’s profile/circumstances with the right lender
• Be up front about what the client’s challenges are and what documents you can or cannot provide
• Contact your BDM to discuss the detail

Tip #3: Be clear on how the solution will help your client.

• Know the benefits of the deal and how they meet your borrower’s goals
• Focus on what’s important to the borrower e.g. payment over rate
• Communicate with the underwriter for any questions regarding the commitment
• Let your underwriter and BDM know if there are objections you can’t overcome in the event adjustments can be made

Tip #4: Formulate and communicate your exit strategy.

• Explain to the borrower why they didn’t qualify with an A lender and why you selected the chosen lender
• Plan for the end of the term
• Suggest actions the borrower can take to help themselves in the future
• Be specific and measurable in your action plan for the borrower: “You need to pay $X on your credit card and $X on your loan each month.  That will bring your balances to $X in 12 months and improve your credit score by the end of the term.”

With strong communication and planning, you can implement solutions that create better tomorrows for your clients.

About Magenta Capital Corporation
Established in 1994, Magenta Capital Corporation (MCC) is one of Canada’s oldest and largest Mortgage Investment Corporation (MIC) managers.  MCC sources, underwrites and manages a portfolio of primarily residential first mortgages, secured by properties located in Eastern and Southwestern Ontario, two of the strongest, most recession resistant real estate markets in the country. MCC has a 23-year track record of generating superior returns for the shareholders of Magenta Group MICs.  MCC exercises oversight responsibility for the Magenta Group MICs in its capacity as General Partner of three limited partnerships, each of which is wholly owned by one of the MICs.

For more information, please visit Magentainvestment.ca.