Brokers

3 Underwriter’s Tips for Getting That Deal Done Faster

You’ve met with your client. You’ve done a thorough job of asking open-ended questions, probing for explanations, and understanding any unique challenges of their situation. You write up the deal, select your lender and press submit.

And then you wait…and your client waits…

Finally, your lender comes back to you with questions and you’ve got to go back to your client for more information. Your client is starting to get impatient; they want the house and they’re anxious to get the process moving.

What’s more, you’ve got multiple deals on the go that require that same back and forth. You’re busier than ever and things are not moving forward fast enough. You’re spinning your wheels, but you can’t find any traction.

Have you and your client been in this situation before? Is it maybe more familiar than you’d like?

3 Tips from an Underwriter to Getting That Deal Done Faster

Time is money: every second counts, especially when those seconds are wasted playing the email game. The good news is that all it takes are a few simple strategies to turn a tedious tug-of-war into a quick and successful deal for all parties involved.

1. Ensure your application and submission notes are comprehensive. Less is more might be good advice about salting your pasta, but when it comes to your application, it pays to be as detailed as possible. Stay ahead of the game by including crucial info, such as the fee you would like the lender to collect, and what product meets the client’s needs.
2. Make sure your client’s solicitor is fully informed about the transaction and prepared to meet the desired closing date. Communicating clearly from the outset will allow you to address potential hiccups well in advance. Avoid time-consuming misunderstandings by confirming that all parties understand their obligations. Clear communication with all parties is key.
3. Notify your client of the essential documents needed for the funding phase well in advance. Have a little sympathy: it can be an intimidating prospect to comb through a dusty storage room, messy hard drive, or overstuffed inbox for the right PDFs and papers. The sooner they know to start looking, the better. These might include:
   • Payout statements for mortgages;
   • Recent statements for any disbursements;
   • Condo status certificates;
   • Confirmation of recent inspection/pumping for septics.

Sealing the Deal

Bonus Tip for Submission: Services such as Filogix, Lendesk, and Velocity can help you package and submit your deal by accelerating the busy work. Furthermore, at Magenta, you can use our Broker Portal to monitor the status of your deals quickly and easily. Our Residential Brokers page also offers advice on specific documentation requirements for different products, contact information for our Broker representatives, and more tips like these for fast submissions.

These tactics can streamline the process further and take the guesswork out of submission. Now, take all that time you’re saving and drum up new business for your pipeline!

About Magenta Capital Corporation

Magenta is one of Canada’s leading residential, private MICs. Since 1994, we’ve specialized in flexible mortgage solutions for Ontarians who fall just outside of bank lending criteria, while delivering on strong, consistent returns for shareholders across Canada. Our goal is to empower our customers, partners and employees to build a better tomorrow.

For more information, contact our broker representatives at brokers@magentacapital.ca.

Knock, Knock? No Doc!

At Magenta, we know there are many reasons why clients might require equity-based mortgage products. For some, unexpected challenges such as the COVID-19 pandemic may have left a mark on their credit or a gap in their tax filings that make applying for traditional mortgages difficult, regardless of their current assets and income. Others might simply have an income that’s difficult to verify, whether because they are self-employed, or their income is from a separation or bereavement, rather than employment. With these challenges in mind, let’s explore how Magenta’s No Doc mortgages can be a game-changer for alternative borrowers who fall just outside of traditional lending criteria.

Business For Self

Magenta offers No Doc mortgages tailored to alternative borrowers whose circumstances may not be best served by other institutions. For instance, consider the small business owner looking to use home equity to fund their business. If that business has a significant cash component, it will lack the verifiable income needed to qualify for a bank loan. But with Magenta’s No Doc mortgages, that borrower would only need to provide proof of ownership of a marketable home in a high-quality location to apply for a No Doc mortgage with up to 75% loan-to-value (LTV).

Rentals

Consider also the self-employed property investor hoping to get a mortgage on a rental property to free up the capital to renovate their other projects. Due to the fluctuating nature of their cash flow, they may lack the evidence to prove their ability to repay a loan, despite their actual financial capacity being more than sufficient. With a Magenta No Doc Mortgage for Rental Properties, not only is there a 100% offset on rental income with no maximum number of doors, but there is also up to 75% LTV on student rentals. Furthermore, Magenta offers 2-year terms in addition to traditional 1-year terms to better suit the needs of a property investor.

Our solutions accommodate your alternative borrower clients by placing the burden of proof on the quality of the property to be mortgaged. Keep reading to find out why you shouldn’t knock no doc:

1. Smaller Monthly Payments: Magenta offers 50-year amortization or interest-only payments. This balances our rates in favour of smaller monthly payments, passing the benefits on to your client’s cash flow.
2. New Longer Terms: Magenta is proud to have recently added 2-year terms as an option, in addition to our traditional 1-year term offerings.
3. 24-Hour Quick Closes: Has a borrower’s lending institution option fallen through? Our team will put in the work to help you meet your client’s deadline.
4. Capitalized Fees: We capitalize lender fees and broker compensation. This means the cost is added to the client’s principal and spread over the life of the mortgage.

 
See our selection of no-doc mortgages for yourself- all funded this year:

No Doc Mortgages are available in urban, small centre and rural locations throughout our lending areas. Please view our interactive Google Map or speak with your Magenta representative to find out more.

Interested in what Magenta has to offer?  Connect with our mortgage origination team, or click here to learn more.

Spotlight on Second Mortgages 

At Magenta, we know there are many reasons why clients choose to take out second mortgages. For some, second mortgages are valuable financial management strategies for dealing with debt efficiently at lower interest rates. For others, second mortgages are an avenue for funding the acquisition or improvement of homes, paying tuition for oneself or one’s family, or any one of life’s other major expenses.

Business For Self

Magenta offers second mortgages tailored to the needs of alternative borrowers whose unique circumstances may not be best served by other financial institutions. For instance, consider the small business owner looking to use home equity to fund their business. If that business has a significant cash component, it would lack the verifiable income needed to qualify for a bank loan. But with Magenta’s Stated Income Program for Second Mortgages, that borrower would only need to provide non-traditional income documents like business ownership, bank statements and other supporting documentation to qualify for a Stated Income Second Mortgage with up to 75% loan-to-value (LTV).

Rentals

Consider also the property investor hoping to get a second mortgage on a rental property, but running up against the limits banks place on the number of rental properties a borrower can have. With a Magenta Second Mortgage for Rental Properties, not only is there a 100% offset on rental income with no maximum number of doors, there is up to 75% LTV on student rentals. Furthermore, Magenta offers  2-year terms in addition to traditional 1-year terms to better suit the needs of a property investor’s longer view.

Our solutions are designed not only to address your client’s short-term credit challenges but also to help them return to traditional lending channels as soon as possible. Keep reading to find out why Magenta’s mortgages are worth a second look:

Smaller Monthly Payments

We offer up to 50-year amortization, or interest-only payments, and balance our rates and fees in favour of smaller monthly payments, passing the benefits on to your client’s cash flow.

New Longer Terms

Magenta is proud to have recently added 2-year terms as an option on our second residential mortgages, in addition to our traditional 1-year term offerings.

24-Hour Quick Closes

If a borrower’s lending institution option falls through, our team will put in the work to help you meet your client’s deadline.

Capitalized Fees

We capitalize lender fees and broker compensation, meaning the cost is added to the client’s principal and spread over the life of the mortgage.

No Notice of Assessment? No Problem

Even clients with low or no documentation verifying their income are eligible for second mortgages through Magenta, subject to only a small increase in their starting fee.

Simplified Financial Planning

We’ll match the maturity date of our second mortgage solution with your client’s first mortgage, simplifying their financial planning.

A selection of second mortgages funded this year (borrower and identifying property details have been removed):

* Small Centre refers to properties located in towns with a population of 1,000 or more within 45 minutes of one of our urban centres.  Rural refers to properties with septic and well access within 45 minutes of one of our urban centres.

Second Mortgages are available in urban, small centre and rural locations throughout our lending areas. Please view our Google Map or speak with your Magenta representative to find out more.

Interested in what Magenta has to offer?  Connect with our mortgage origination team, or click here to learn more.

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 for 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 approval.

Here’s three tips for packaging your deals, and what your lender wants to see:

• Documents up front. Sending most of the needed 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.

4 Questions to Ask Your Client About Damaged Credit

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 understand 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 a 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 upfront 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.