Brokers

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.

Staying Top of Mind with Clients

An agent or broker like yourself is the bridge between clients and lenders. 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 stories 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.

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, visit www.magentacapital.ca.

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.

Register for Magenta’s back-end portal to access useful tools and forms today!

For more information, please visit Magentacapital.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.

Register for Magenta’s back-end portal to access useful tools and forms today!

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, visit www.magentacapital.ca.

3 Tips for Planning an Exit Strategy

For your clients who need a quick-fix mortgage, putting together an exit strategy is a must!

Here are three tips for planning an exit strategy that will help you transition your borrowers:

1. Begin Right Away.

Successful exit strategies depend on getting started right away. The best practice is to formulate a plan while the ink is still drying on the quick-fix mortgage. This is especially true if bruised or thin credit necessitated the short-term, higher rate mortgage, as credit takes time to build and repair.

2. Diagnose the Problem.

In order to find a solution, it’s important to know where your borrowers are struggling. The culprit is usually bruised or thin credit, but in this age of entrepreneurs, proving income may also be an issue. No matter the problem, there are almost always ways to address it and fix it.

3. Follow Up.

Set milestones for your borrowers and check in on them regularly to make sure things are progressing according to the plan you set up.

If everything is coming along nicely, you can begin building the file for their transitional refinance nice and early and have it ready to go when the quick-fix mortgage renews!

Register for Magenta’s back-end portal to access useful tools and forms today!

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, visit www.magentacapital.ca.

Getting to ‘File Complete’: Using a Checklist to Complete the Package

A good old-fashioned checklist is one of the most useful tools to help complete a file.

Checklists are easy to create, easy to use, can be implemented at any stage of a file, and are one of the simplest ways to make sure you get to ‘File Complete’ with the fewest hiccups.

Checklists for Borrowers

Introducing a checklist system can happen right from the initial interview with the borrowers, and before the file has been submitted.  After taking an application, you will have an idea of which documents will be required right away.  You could create different types of checklists for different types of files. You might also create one checklist and simply highlight the things you need from your clients on each different file.

For example, you may have one checklist for traditional income, and one checklist for Business for Self (BFS) files.  You might also have one checklist for purchase files, and one checklist for refinance files.

You can expect overlapping requirements – every borrower will be required to present a valid photo ID, for instance.  For the most part, however, you can customize a system that works best for you and for your clientele.

Checklists for Brokers

It’s a good idea to place a checklist noting all required documents into the hands of the borrowers. It’s an even better idea to keep a copy of that same checklist for yourself!

The necessary items may arrive in one big package, or the borrowers may bring things in as they find them, etc.  If you have a copy of the checklist, you can tick items off as they come in.  Consider adding a column to keep track of whether you’ve sent the documents to the lender, and whether they’ve been approved.

Depending on your file load at any given time, you may want to have a system to keep track of which stage your files are sitting.

It’s standard to keep a ‘Closings Calendar’, for files that have been instructed and have firm closing dates. What’s less common is to keep a checklist in each file to let you know at a glance at which stage a file is in the process.  You can have a checklist that has columns like: ‘Pre-Submission’; ‘Submitted’; ‘Approved’; ‘Declined’; ‘Complete’; ‘Instructed’; ‘Closed’.

Utilizing a checklist system helps ensure that you get the paperwork needed to complete your file. It’s also a good reminder that it’s time to follow up with a lender or law office!

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, email us at brokers@magentainvestment.ca or visit www.magentacapital.ca.