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Borrowers turn to alternative lenders amid new mortgage rules Mortgage brokers say the borrower rejection rate from large banks and traditional monoline mortgage lenders has gone up as much as 20 per cent after Canada’s banking regulator imposed a new stress test for homebuyers who don’t need mortgage insurance. As a result, alternative lenders are seeing an uptick in business as brokers increasingly direct homebuyers toward borrowing options that are beyond the reach of the Office of the Superintendent of Financial Institutions’ (OSFI) newly enacted tighter lending requirements. Clients who don’t meet the bar are turning to private lenders, mortgage investment corporations (MICs) and credit unions, which are provincially regulated and not required to implement the stress test, said Carmen Campagnaro, president of Pro Funds Mortgages in Burlington. Campagnaro is one of the brokers who said rejected loan applications to traditional lenders have risen by 20 per cent since Jan. 1, when OSFI mandated a new stress test for uninsured borrowers,…

20% more mortgages are being denied by big banks, sending borrowers down the credit ladder TORONTO — Mortgage brokers say the borrower rejection rate from large banks and traditional monoline mortgage lenders has gone up as much as 20 per cent after Canada’s banking regulator imposed a new stress test for home buyers who don’t need mortgage insurance. As a result, alternative lenders are seeing an uptick in business as brokers increasingly direct home buyers toward borrowing options that are beyond the reach of the Office of the Superintendent of Financial Institutions’ newly enacted tighter lending requirements. Clients who don’t meet the bar are turning to private lenders, mortgage investment corporations (MICs) and credit unions, which are provincially regulated and not required to implement the stress test, said Carmen Campagnaro, president of Pro Funds Mortgages in Burlington, Ont. Campagnaro is one of the brokers who said rejected loan applications to traditional lenders have risen by 20 per cent since Jan.1, when OSFI mandated a new stress test for uninsured…

Mortgage bond market may get a boost from new Canadian rules The Canadian government is increasingly reluctant to insure mortgages against default. That may end up giving new life to a nascent bond market in the nation. For decades, most home loans made in Canada were made by the biggest banks and guaranteed by the government’s housing agency. In late 2016, regulators tightened the requirements for qualifying for that insurance, resulting in more people doing without it: about three-quarters of the mortgages made by federally regulated banks last year didn’t have government backing. Nearly half the nation’s $1.5 trillion (US$1.2 trillion) of home loans are now uninsured. For lenders, consumers’ growing demand for loans with no government backing creates a thorny problem: funding. A bank can easily bundle government-insured loans into bonds and sell them to investors. That bond market was $463 billion as of Sept. 30.   ‘Market Solution’ Without that backing, banks and other lenders have to rely on deposits, asset-backed commercial paper,…

My First Article for My New Site One day you make a reservation on an airline. You probably don’t love sitting in airplanes (who does?) but you’ve gotten used to it by now. Though you gripe about the legroom, you’re comfortable with the airline you’ve chosen. Then you arrive at the airport and you’re surprised to find that instead of the flight you expect, you’re going to be put on a totally different airline. Not Southwest or Delta. More like Aeroflot. Or Air Bolivia. That’s more or less the situation with your mortgage servicer. The mortgage servicer is the company that collects your monthly payment and — this is going to be the important part — is responsible for modifying your loan, imposing penalty fees or foreclosing if you stop paying. Most often that’s the company you got your mortgage from–the bank that approved your mortgage and that’s listed on the documents you signed when you closed on your house. Except that the mortgage servicing rights (MSRs, as they’re called in the business)…

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