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BC Notaries Conference

BC Notaries Conference. Presenter Paula Siemens Invis - The Siemens Group. Brokers give independent advice and act as your advocate. Brokers can offer all mortgage products. Brokers are compensated only if the client is happy with their services.

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BC Notaries Conference

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  1. BC Notaries Conference Presenter Paula Siemens Invis - The Siemens Group

  2. Brokers give independent advice and act as your advocate. • Brokers can offer all mortgage products. • Brokers are compensated only if the client is happy with their services. • Brokers undergo mandatory continued education. • Brokers are self employed and will be there when the client is interested in returning for another mortgage, most branch people move around every few years. Why use a Broker

  3. Brokers are under the watchful eye of FICOM, branches are regulated by OSFI. • Many branch lenders do not have to supply documents to the approval centers proving the validity of their information. • In branch lenders are rewarded for cross selling other products to the borrower. Branch vs. Broker

  4. Client meeting/interview takes place to establish goals. • The broker would then analyze which products are best suited to the client and go over 1-3 options to meet that goal. • The broker then submits the file and documents to the lender of choice. Receives the approval and will negotiate any trouble areas with the lender, ensuring the process is smooth for the client. Process of working with a broker

  5. Once the file is completely approved with the lender the approval is signed by the client and then the instruction are sent to your office. • Typically most lenders have a unit that sends out the instructions or many outsource this process using title insurance firms. • This is when you want to call the broker to ensure what you have received is in fact correct.

  6. Signed application and client consent. • Fraud avoidance standards, state that we should exercise reasonable diligence in making sure we know who we are dealing with.   • title searches • Cross reference bureau address to the application • Google search the business or client • order our own payout statements • Cross check clients on 411.ca   Knowing Our Clients

  7. We essentially work with 2 insurers for all high ratio (above 80% LTV) mortgages, however, we can also use Canada Guaranty as well. • New qualification guidelines came into affect March 18, 2011. • Secured lines of credit cannot exceed 80% loan to value • Maximum amortization on high ratio loans is 30 years • Refinances are allowed up to 85% of lending value down from 90% CMHC/Genworth

  8. Longer amortizations are still available on conventional deals (below 80%) up to 40 years. • Borrowers can use up to 32% of their income for qualifying for the mortgage or 40% of their income including other debt payments. • Some exceptions exist to these ratios depending on the clients credit scores. • Rental properties are being scrutinized by lenders and the amount of rental income considered has dropped to 50% for many lenders. General Lending Guidelines

  9. Private lenders are used when: • The clients credit is inferior • The property being used as security is unique • Lending ratios are far too out of line • Client has not filed taxes • Clients cannot supply documents that the lender has requested • They fill in niches where conventional lending is lacking Private Lending

  10. Straight Port – No change to mortgage The existing mortgage balance, remaining amortization, and current loan-to-value remain unchanged or decrease from the existing property to the new property. No new CMHC insurance premium is payable CMHC portability of premiums

  11. Loan to value increase or a new mortgage with additional funds .(New LTV - Current LTV) x Market Value of the New Property x Premium on Increase Loan Amount • Example: • Current LTV is 85% • Purchase Price is 890K • Client needs a mortgage of$801K = 90% LTV $801K(LTV @ 90%) -756,500 (LTV @85%) = $44,500 X 4.25% =$1,891.25 vs. $16,020 if processed as a new application to the insurer. CMHC portability cont’d.

  12. A new mortgage with additional funds, the premium is: • Purchase price is $750,000 • Original Mortgage was $450,000 • New mortgage required is $625,000 • The increase in mortgage = $175,000 $175,000 x top-up premium 2.75% (83% LTV) = $4812.50 vs. $625,000 x 1% = $6250 = savings of $1687.50 The lesser of the two premiums can be charged. This is not automatically calculated. If the broker/lender does not do the manual calculation for the top up the whole premium will be charged again. CMHC Premium Portability Cont.’d

  13. Thank you for inviting me here today! • What Questions /Comments do you have? • Can you offer insight advice to the broker community that would assist you with the work you do? Thank You

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