Something Seem Fishy? Don’t be Afraid to Dig a Little Deeper

If is walks like a duck and talks like a duck, it may be a duck! Financing a mortgage has a lot to do with good underwriting and funding models – but also a lot to do with gut instinct! If you are underwriting an application and something seems fishy, the time to dig deeper is now as to save invaluable time and expense!

Clients and brokers alike err from time to time. Often this is unintentional and occurs because the individual made their best educated guess on a piece of information. Of course, sometimes there are also deliberate attempts to manipulate information to get a deal through.

Here are some key underwriting tips that you may or may not be deploying to mitigate risk when you underwrite a deal.

Compare - When asking for documentation from the broker or client, such as void cheques, paystubs, ID, etc., make sure to check your documents and compare them against the information both in the credit report and in the application. This can be one way to not only identify issues that could surface later on your deal but also to mitigate fraud. I know, I know – seems like common sense, but many underwriters process volume deals and scan paperwork, when taking an extra couple of minutes could make a major difference.

Verify – don’t just take what is said to you at face value. Check the facts on the application at the application stage. Tools are now available that will enable you to verify who is the legal homeowner is, as well as verify registered mortgages and liens.

Evaluate – investigate the value yourself. Do not just depend on the fact that CMHC may accept the value or that you are going to get an appraisal to move forward on stated value. This can impact your closure rates with your insurers, not to mention avoiding that the wasted time spent underwriting a deal only to find out later that the value wasn’t there.

So we have talked negatives. You thought something seemed fishy and thus investigated it – does it mean that you will always discover a bad fish? Absolutely not. You may discover a big, fat grilled salmon. Your client may owe far less than anticipated or may have a home worth far more money than the client or broker projected. What does this mean to you? Upsell, upsell, upsell. You may have more of a deal than you think you do!

If something seems off, don’t ignore your gut. Compare, verify, evaluate. If everything is good, that is great. However, if something isn’t lining up, save yourself the time and expense and fix the problem right away.

For more about the tools that make comparing, verifying and evaluating easy, call Purview For Lenders today at 1.855.787.8439. 

HPI (House Price Index) and OMI (Ontario Mortgage Insight Report) Two Acronyms that mean A Lot

There is a reason why many economists subscribe and pay attention to the Teranet National Bank Index and The Ontario Mortgage Insight Report. If economists are paying attention to these what is contained in these reports, you should be too! These reports shed insight into the Canadian and Ontario real estate markets and trends. Reviewing this data can enable you to foresee changes coming in the market – both good and bad. This can help you to ramp up marketing efforts in particular regions or to mitigate risk.

The Teranet National Bank House Price Index is a monthly published report that provides the rate of change for Canadian single family home prices. The data is amongst the most accurate available and the report bases its measurements on actual sales in the public land registries. This is a national composite. Here is where you can register to receive this very valuable monthly report to your email inbox: http://www.housepriceindex.ca/Default.aspx.

The Ontario Mortgage Insight Report from Teranet also provides valuable statistical information which includes mortgages and home equity by location and transaction. This report is available in Ontario and you can register to receive it by contacting Teranet.

These two reports give you the competitive edge – stay in the know by staying in the loop!

Want to learn more about either one, or the many ways in which they can help you become more efficient and competitive? Contact Purview For Lenders today at 1.855.787.8439. 

More Mortgage Brokers Than Ever Using AVMs

While you have likely been using AVMs (automated valuation models) for many years as a lender, many brokers have only started using them more so in recent years, largely because they have been a product generally offered to lenders. This is no longer the case thanks to advancements in technology.   

The lack of use of AVMs or use of some platform to validate property values and home ownership information can largely explain the shock you likely hear from brokers when they submit a deal and without requesting an appraisal, you upsell the deal, down-sell the deal or decline the deal because you disagree with the value as a result of your AVM.

We often blog to brokers about the importance of strong lender/broker relationships. Developing and nurturing these relationships means work on both sides – especially if your approval and funding process is largely electronic, meaning little human contact between underwriters and brokers.

We constantly stress the importance of packaging and due diligence.

One way you can help your brokers to validate information more consistently and from the same source as you is to let them know the types of tools that you use when underwriting deals.

AVMs are an excellent example – just think of how many bad deals would be avoided before crossing your desk if your brokers leveraged AVMs to validate values, registered mortgages and the people on title.

This means education! When your BDMs hit the streets, arm them with more than current rate sales and info on who qualifies for what. Educate them about the tools, tricks and techniques that are available to perform due diligence and better package their deals.

Also – social media. Social media may be a marketing platform you use to attract brokers. Providing brokers with additional content that is of value to them and educating them on how they can be more successful can be a more powerful marketing tool than pushing out rate sales.

Teaching your brokers how they can underwrite more effectively leads to more qualified deals and an immense amount of time and cost savings – to you, your broker and, if you are not using AVMs, your insurers when disagreements re: value occur.

More mortgage brokers and agents are using Automated Valuation Models than every which is excellent for the industry. Get on board, and help your brokers be more effective.

For more about the value of an AVM for your brokers, please contact Purview For Lenders today at 1.855.787.8439. 

Private Lenders - Good Mortgage Gone Bad – Now What?

There is nothing worse than funding a deal that goes bad! If you are an FI who insures your deals you may have some solace knowing that you have that insurance in place – but there are still tons of lenders who don’t insure their deals simply because they can’t!

You know better than I that those more difficult deals where there are challenges with credit or income type generally don’t qualify for insurance and end up as equity deals that largely depend on the integrity of the asset, location and equity.

You may have done all you could – you may have had a conservative appraisal, lent on a low loan to value only to encounter a surprise later when a mortgage goes into default. This often occurs when there are changes in the marketplace impacting the value of a property – or in the case of second mortgages, the first goes into default and the first mortgage lender begins chewing up equity with whatever expenses they incur.

You likely have your standard procedure for dealing with defaulted mortgages – but this blog will shed insight into some technology that banks use, technology that is now available to even independent private mortgage lenders, that can be useful.

The first thing you want to do when a mortgage goes into default is check into the value and any encumbrances that may have been registered after your mortgage. A simple property search using a tool such as Purview For Lenders can achieve this by validating both value and registered encumbrances.

You can change your criteria to generate different models that show you the low to high end of the spectrum with respect to other properties in the area.

What’s more, you can even leverage an AVM (Automated Valuation Model) to identify trends in particular areas to be able to see where you have assets that may be experiencing a shift – good or bad. This could be a sign to solicit clients to borrow more – or a sign that on renewal, maybe this isn’t a good deal to have in your portfolio.

Shifts in markets and equity positioning are especially challenging for private lenders because when 1 year terms give you a chance to get out, annually, interest only payments mean that you are not seeing principal go down so a shift in values in a particular area can present considerable risk.

Want to be prepared when a good deal goes bad? Deploy the tools and technology available to you!! Purview For Lenders has those tools. Contact us today by calling 1.855.787.8439. 

Reduce Mortgage Fraud Using Technology!

We blog so much on the topic of fraud because it remains a very common challenge facing the mortgage industry as a whole. There are so many different types of fraud and one reason it is so challenging is because, in many instances, fraud is being committed but the individuals don’t even see it. With so many parties to the transaction and hands in the pot, you can see how easy it is for fraud to occur.

·         Real estate agent – perhaps they know something about their client, they are about to be laid off for a month, for example, but because it’s only a month, they see it as harmless so don’t tell the broker.

·         Mortgage Broker – perhaps the value of the client’s home is $230,000 but if beefed up another $10,000 there would be enough equity to cover all their debts – I mean hey, what is $10,000, right?

·         Client – perhaps the client visits a mortgage broker and tells the broker that their parents are loaning them their down payment but in fact they are borrowing it.

·         Appraiser – perhaps when at the house the appraiser is impressed because the homeowner has similar design taste as the appraiser. The client gives the appraiser a huge sales pitch about the house and so the appraiser decides to beef up the value a little bit to help the client out.

Genworth put out a great release recently outlining common types of mortgage fraud - check it out here: http://genworth.ca/en/lenders/types-of-mortgage-fraud.aspx.

Fraud will always exist, so lenders will have to continually seek out measures to combat fraud – and technology has been a great help in this area. Using technology and some good old fashioned investigation you can ensure that you know all there is to know about your application. Here are some tips that you can use to prevent fraud:

Getting Started with Purview: Integrating Purview Into Your Workflow

Whenever you look at ways to integrate new technology into your organization to increase efficiency, it is important to consider how versatile the technology is and how much use you can get out of it. The Purview For Lenders product is one that is commonly known as being a staple in underwriting departments Canada-wide, but Purview is actually used in many different areas within an organization.

In Ontario, Purview For Lenders uses data from the Province of Ontario's Land Registry Information System (POLARIS), which contains the most current and accurate land information available. Data provided from outside of the Province of Ontario is facilitated through agreements with both municipal and city assessment offices and third party providers.

This data is then delivered through a report that reveals:

• Property Sales Information – information about the property’s sales history
• Home Ownership Information
• Registered Mortgages and Liens
• Property Value and Equity Estimate
• Fraud Check and more…

The information is versatile because, within a financial institution, it can be useful in so many different areas.

On the collections and enforcement side, this report can be obtained in an instant online and is far less expensive than an appraisal. It can be used to evaluate a particular client’s property or it can be used to evaluate your entire collection’s portfolio. You can locate clients and also learn of other properties they may own, so if you do power of sale and are in a loss position you may pursue the debt through other assets.

In special adjudication, you can use the AVM to validate the value that a broker or client has submitted in an application and even compare it to the active MLS listing or to active MLS listings.

In risk management, you can leverage the data in Purview to evaluate and value your current portfolio and determine price appreciation year over year. You can also use Purview to determine housing price trends again interest rates.

Private lenders really gain a lot of value from of Purview. Traditionally a product used by major banks, more trust companies, credit unions, MICs and private lenders now take advantage of Purview. Why? For all the same reasons listed above. The beauty though, is that technology and affordability have leveled the playing field, making Purview a product that everyone can take advantage of.

Whether you use Purview now or are thinking about it for the near future, consider all the ways you can use it to maximize its value in each workflow that you integrate it into.

For more about the many valuable uses for an AVM please contact Teranet today by calling 1.855.787.8439.

Mortgage Enforcement Tools and Tips: Lenders Use AVMs to Collect More

We blog a fair amount about automated valuation models (AVMs) and how lenders use them. This is because, while they are widely discussed for being used in the sales, application and credit adjudication stages, AVMs are actually used across many different departments within financial institutions.

AVMs are particularly useful in the area of mortgage collection and enforcement. In collection and enforcement, the more you know about your client and security, the better. Power of sale is not always the best answer and it is better to know enough about the complete picture than to face surprises later.

AVMs help you quickly learn the value of a particular property. While that information is very useful when collecting a debt, some AVM platforms like Purview For Lenders include their AVMs inside a more comprehensive report, so on the collection and enforcement side they are able to:

• Validate addresses
• Validate home ownership information
• View registered mortgages
• View registered liens
• View an estimated property value
• View exterior and aerial imagery and more

Searches can be performed by name or address. Either way you have to know the Land Registry Office that the subject property is located in. If you know the homeowner’s name and not their address, you can still produce a search result.

This is handy to see many different things when you are looking at how you will collect your debt:

• You can use it to locate people who have disappeared – maybe your client owned more than one property.
• You can use it to get an idea regarding the financial positing of a property – maybe after your mortgage your client got subsequent financing.
• You can use it to learn if someone owns a home to enforce a judgement.
• You can use it to estimate equity in a property you have financed that has gone into default – this comes in handy when you are considering instituting a power of sale.
• You can use it to check if a condo has placed a lien on a property or a lien has been placed for unpaid property or income taxes  

Having the answers helps allow you to make some solid decisions about how you are going to go about collecting your money and what role your client’s property will pay in the collection of your debt. This will position you take collection action armed with as much of your client’s true and current financial picture as possible.

For more about the value of an automated valuation model please contact Teranet today by calling 1.855.787.8439.