Thinking twice when handing your mortgage over to a bank adviser

Great story below of a recent Scotiabank advisor messing up a deal so bad that it ended up disqualifying a buyer from getting a special at 3.69% insured mortgage when market rates are 4.45%.

Bank advisors mess up all the time and I hear about it all the time. Maybe 15% of our deals get to us from bank mess ups.

In the story cut and paste below these buyers just would have ended up with a a higher rate but their deal wold still work… this one caused a 1 year delay.

Let me tell you a mortgage story…

We had a customer that we helped sheppard past 3 or 4 fiery hoops getting his mortgage ready for approval with a bumpy past we were smoothing over. Then 1 day he calls and says a met a bank mortgage rep at a gas station, that bank rep “guaranteed” him getting approved so our customer applied and … surprise – worse than a decline, CMHC declined him.

CMHC was the only lender that would do his specific deal, for the mess he was in, and/ but CMHC NEVER forgets – anything. All the insurers retain all data for ever. So he now had to wait another 12 months to get insurer approval. The delay in the end was 12 additional months that he had to wait before he could buy.

So … Think twice before handing over your mortgage to a bank adviser

Mark Herman, Best mortgage broker in Calgary Alberta for new home buyers.

 

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Opinion: Think twice before handing your mortgage to a bank adviser – CMT News

Written by Ross Taylor, Mortgage Strategies, Opinion, 

Let me tell you a story.

Recently, a major chartered bank ran a very competitive promotion: 3-year fixed rates at 3.69% for insured files and 3.99% for conventional files. Needless to say, these rates were popular, business was booming, both for the bank and for brokers working with them.

We had pre-approved a young couple earlier in the year, but when it came time to seek approval on a home they had made a successful offer on, they first went directly to their local branch to withdraw funds from their First Home Savings Account (FHSA).

When a branch adviser steps in

During that visit, the branch financial adviser offered to handle their mortgage as well. He convinced them there was no need to come back to our team, he had it all under control.

They also explored options at another bank, but the rates they were offered were mediocre. Our promo was still the best rate in town.

The deal gets declined, and there’s no second chance

But here’s the twist. After the financial adviser submitted their deal, it was declined. He escalated the deal to senior management, but again was given a firm no.

When they came back to us and told me the news, I was shocked. I couldn’t understand why they were declined. On paper, this was a strong file. Solid income, great credit, and their debt service ratios were within reasonable bounds.

Misinterpreting income cost them the deal

I asked if they were told why they were turned down, and they said, “because our debt service ratios were over the 39/44 limit.”

Now, their pay stubs were a bit complicated, I’ll give you that. But we had their T4s, and I could easily make a case for either using a two-year average or taking their current full-time salary. Both would have worked. You just had to know how to interpret the documentation properly.

I contacted our Business Relationship Manager at the bank and asked if I could re-submit the file. After all, it had been declined, and I felt confident we could get it approved with the correct interpretation of income. But the answer was a firm no.

Why bank policy closed the door

The bank’s position was that I wouldn’t want another broker or branch employee taking one of our approved files and trying to submit it again. And while I understand the sentiment, this wasn’t the same thing. This wasn’t poaching a win, it was salvaging a decline.

But rules are rules, and because the file had already been escalated and declined by the branch, there was no path forward for me to resubmit it — even if I knew how to fix it.

What’s the lesson here? Be careful who you trust with your mortgage

This story isn’t about one bank being better than another. It’s about understanding that not all mortgage advisers are created equal. When you walk into a branch, you’re often speaking to a generalist. They might have good intentions, but they don’t always have the same level of mortgage-specific training or experience as a full-time mortgage broker.

And the consequences of that can be enormous. In this case, the clients lost out on a great rate and had to start over, simply because it seems their adviser didn’t fully understand how to package their income. And once the file was declined, there was likely no second chance.

The bottom line

Mortgages are complex, especially if your income is even slightly non-standard. Getting declined not only wastes time, it can actually prevent you from accessing the best deals, even if you’re fully qualified. Before you hand over your file to someone behind a desk at your local branch, ask yourself: do they really specialize in mortgages?

Because once a file is escalated and declined at the bank level, it may close off options you didn’t even know you had.

Make sure you’re putting the biggest financial transaction of your life in the right hands.