Welcome to a New Year of Mortgage Matters, compliments of your Ottawa Sun. My mandate throughout the year will be to identify serious flaws within the mortgage system, possibly affecting our readership, and discuss possible solutions to those problems.  The answers discussed will be generic in nature and will contain the opinions of the author, and not necessarily the Ottawa Sun.  If you would like to discuss individual problems, you may contact me through the Ottawa  Sun Homes Editor.

I am and have been a mortgage broker since 1980, and in the mortgage business since 1970.  I have placed thousands of mortgages for Ottawa and area Consumers.  The mortgage broker has many lending sources, both institutional and private.  The mortgage broker has access to discounted rates for clean credit applicants, as well as other sources for those with a blemished past.  More times than not, the mortgage broker earns a commission from the lending institution that funds the mortgage.   Usually, the mortgage broker is a former disgruntled lender, who had no power to change the rules from the "Ivory Tower" at head office.

Lending institutions abound in Canada.  It should be noted that lending institutions in this country are controlled by parliamentarians, and even if you have never heard of some of our lenders, you can rest assured that as long as you owe them money (as in a mortgage situation), you can feel safe in accepting their mortgage loan.   Most of us have become complacent in our mortgage matters, primarily dealing with mainstream lending.  The reason....your normal Bank or Trust Company was good enough for your parents, it should be good enough for you.  The "normal bank" made a huge profit last year, mainly because of antiquated thinking from the Consumer's point of view.  Part of this profit was earned by not lending to what was  identified as risk clients.  Another part was renewing mortgages to existing Clients at the posted rate, as opposed to discounted rates.

Situations exist where the definition of risk fluctuates with the lender. There are fringe lenders who cannot necessarily compete with the mainstream banks from an advertizing point of view, or from an interest rate point of view,  but some of these fringe lenders can and do compete nicely from a wider client range than your normal bank, and possibly at a better rate. Most existing mortgage holders can get a better rate on a renewal through another lending institution than from their present lender.  We will discuss dealings with a wide range of interest rates.  Some of these rates may seem high to you but us old-timers remember when mainstream lending was at 17-18%.   Today's fringe lenders will charge between 6% and 12% on first mortgages.

It may surprise you that your own lender may even offer you a better rate if it gets challenged.  It may also surprise you that "situation  interpretation" can vary from lender to lender or even from lending officer to lending officer within the same company.  Most lending institutions analyze your mortgage application based solely of income and debt service ratios; it may surprise you that some lenders only care about equity position.  Most lending institutions in this country need to have their loans insured against default, if the down payment is not 25% of the purchase price; it may surprise you to find out that some lenders in this community will lend up to 100% financing, without default insurance.  Some lending institutions will insist on the Consumer hiring a lawyer to represent their needs in a equity-take-out situation, and obtaining a new land survey; it may surprise you that some lenders will allow an equity draw without the expense of legal work or a survey. These are just a few of the topics we will discuss this year.