Special focus Credit unions
licensed to lend across Ontario, but will only grant mortgages to clients who are in close proximity of a Meridian branch. This is so that the credit union has “the opportunity to engage with that member” and “demonstrate the quality of service,” according to Meridian’s vice-president of marketing, Dave Roberts. He adds that because mortgage brokers deal directly with the credit union’s branch staff, there is also an opportunity for stronger broker/lender relationships to be built. Brent Irving used to work as an investment adviser at Vancity and now, as a broker with Dominion Lending Centres, he still likes to work with credit unions on a regular basis. Irving says he sends close to 20 per cent of his clients to credit unions like Vancity, Coast Capital Savings, North Shore and Interior Savings. “Where credit unions stand out is their service at the branch level – it tends to be better than at a bank and it’s less of that ‘big bank’ experience that some consumers don’t like,” says Irving. “I’d definitely encourage a mortgage broker to build a relationship with at least one credit union in their area because of their service and because they tend to be more open-minded with the alt-A business.” Deal flexibility The willingness to bend to make an alt-A or B deal fit is another feature of many credit unions that can be an advantage to mortgage brokers. While many banks or A-focused lenders don’t accept borrowers who are self-employed, have untraditional income sources or damaged credit, these applications can often be serviced at a credit union. Case in point: IC Savings & Credit Union, which lends in the Golden Horseshoe region of Ontario, started in the B mortgage lending space when it opened in 2000. It has since grown to include A clients, as well as commercial mortgages. “The ability to do business in the manner that we do from A to alt-A to B is sometimes
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surprising to mortgage brokers because other lenders aren’t able to be as flexible,” says Bruce Savage, vice-president of lending services at IC Savings. Feth agrees, saying one of the biggest perks of a credit union is their flexibility. He gives the example of a recent client who had income coming from a rental property, a part-time job and a pension. While he says he would have had to fight to get the deal done at a bank due to the income sources, the credit union made it work. “Credit unions are far more flexible, especially on conventional deals,” says Feth, adding as long as the clients don’t have “terrible credit,” there is likely a way to make a deal work.
“ where credit unions stand out is their service at the branch level – it tends to be better than at a bank and it’s less of that ‘big bank’ experience that some consumers don’t like ”
Top: Jeff Mayer Middle: Brent Irving Bottom: Bruce Savage and Phil Fiuza
Jeff Mayer, a broker at Mortgage Intelligence in Toronto, says many brokers automatically jump to a B lender if they can’t get a deal done at a bank when they could be looking at a credit union for better rates. He refers to a recent deal he worked on in the Kitchener area that he couldn’t get a bank lender to do. Mayer searched the Internet and sent the deal to a local credit union and was surprised to learn it didn’t pull the credit score but instead only looked at the client’s repayment history. “That really helped the deal,” he says, adding he secured a rate that was lower than it would have been at an alternative lender.
PROS:
CONS:
Friendly, community-focused service
Limited scope of lending
Flexibility on alt-A and B deals
Harder for brokers to access directly (no BDMs)
Other financial product offerings aside from mortgages
No volume bonus or loyalty programs for mortgage brokers
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