Under the newest lending rules, credit unions have emerged as among the most reliable lenders brokers can use.
Principal broker and Owner of CLN Mortgages Raj Babber says credit unions, which operate outside the purview of the Office of the Superintendent of Financial Institutions’ regulations, have been instrumental in closing deals.
“They’re regulated under DICO [Deposit Insurance Corporation of Ontario], as opposed to OSFI, and they’ve come out and said, ‘As of right now, it’s business as usual,’ and the rates are fantastic,” said Babber. “There’s going to be a big switch to credit unions with brokering or mortgages being sent there. There’s only so much money that can be sent, and they do have quite a bit, but they’re going to be selective of the people they deal with—people who are providing them volume and are efficient with closing, so it’s important to establish a relationship and build a good rapport with them.”
Although credit unions may be selective with whom they partner in the broker channel, most reputable brokerages already have strong relationships with them, and they’ll merely need cultivation.
Babber has been working with DUCA Credit Union and Meridian, as well as smaller ones like FirstOntario, and he exalts their rates, which he called “competitive, if not better than what’s being offered out there.”
Shane Bruce, founder of the ACME Group of Companies, says his base of St. John’s, Newfoundland, doesn’t have the same resources larger provinces do, but that credit unions have emerged an excellent solution to helping clients secure mortgage financing.
“Most credit unions in our area aren’t part of the broker channel; it’s different when you’re in bigger markets like Ontario and B.C., so we use off-the-book,” he said. “I’ve always felt credit unions have so much to give and could take over the entire market, but they don’t have the funding to take on the crazy level of business out there.”
In some cases, added Bruce, credit unions are by far and wide the best available option for clients, and he’ll refer the former to the latter, even though he doesn’t make money off the transaction.
“What we’ll do is bring their information to our contact at the credit unions. They (Nfld. credit unions) don’t pay us for this, but it’s all about the greater good of the customer. And we don’t charge the customer. We make no money off them, but the hope is the customer will come to us later and tell a friend who will tell another two friends.”
