How to Think Like a Lender During the Pandemic

By: Robert Floris

Lead Mortgage Broker with 30 Years of Mortgage Experience

“My cash flow is killing me with this pandemic”

“I have been laid off because of this virus”

“It was not my fault I lost my job”

“I have never missed a mortgage payment”

Yesterday was an interesting day as I took three calls who wanted to purchase or refinance their mortgages. Unfortunately, I could not help any of these existing clients. Why? The pandemic has affected their job status. In Canada, layoffs are normal and you should not be ashamed. The banks and mortgage lenders, as mentioned before, are worried about their money and profits. The best way to explain this is getting in the Canadian Bankers or Mortgage Lender’s thought process:

Before March 25th, the mortgage lenders had a soft spot for recently laid off clients. After March 25th, not so much. Banks are now scared. When banks are scared, they become cautious. And when they are cautious, they lend differently and less.

Income has replaced credit as the highest criteria. “Are you currently working” is the first question. If yes, prove it. Show us your letter of employment and a recent pay stub

Millions of Canadians defer their mortgage payments; thus, banks and mortgage lenders are borrowing cash to make up these payments.

Do they think that everybody will eventually catch up to their payment? No.

Do they expect losses? Yes.

This is why they’re mitigating their approval process to lessen the damage.

Are all lenders, banks and financial companies thinking the same? Yes!

One major bank told me that even if you are working today, they will send your file to risk to ensure the loan will still have good probability.

So now you know what is going on in the mortgage market during the pandemic, based on the lender’s beliefs. This article started on how the clients are thinking with some of their comments. If you are laid off and you have not deferred your mortgage payments, please do. It will save valuable cash for your family’s necessities. There is no shame in doing this and best of all, it does not affect your credit rating. As well, call your creditors to investigate a break on due dates and interest rates. Many of our clients at Mortgage Architects in Hamilton have been wildly successful at attempting these deferred payments. We want to hear more stories of this sort.

Robert Floris has been in the mortgage industry for 30 years, including working as a Sales Manager for a major chartered bank. Over his career, he has personally lent over 1 billion dollars and proudly continues to advise and tutor his valuable clients.