Key to growing Alt deals

One alternative lending executive believes he has the answer for brokers looking to gain the competitive advantage in alt-lending.

Brokers are intent on growing the number of alternative lending deals, but one lender exec argues they need to transfer lead-generating duties to referral partners in order to stay focused on arranging those mortgages.

“Your cost of marketing, and your dollars spent on advertising is minimized; you’re working with a select number of individuals instead of dealing with the masses, you deal with the few who deal with the masses,” Marc Ruttenberg, president and chief executive officer of Paramount Equity Financial Corporation told MortgageBrokerNews.ca. “You’re bringing a valuable resolution to the few who deal with the masses and letting that channel direct applications to you; as a mortgage broker, you get to concentrate more on the funding than the sourcing.”

According to Ruttenberg, brokers with a pool of real estate agent referral partners will thrive in the space going forward.

“Real estate agents work with investors who buy investment properties for their portfolios and because of the institutional market being restrictive with CMHC regulations; it’s more difficult for these individuals to find financing without larger deposits down,” he said. “The alternative lending space allows those Realtors to work with a mortgage agent who has a direction through lenders where they can get 80-90 per cent financing without having to go through the CMHC rigmarole and be able to have a little more flexible lending alternative.”

With brokers and clients now grappling with tighter mortgage lending, many homebuyers are being forced out of the prime space.

Ruttenberg believes two-thirds of mortgages generated in Canada right now are alternative deals and he expects that number to continue to grow with B21 on the horizon.

OSFI released its draft for the B21 guidelines a year ago and they are currently subject to a consultation period that is open until May 23.