“An expert is a person who has made all the mistakes that can be made in a very narrow field.” – Niels Bohr
Once the complete application is built, and the call comes to an end, a number of next-steps must occur immediately. Otherwise they are unlikely to occur at all. These steps need to become policies, rituals even, their implementation an unbreakable habit. You do not get up from your desk until they are complete.
- Thank the referral source by phone, text and (not or) email. Then send them a thank you note ∕ gift—reward the behaviour. (Chapter 47)
- Create a complete contact card detailing the client’s name, phone number, email address, workplace, job title, and in the notes section complete name of the referral source (and their job title if relevant, i.e., Realtor) and their Realtor’s name; ultimately, you will add their lawyer’s name in the notes section as well. (Chapter 10)
- Add them to your crm program.
- Add them to your file tracking spreadsheet. (Chapter 29)
- Send an email to the client titled “Client Agreement and Documents List.”
You just gave the clients a verbal heads-up that this email is headed their way, so make it happen quickly. You have explained that the client agreement is non-binding and does not commit them to you exclusively or to any costs whatso- ever. It is essentially a permission slip allowing you to pull their credit report and send their information to a lender for pre-approval or approval (in B.C. there is no ability to charge an advance fee as per legislation, or any fee at all unless the mortgage is registered).
You have also explained that with regard to documents list, having processed more than xxxx number of files you have learned to include great detail about the documents required. What we need, why we need it and how best to access it if they cannot find it quickly and easily on their end.
The speed with which you send the clients this email is one more telltale sign to them of how game-on you actually are. Are these clients really at the top of your priority list? You had better make them feel like they are your only client. Speed of response goes a very long way to creating this perception.
The Master List
My standard documents list is re-created below, and it is yours to copy and improve upon. As you can see, it is a master template designed to address nearly every sort of application a Broker might deal with. It also acts as my safety catch on a few key points, such as issues that develop with certain property types. It also contains links to how to calculate our jurisdic- tion’s property transfer tax along with potential exemptions to said tax. These links also serve as a written reminder to the client that the Property Transfer Tax exists and cannot be financed into the purchase.
In some cases, the Realtor believes discussion of the property transfer tax to be something that the Mortgage Broker should take care of. Many Brokers feel this is something a Realtor ought to be making sure a client is familiar with, as showing properties at or near the cutoff point of the tax exemption obviously has an impact on the client’s ability to afford the property.
The best policy to adopt is that all things related to a smooth financing completion are the Broker’s concern. Your concern. Incorporate as much detail into the various steps of the process as possible. This formal style of opening email is a great spot to include various hyperlinks to keep the process on track from start to finish.
Please keep in mind this is a living document that I refine regularly. Most importantly, I do not send this complete list to any client, ever. I have created an email signature that contains all of this text, and then I delete the irrelevant items on a case-by-case basis. And I cannot know which items to delete without having had a detailed application conversation with the client up front. In other words I do not want a client sending me stacks of documents up front, I want to speak with them first.
For instance, we do not ask clients for property-related docs when they are first-time buyers; we do not ask them for a separation agreement when they have confirmed they are single and have never been married, etc.
This is a master template. Chop it down according to the application you have just taken, and ask for only the relevant documents.
My email template
Good morning ∕ afternoon ∕ evening,
Please find attached a non-binding client agreement. This document in no way commits you to a specific lender, myself or any costs.
It is a permission slip allowing us to represent your interests with a variety of lenders.
Please find my complete contact card attached, and please save it to your phone and your computer. Also please send me your complete contact card. (Thank you.)
Below, you will find a detailed explanation of each document required.
Mortgage document requirements
Please forward what you can when you can—there is no need to save it all for one big fax or email. The sooner we receive each document, the better prepared we are to address any questions that arise.
All documents may be faxed to 1-555-555-5555 or scanned (pdf) and emailed to firstname.lastname@example.org
iPhone or iPad user? Check out the Turboscan app. It allows you to scan and send docs in a pdf format right from your iPhone or iPad. Awesome application!
please try to scan at no greater resolution than 300 dpi. pdf format is ideal.
Trouble with pdfs? Download cute pdf writer for free—a fantas- tic program that installs on a PC like a printer driver. It allows one to “print” just about anything into a pdf document. For mac & newer PC users, select “Print” and then choose the printer driver
“Save as pdf” from the menu.
1) Employment Confirmation Letter
This letter must be dated within 30 days of:
• The offer written to purchase.
• The application for renewal or refinance.
it must state your start date, annual base salary (along with bonus info if applicable) and job title. one simple sentence. It must also have a signature from the author along with their title and phone number. It is important that the author be accessible by telephone. The lender will call to confirm employment details in 100% of cases.
2) Your most recent pay stub 3) The 20XX and 20XX T4s
1) A two-page document from the corporate binder titled “Notice of Articles.” This demonstrates who the shareholders of the company are.
***See attached example.***
2) Copy of business licence for current and previous year
3) Two most recent fiscal years’ business financial statements (these must be accountant prepared).
All applicants should be prepared for a request of one or more of the following:
4) Notice of Assessment (NOA; Canada Revenue
***See attached example.***
For the 20XX and 20XX tax years. (Note the tax year date, not the mailing date) ***This is not your property assessment. It is the income tax receipt from cra showing income taxes owed or due.
If this document (NOA) shows taxes owing, a proof of payment must be supplied. Proof of payment can be either a “statement of account” from CRA, a copy of the cleared cheque or a printout of an online banking statement show- ing the payment made to CRA. Please note the “statement of account” is a secondary document to the NOA.
The NOA is primarily used to support commission, bonus or overtime earnings. We typically need to show a two-year average to use this income.
In the case of business owners, the NOA serves as confirmation that the income filed was accepted by CRA. It is like a receipt confirming the validity of the T1 General itself.
If you cannot locate your noa, or it shows taxes due and you cannot locate the receipt for payment, please call 1-800- 959-8281 and press “*.” Then request that an NOA and ∕ or “statement of account” be mailed to you. CRA will not fax or email this document, so this is a call worth making early on if you cannot locate your NOA easily (“easily” being defined as 10 minutes of searching).
Often, CRA will try to tell you what you “actually” need is something else, that one document or another “will be fine.”This is not the case. Please stand firm on your request for an NOA. Lenders specifically require the NOA. No substitutions.
This is the first and most important piece.
The second is the SOA (Statement of Account). This is required only when your NOA shows taxes owing and no other documentation is available to confirm that the taxes were paid.
Despite CRA suggesting it will take two to four weeks to receive, it typically takes less than five days.
5) Complete T1 General Tax returns, all (25+) of the pages, for each year noa supplied.
Requested when a client owns investment properties or is a business owner. T1s prepared by a licenced accountant only. please do not file your own taxes. ***Discuss***
6) A copy of your most recent property tax notice. And confirmation of payment. only for residential properties in your personal name.
7) A copy of your (fire) home insurance documents. If you are in a strata, a Form B. This is available from the Strata Council or the property management company. Often, there are rush charges associated with Form B; the earlier ordered, the better.
8) A copy of the most recent mortgage statement avail- able for each property owned in your personal name. This statement must show the property address along with your personal name.
9) A copy of a (current) lease for each rental property owned. ***Discuss options if tenant is month-to-month.***
10) If you are purchasing or re-financing a strata-titled property: we will require the minutes of the last two AGM’s and most recent strata meeting minutes.
11) If a refinance: a copy of the survey certificate. (The black- and-white document that shows the lot dimensions with an outline of the footprint of your home on it.) ***Discuss Title Insurance in lieu of***
12) If a purchase: please have your Realtor provide a copy of the purchase sale agreement (with all applicable signatures). Also the PCDS (property condition disclosure statement), MLS and a copy of the floorplan if applicable. Also when applicable a copy of the site survey is useful to have on file. Ideally, please provide your realtor’s contact data; we will communicate directly with them for all of the property-specific documents.
note: A failure to have a “Notice to Vacate” on a property currently tenanted may jeopardize your financing. Always request a “Notice to Vacate” be a part of any purchase con- tract. ***Discuss if this is a problem***
note: Please advise if the property is any of the following or any similar issue exists:
- A remediated grow-op
- Remediated drug lab
- Lease land
- First nations lease land
- Age-restricted property
- Special assessments (pending or otherwise)
- Any reference to water or leaks in the minutes
- A “fixer upper”
- Contains vermiculite insulation
- Has (even partial) knob-and-tube or aluminum wiring
- Contains asbestos
- Is on land with a commercial zoning component
- Livestock is present, etc.
- Active farming of any kind (check the mls notes)
- Any commercial activity on the property
The list goes on . . .
13) If the property is to be registered (or is currently registered) in a Holding Corp, we will also need the two-page document titled “Notice of Articles” for said Holding Corp. This data is important, as is clarification if the property is currently registered in the name of an actively operat- ing Corporation. ***See attached example.***
14) If you are applying for a construction mortgage, please supply a detailed builder’s budget (build sheet) and a copy of the house plans, as these will be required in order to request an appraisal of the property.96 · be the better broker
15) A copy of either your Driver’s Licence or current Passport. This is as simple as snapping a photo with your phone and emailing or texting said photo.
16) A copy of a void cheque drawn on the account that you wish mortgage payments to be deducted from. Again, a texted photo works.
Please note: You do not have to open a new chequing account with the lending institution with which we are placing your mortgage. With a copy of your cheque, the new payments will simply be drawn on that account. No changes to your bank accounts are required with this process.
It is also important to note that a “counter cheque” will not be acceptable. It must be one with your name and current address pre-printed on it.
In the absence of a cheque, we will provide you with a Pre- Authorized Debit form to be completed. Do not make a trip to your current lender for a similar form, as the new lender will often have their own specific form.
17) Down Payment
Are you a first-time buyer? Here is a super-simple down pay- ment calculator that factors in the latest rules as of 20xx.
Property Transfer Tax (ptt): In British Columbia, all buyers (except first-time buyers purchasing under $475,000) pay Property Transfer Tax. This is a cash expense in addition to your down payment.
PTT cannot be financed into the mortgage.
For more details (and a link to a PTT calculator), please click here: www.bcrealestatelawyers.com/ptt-calculator/
First-time buyer purchasing between $475K and $500K? Here is a link to the transition calculations: www2.gov.bc.ca/gov/topic. page?id=47FA8BF59DC045A5862895B554A1180A
Due to federal government guidelines, there are strict requirements imposed on documenting the source of down payment monies.
The lender will require 90 days’ bank account history of the account in which the total down payment funds will accumulate.
this is not to say that you need the money in an account for 90 days.
you do not need the money in an account for 90 days.
We are demonstrating two things here:
1. That you have had a CDN$ bank account for 90 days.
2. That the total funds to complete the purchase are currently in the account (at the time of subject removal, ideally).
We do this by providing one or more of the following:
A. Three months’ bank statements, OR investment accounts. All statements must clearly show the account holder’s personal name and account number.
B. A contract of purchase and sale for your current residence if the source of funds is from a sale.
C. A gift letter—we supply a template upon request (many lenders have specific gift letter templates).
In the case of a gifted down payment or other special circum- stances, an inheritance for example, we may need to provide additional documentation. This is rare; typically, the gift letter alone will do the job.
In an instance where less than 20% is being put down, we will also need to show an additional 1.5% of the purchase price as available cash in the bank in order to meet the down payment condition. (Technically, even a 5% down buyer must be able to show 6.5% of the purchase price as cash in the bank.)
In an instance where funds are being pooled into one account from multiple accounts, e.g., rrsp, tfsa, gic, long-term savings, we will be asked for 90 days’ history of each of these accounts as well.
If you are a business owner, there may be an option to raise capital via equipment leasing through your business. Request further details if applicable.
18) Name and phone number of the solicitor you would prefer to use. A recommendation can be made if you do not have one in particular that you wish to use. I have an excellent referral in this department who will keep things simple for all involved.
19) If you are separated or divorced: a complete copy of the separation agreement. The purpose is to show support pay- ments being made or being received.
20) Last, a quick read regarding the Nature of Pre-approvals if you are interested. As well as a read on the process of purchas- ing a property.
Admittedly even an edited-down version of this list asking for just seven or eight items may seem likely to scare some clients away. It rarely does—roughly one in one hundred applicants fall silent at this point. The majority appreciate the detail.
As for the 1-100 that we do lose, this is a point where “testing the client’s commitment to the process” is actually a pretty good idea. There can be far more stressful moments during a transaction than providing a relatively simple list of easy-access documents.
Losing a client sooner rather than later in the process is always best, but in your early days you want to go through the process and practice of taking as many applications as you possibly can. Ultimately, you will find that the overwhelming majority of clients respond quickly with a complete documents pack- age. And that you create far more stress by asking for one or two documents a day for two weeks running.
Do not try to make the process lighter on documents, do not argue with an underwriter that you should not have to supply certain documents, just get them up front on day one when tensions are low all the way around.
Admittedly, there is a parallel here to the Broker who suggests an online application link tests the commitment of the client. Again, the key difference is that we have built a complete application, a beneficial experience for both the client and Broker, and very few clients are going to walk away from that hour of time; the client is now invested and connected.
Were you to attach this documents list on the heels of an online application where the bond is still much weaker, I suspect you would lose one in ten rather than one in one hundred.
My limited experiences with sending clients online links and leaving that ball in their court were all highly negative, and so I switched back quickly to the ways that have worked well for me.
This is not to say that these are the ways that will work best for you, although I suspect they are the best path for any aspiring full-service Broker.
chapter tip: Look for every opportunity you can to shorten the documents list by doing the work yourself. Many municipalities will release a property tax statement con- firming no taxes are owing on a home. If you can access that document directly then do so.
chapter tip: Always pursue the option of a Schedule A or Letter of Economic Rents from an appraiser in lieu of requesting lease documents from a client. All too often, clients will have expired leases and tenants on month to month, and you are creating work for the client that could be avoided with a small expenditure of time and money on your end.
chapter tip: The 2015 noa format has changed; be sure you have a current sample of the new form for clients to view along with the previous one.
chapter tip: Ask your clients if they have an accountant. If so, ask for an email introduction as the accountant may well be able to send the majority of the documents to you directly. This ensures nicely titled low-resolution pdf files, and the accountant speaks the same documents language as you do. If you are really on your game, you will convert their accountant into a referral source as well.
chapter tip: Keep in mind that the gathering of the correct documents is the most challenging aspect of the process for 99% of clients. How can you smooth the flow of docu- ments from your client to you? Focus on this; think on it.
chapter tip: On the topic of email “read receipts”—just don’t. They are frustrating, and nobody likes them. Do not use them ever. Pick up the phone, engage a more personal touch if you want to confirm that an important email has reached a client.