By Heino Molls
In April, the CBC reported about Home Capital: “Shares in the alternative mortgage lender plunged” and “clients withdrew hundreds of millions of dollars in a matter of days. The troubles at Home Capital began when the Ontario Securities Commission alleged that several company executives misled shareholders in their handling of a scandal involving falsified documentation for a bunch of mortgages almost two years ago.”
The CBC further reported that “in the summer of 2015, Home Capital announced that it had cut ties with about 45 mortgage brokers for fudging numbers” and they reported that “Home Capital makes most of its money selling uninsured mortgages to clients who the big banks don’t cater to, usually because they have spotty credit histories, are self-employed or have otherwise uneven incomes.”
In other words, Home Capital gave mortgages to people who had been brushed off by the banks and other standard financial lenders so they could buy a house. Most mortgage lenders don’t want to take a chance on a person who might be working for themselves or who has been through some tough luck in the past, even though they can show that they are hard working and entrepreneurial. Does that sound like anyone you know? Well I can tell you someone who that sounds like – me, that’s who. It also sounds like a lot of real estate brokers and salespeople I know.
These are people who are self-employed and especially people who have been through the ringer of sales careers and whose credit has boomed and busted for no other reason than some bad luck or unforeseen happenings. I have often said and written that although I have never been a Realtor, I have enormous empathy for sales reps and brokers because we are all unemployed every single month. I can tell you, dear reader, that while I have covered your business for over 30 years, the only thing I know for sure about your business after all this time is that it is uncertain whether you will make a sale this coming month. I can also tell you that even though I have been in the business of providing news to this industry for almost 30 years, there is no guarantee that I will make a sale this month either.
For a lot of us, a company like Home Capital and what happens to them is important. I had a mortgage from Home Capital (through its subsidiary, Home Trust) a few years ago. It was arranged by a good mortgage broker who worked hard for me. I must be honest and say that I was not overly pleased because I had to pay a higher rate of interest than my straight-laced, union member neighbours with their guaranteed jobs and gold-plated benefits. I had to pay some extra charges that I kind of thought were suspect in terms of real bona fide costs to get my mortgage, such as “administrative fees”.
The important thing was that at the time no bank would even talk to me but Home Trust did and they did that for thousands of other people as well and for that I will be forever grateful. We all know the market is currently robust but there was a time that it was not and I can tell you that at that time, when the chips were down, Home Trust stood with me and they stood with a lot of other folks who didn’t have great credit. The bottom line was that if wasn’t for Home Capital, we would not have been able to buy houses for our families.
Today, for all the mud that is being slung at this mortgage company, even if some of it is deserved, somebody should say, “Hey, you know these guys helped a lot of people buy houses who would not have been able to because of the evil banks and conservative financial lenders in the real estate world.” For all the smug people who have lots of money and cushy incomes, there are a lot of folks who don’t. We ought to acknowledge the mortgage lenders and the mortgage brokers who work hard to help people buy a house who would otherwise not be able to. They deserve a lot of accolades that they don’t ordinarily get these days.
If I am not explaining this well enough, find the movie It’s a Wonderful Life and watch it. It is all about a guy who runs a savings and loan company that lends money to people that the banks turn away so they can buy homes for their family. It’s not just about Christmas, its about good people in business.