Vishnu V. and his wife live in London Ont. and submitted their mortgage application for a new home under construction on Sept. 6, 2016. At the time, they were putting a 20 per cent down payment and received approval from a monoline lender for 120 days. The closing was set too far in advance of the April closing to guarantee the rate, but they were advised to waive financing conditions.

But after hitting the 120-day close mark, the new rules for underwriting were in place. The file had to be fully re-underwritten.  Vishnu and his wife could no longer qualify under “insurable guidelines”. They had to change the approval to include additional income that was not previously required. Fortunately, they had additional income or the story would have turned out very different.

The couple is now in a position of feeling forced into considering an approval with a major bank versus a monoline lender. The bank deal, has less prepayment privileges, higher IRD calculations but a lower interest rate than the monoline. If they’d like to have the same rate as the bank offer, it is available, but they can’t have a 30-year amortization. This is the tale of a couple who “qualify,” but is being offered two conflicting approval offerings which they are bearing the task to decipher which is the “lesser evil” to accept.