Commitment Issues

We need to stop pretending that a mortgage “commitment” in Canada is actually a commitment.

It isn’t.
It’s a suggestion at best.
A maybe.
A “we’ll see how we feel on funding day.”

And that’s a problem.

Here’s the reality.

A client gets approved.
Conditions get removed.
Deposit goes into a trust account. (the money is gone)
Moving trucks get booked.

And then…

Two days before closing, a lender can pull the file.

Income tweak.
Document question.
Policy shift.
Risk appetite change.

Deal dead.

Think about that.

We let Canadians put their life savings on the line…
Based on something that is not binding.
At all.

We hope it will work out.

Hope has a time and a place.
This is not it.

Meanwhile, in other markets?

Different story.

In the UK, when a lender issues a commitment… it is a binding commitment.
The government legislated it into existence.

The mortgage funds.
Every time.

Lose your job the week before closing?
Still funds.

Because the commitment actually means something.

Meanwhile in Canada...

We draw an arbitrary line at funding day.

Not condition removal.
Not when the risk is locked.
Not when the client is fully approved.

Funding day.

And everything before that is… reliant on a vibe.

Whose vibe?

Not the buyer.
Not the seller.
Not the Realtor.
Not the broker.

We’ve built a system where the highest risk moment in a transaction…
is the final moment.

This makes no sense.

If a lender is comfortable issuing a commitment…
they should stand behind it.

If you’re not comfortable…
then don’t issue it.

But stop calling it a commitment.

Because words matter.

And right now, the word “commitment” in our industry…
doesn’t mean what people think it means.

What would a better system look like?

Simple.

The approval becomes binding at condition removal.
Not funding.

That’s the moment everyone in the transaction actually commits.

Would that shift risk to lenders?

Yes.

Good.

They’re the ones pricing it.
They’re the ones underwriting it.
They’re the ones calling it a commitment.

And hey, if you want to argue this is a rare issue in Canada… perfect.

Price it accordingly!

Add 0.01% to the rate and give clients 100% certainty.

And there’s the key word.

Certainty.

Something sorely lacking in so many areas of our lives.

Right now, the risk is sitting with the wrong party.

The consumer.

In a market like this…
where uncertainty is already high…
where deals are harder to hold together…
where clients are more cautious than ever…

We should be increasing certainty.

Not pretending we have it.

A mortgage commitment should mean something.

Right now, it doesn’t.

And everyone in the industry knows it.

Time to fix it.

Will you?
(I know some lenders read this)

DW