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Mortgage Broker News | 29 Aug 2011, 04:00 AM Agree 0
Clients are entitled to know when they’re being charged a higher interest rate so brokers can bank the spread to pass it on to other customers, argues an industry veteran, calling on FSCO to mandate disclosure around that lender option.
  • Businessman | 30 Aug 2011, 03:16 AM Agree 0
    Should any retailer or proprietor in Canada disclose what profit they are making on any sale? Paul is obviously not a businessman and for some reason considers our industry as a charity. We are not a charity and we charge whatever we feel is just for our services. Let the clients decide is they made the right choice or not. Does a bank disclosue to the client how much profit they are making on each product that they sell? NO!!!! They let the client know how much its costing them, and the clients decide for themselves!
  • Chad | 30 Aug 2011, 03:18 AM Agree 0
    Tell that to the lenders when they renew a client.. "did you know we are screwing you since the last guy i renewed i was competing with a broker so I need to make my spread back." or what about the crazy ird calculations using original discount applied to remaining term rate. (eq you received a 2% discount 5 years ago so we not your IRd rate 1 year (2%- your discount 2%)=0

    We need to stop playing around and demand the industry as a whole tell the consumers what is really going on.

    The value of a broker is knowing the above, not just rate.
  • alberta | 30 Aug 2011, 03:58 AM Agree 0
    on our reca forms, we have a section where it states are you ( the client) paying a higher interest than normal for this transaction. it is a clear as day. Do clients need to know everything? I go over the sheet with every client, state very clearly this is how we get paid. Clients are not stupid they know that you are getting paid for your work. We do not work for free. Clients are not dumb and they accept that the are getting value for the service and if we should get paid.
  • Donald Wilson | 30 Aug 2011, 03:59 AM Agree 0
    Full disclosure doesn't require a regulator to tell us that we have to specifically do what is right for the client. I have always felt that brokers should disclose how we are paid, what incentives we are given to use one lender vs another, etc. Full disclosure may cost us a deal from time to time, but lack of disclosure costs a lot more - credibility
  • Jake Rempel | 30 Aug 2011, 04:02 AM Agree 0
    We as Broker/Agents are not in the retail business! We are not mortgage pedlers!
    We are Agents for our Clients and therefore have a fiduciary duty to them! If you want to charge your Client an extra fee do so but you must disclose or you are faceing a law suite.
    We have very limited oportunities now to show the public who we are and that we can be trusted. I'm also a Licensed Realtor and if I made some extra coin at my Clients expense and did not disclose I would lose my License!
  • Ad Lakhanpal, Broker,Mortgage Alliance | 30 Aug 2011, 04:05 AM Agree 0
    I don't think that this is an issue of ethics, or of conflict of interest.In a free market, price of a product is generally based on what the market will bear.Every seller balances risks and rewards in his pricing strategy.By offering a higher rate,the broker also risks losing the deal because the clients have an option to shop around.Pricing is for the total value that the broker provides.Why tie down the hands of the brokers when the competitors i.e. the bank branches are doing the same thing.They can give super low rates to some clients because they know they can charge higher rates to others.Let's not make the playing field more uneven than it already is.
  • Ron Butler | 30 Aug 2011, 04:10 AM Agree 0
    Paul does have a point, we exist in a regulated industry and the regulator is not the same one who regulates our bank competitors. If the regulator asked why we charged a different rate on the same day, from the same lender to essentially the same type of client; how would we answer: "stupid regulator, we are business not a charity" or "stupid regulator, the banks do it every day"

    I don't think we would react that way to the regulator so we need to think this through a bit more clearly.

    I don't really have an answer yet, but I think we cannot just say "screw it, we can do whatever we want"
  • Kim D | 30 Aug 2011, 04:15 AM Agree 0
    When clients come to us for financing, they are TRUSTING that we are acting in THEIR best interest, as we should. Not disclosing the fact that they are being given a higher rate, so the Broker can bank points to benefit others, is simply unethical and dishonest. It tarnishes the reputation of the Broker industry. Rates are not everything, but honesty is.
  • Jake | 30 Aug 2011, 04:28 AM Agree 0
    Seems that some of us don't understand the difference between Clients and Customers!
    The Banks and the retail industry have customers. We have Clients! Customers can be sold what ever they will buy. Clients trust their Broker/Agent to do what is best for them! We are agents for Clients!
  • how about some honesty from clients | 30 Aug 2011, 04:29 AM Agree 0
    We are honest as it is. Clients are the ones that need a lesson in honesty. They will shop brokers like no tomorrow no matter how many years of service.

    So, will I lose any sleep if they have to pay a fee? Absolutely not!

    If they don't like fees then they can negotiate their own mortgages. My time is valuable and demands top dollar.

    Furthermore, any regulating agency that tries to regulate my fees will find themselves dumbfounded. Experienced brokers know how to incorporate fees using various methods.

    Take my license away? Highly unlikely when you have government official contacts like I do.

    Bottom line: if you expect not to pay fees when dealing with me, then you don't deserve a loan!
  • KED | 30 Aug 2011, 04:35 AM Agree 0
    I 100% agree with Kim D. And I'm glad in BC that you have to disclose if the client was given a higher rate to bank points (as per one of the last FICOM bulletins). I am just wondering how many brokers are actually disclosing this? I would never give a client a higher rate to bank points, makes my stomach churn just knowing other brokers do!
  • Paul Mangion | 30 Aug 2011, 05:07 AM Agree 0
    I think some have missed the point. You can charge your client whatever they are willing to pay as a broker fee but you should not be allowed to up a rate and use whatever BS excuse to get the client to pay the rate only to bank spread to be used to buy someone elses deal down later and not use your own compensation. You should not rob Paul to pay Peter. That is wrong!
  • Broker | 30 Aug 2011, 05:29 AM Agree 0
    If a broker wants to be ethical they must buy down the rate fully and make no money on the deal. Is this what i am hearing? as that is in the clients best interests! Oh yes and the banks and lenders provide full disclosure on exactly how they make their money on a mortgages and how it is distributed... lets not be ridiculous, some mortgage brokers will do anything to be in the spotlight. I do feel agents need to disclose what is earned through referral and bonus, but clients do not need to know exact details. "It's like charging a fee" who is this guy? If your having to buy down rates to keep your client your not much of a broker and wont last in the industry (its about service not rate).
    The rates are all discounted anyways, even when you get points/bonus. I am with Ad Lakhanpal "Pricing is for the total value that the broker provides".
  • Ad Lakhanpal | 30 Aug 2011, 05:56 AM Agree 0
    Further to Jake's point re clients vs customers, I agree that if a client signs an exclusivity agreement with a broker,in good faith, and forgoes the option to deal with other brokers/lenders, he deserves the best service package. Law of agency is a complex one.We do not automatically become some one's agent if they pick up phone and call us.For those,the brokers should be free to quote what they want because the clients are free to shop around as well. This is a self regulating environment. You quote too high, you risk losing the deal!
  • Angela Wong-Liao | 30 Aug 2011, 06:21 AM Agree 0
    I agree with Paul that we have to give full disclosure to our clients and we should not be robbing from Paul to pay Peter.
  • Chad | 30 Aug 2011, 06:27 AM Agree 0
    I think most people are missing the whole point.
    Not every client should have the same rate. If you 20 mins on one file and 3 weeks on another should you get paid more? If client has a beacon of 590 and another 780 should they have the same rate? If you have a $800,000 home in a nice area should that be priced the same as the mobile home? We need to move away from this rate focus. Why do you sell a big brand vs a no frills? If it was only about rate TD, Scotia, Firstline etc would all be out of business.
  • Paul Mangion | 30 Aug 2011, 07:47 AM Agree 0
    There are a lot of good points and some silly ones. You can charge whatever you want. It is called broker fee's and I am sure you can convince your client that you deserve them. What I am talking about is having the people that are challenged paying more so a stellar credit person can pay less. It is hidden where a broker fee is in the open.
  • Lance | 30 Aug 2011, 07:52 AM Agree 0
    There is already a section on the Disclosure Form revealing whether or not we (might) get a Bonus of some sort. In FSCO's eye's, they've covered it, leave well enough alone . . .
  • Mal Eccles CPMB | 31 Aug 2011, 01:01 AM Agree 0
    The discussion of as to how much we (Broker/Agents, Ontario) are to disclose to our Borrowers ( client’s) is clearly covered in Ontario Regulation 188/08 section #21 under the MBLAA,2006.
    http://www.e-laws.gov.on.ca/html/regs/english/elaws_regs_080188_e.htm
    I strongly recommend that all Brokers and Agents familiarize themselves with this and all other sections of 188/08 as I suspect it may be part of the MB RE-Licensing Course that will be launched this fall.
    http://www.fsco.ca/en/mortgage/Pages/edu_mandatory.aspx
    Mal Eccles CPMB
    Chair-Education IMBA
  • Michael Roach AMP | 31 Aug 2011, 07:18 AM Agree 0
    In a perfect world the banks would disclose that a client can get a better rate than what they first offer. It is not a perfect world
  • alberta | 02 Sep 2011, 09:13 AM Agree 0
    I guess we have to much time on our hands. the disclosure that we have clients sign, states in plain English ( you do need to check it, if it applies to that particular mortgage) if you are paying a broker fee, or higher rate, etc. I think we are spending way to much time on this issue. there are more important issue that we can discuss. just my thoughts
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