8 secrets road reps told MBN

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A high-volume road rep at one of the Big Five is sharing a laundry list of secrets with MortgageBrokerNews.ca, including just how many deals he loses to brokers and the real reason why mortgage specialists return to the bank after a stint in the broker channel.

The following information – collected over the course of an extensive interview Saturday with MortgageBrokerNews.ca editor Vernon Clement Jones-- was shared on condition of anonymity. It nonetheless reflects the observations and analysis of not only a leading road rep with CIBC but presumably many of his counterparts at big banks across the country.
  1. Road reps lose about 10-15 per cent of their deals to mortgage brokers. “That’s almost always on rate and not because of any service deficit,” according to the GTA mortgage specialist, “and it’s been a relatively consistent (figure) over the last five years.” So brokers aren’t gaining or losing momentum in today’s mortgage war.”
  2. Road reps do respect mortgage brokers as fellow salesmen and women. “We do, however, see ourselves as superior to branch mortgage specialists, who generally are more reliant on walk-ins and aren’t (hustling) for deals like road reps or brokers.”
  3. Ouch! Warning, this one may hurt: “Many road reps who go over to the broker channel often come back to the bank,” said the source, “and it’s not because they can’t make it without a big bank name behind them. No, it’s because the deals that come to them as brokers aren’t generally of the quality that we see in the bank, and doing the broker deals can make you feel a little dirty. The prestige isn’t there.”
  4. Road reps see the broker value proposition as focused on rate and rate alone. “I would say that broker rates tend to be about 10% lower than ours. Which isn’t to say that we won’t match those rates in many cases.”

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  • Ron Butler on 2015-03-30 11:43:16 AM

    This is mildly interesting but I don't think I would describe this information as a secret. Mobile bank reps are often knowledgeable about their products, skilled and hard working and there is very little question that they originate a big share of Canadian mortgages

  • mat on 2015-03-30 12:01:55 PM

    #3 is pretty funny.
    "make you feel a little dirty, the prestige isn't there".

  • Ron Butler on 2015-03-30 12:08:11 PM

    Yeah, I thought about the "little dirty" comment. Odd, but maybe it reflects going from triple A deals to B deals. Here's a fact: I have interviewed many mobile bank reps for our salaried mortgage agent jobs and they all do get a kick out portraying themselves as "bankers" and to be fair; the Canadian Banks spend a several hundred million a year promoting themselves to Canadians so the reps may as well trade on it.

  • Anthony Contento on 2015-03-30 12:21:14 PM

    I would agree with Ron. I disagree with the comment made regarding mortgage specialist going back to banks"because the deals that come to them as brokers aren’t generally of the quality that we see in the bank, and doing the broker deals can make you feel a little dirty." As in any business, how you care to do business is what you are going to attract. There are many Successful X bankers , who left the Big Banks and never looked back. You reep what you sow. Mortgage Brokers continue to be the hunters and gathers, and depend on their product knowledge, their ability to close a deal, and ensure their service is superior to others, so the can maintain a competitive advantage. Many of the larger banks have their branches refer to their Sales Force to help them with their #s , as well as provide the customer with the option of having someone mobile to visit them. CIBC, and RBC both assist their Specialist with deals, at a lower commission if it is branch referred. Industrial Alliance is not the only Lender offering lower rates. There are many more lenders who sell paper to the very same bank many Specialists work for. In the end, Service , rate, and product will determine where the customer lands. As for everything else, we are all on the same playing field. As a veteran of the Industry, I would question why the specialist(at cibc) cares to stay anonymous? Your comments are noted. As Ron stated, this info is not a secret. However, some comments are not factual either and open for debate.

  • John on 2015-03-30 1:35:56 PM

    #3 is one of those myths that brokers only deal with people who cannot get a mortgage at a bank. I have as many 'A' clients as I do 'B' clients.

  • OkanaganBroker on 2015-03-30 1:50:13 PM

    Hmmm.... I would feel a little "dirty" by not being able to provide my clients with all the best mortgage choices and the very best rates...LOL

  • Lior Hershkovitz, Mortgage Edge on 2015-03-30 1:51:52 PM

    Not too many secrets there. To add to Anthony's point on IA, they do pay a lot while offering very low rates which is why many brokers send them business. For instance a month ago you could sell 2.69% 5-year mortgage with them paying 180 bps. Let's see the banks match that kind of commission for their road reps. That said there are plenty of other lenders who offer low rates on regular mortgages such as RMG and Merix without having to force the broker to buy down to peanuts.

    As for the "feeling dirty" part on non-conforming deals take it from someone who focuses on that segment: there is nothing dirty about being involved in specialized financing. It's a stigma that employees pick up working for a bank. At the end of the day the regulatory system in Canada is getting tighter. B20, B21, Basel III, restrictions on bulk insurance, all of those lessons from the credit crisis are making their way through the lending system. Many consumers who used to qualify with a bank a few years ago will not qualify today. This is not necessarily because of credit issues. It's the way the income is structured without having enough assets with the bank, non-conforming property, etc. The bottom line is alternative financing is on the rise because the banks are turning down more people.

  • race to the bottom on 2015-03-30 2:25:44 PM

    Interesting article, the broker channel has always been about rate, its the only card they can play. Excellent service is mandatory and expected by the customer so selling service or even strategy really doesn't cut it. Those that played in the middle for the last decade are being wiped out. Google or similar will soon be the broker which will take out the remainder of the channel which leaves the banks and road reps standing.

  • Mark Brennan on 2015-03-30 3:34:55 PM

    #3 could also be the Bank declines for little other reason than it doesn't fit in their guidelines. Nothing dirty about it, maybe just requires a bit more effort and dig in until the best solution for the client is found

  • Paul D on 2015-03-30 9:02:06 PM

    I run a private lending company that deals only through Brokers. Brokers are not dirty, but they definitely are not afraid to get down and dirty. No cookie cutter deals in my business. Brokers who structure private deals roll up their sleeves everyday to find workable financing solutions for their clients. This is the kind of partnership I value. Walking a Prime 'clean' deal into the Royal Bank is no major feat; try to find a bridge for a client that needs an environmental clean-up, in Consumer Proposal and has a Collateral Mortgage...

  • Jeff G on 2015-03-31 10:21:42 AM

    I've had a client come to me that got declined by one of the big 5's mobile mortgage specialist and got them approved with the very same bank. Only thing I can assume is that the specialist didn't know their product line well enough to offer it to them. As for reps leaving the bank for the broker channel and going back to the bank, there is only one reason why you would ever do that. You couldn't cut it on your own.

  • Jim Thornton on 2015-03-31 12:27:31 PM

    I have a couple of thoughts on this... First, with regards to brokers being "a little dirty". That's just absurd! Why would being a broker mean that you are being dirty. The majority of my business is clean, bankable, business. They just prefer to work with someone that has the expertise to recommend more than one lender to them. Then, there are the clients that fall outside of the bankable-box because maybe they own 4 rental properties and the bank will only allow you to have 3. How does doing that deal make you "a little dirty"? Then, you have the clients that can't get regular mortgages because of bankruptcies, self employment or a whole host of other reasons. Helping these clients out... How does that make you dirty?

    There are people everywhere, in the bank channel and in the broker channel that don't have solid ethics. They are not exclusive to either channel, but saying that being a broker makes you feel "a little dirty" is like saying a bank rep doesn't care about their clients and can't offer service. Both are inaccurate exaggerations.

    Second, as far as the mobile specialist saying that reps don't go back because they couldn't cut it, I don't buy it. The fact of the matter is that if you feel that you have to do "dirty deals" to earn a decent living in this business as an agent/broker then I would question your ethics in the first place. Anyone with a solid moral compass, with a desire to take care of their clients and a willingness to work hard can make it as an independent broker/agent.

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