A recent case of alleged fraud involving several mortgage brokers has one seasoned pro speculating as to the influence of some of the industry’s most important referral partners.
Paul Mangion, a principal broker with The Mortgage Centre in Mississauga, says a few real estate agents sometimes mislead new brokers with the promise of a cornucopia of deals.
“You have an agent who says, ‘I can send you 20 deals a year but I need this one done,’” he says. “I would guess, and there’s no statistics behind this, but for 95 per cent of the frauds being done in mortgages on a purchase, the agent may have been aware of it.”
Mangion’s comments come on the heels of Home Trust
’s suspension of 45 mortgage brokers who it argues were falsifying income documents. Regulator investigations are ongoing, although there’s no indication real estate agents were involved.
Still, Mangion maintains that real estate agents are usually aware of how much home their clients can afford. But the temptation to close a deal for a “happy client” and the commission that’s often 10 times that of the mortgage broker can result in pressure being place on that originator.
“Those types of agents rank their mortgage agents based on how much they can push through the system,” he says. “At the end of the day, they’re the first point of contact for these clients and RECO doesn’t do enough to get rid of them.”
But that’s not to say that brokers should get off scot-free.
“It’s always the broker (who is faulted), and they should be because they’re the ones who say they can do it,” he says.