Article misleads public about mortgage brokers

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A MoneySense article entitled “5 things your mortgage broker isn’t telling you” has won the scorn of one broker who believes it is misleading and biased.

“I’ve never seen anything more blatant and I can’t believe a journalist wrote this without getting both sides of the story,” Kent Farnsworth of Mortgage Alliance Simply Mortgages told MortgageBrokerNews.ca. “It really feels like it came from a bank; the information that she is projecting out there ... every point she makes I’ve heard them all from clients who just walked out of a bank.”

In the critical article, which appeared in the February/March issue of MoneySense, authour Kira Vermond makes  a number of suggestions about brokers, including that their commission structure “could be” a conflict of interest, that brokers are “newbies” and that they aren’t capable of finding a mortgage for clients who lack high credit scores.

For some industry players this article will be reminiscent of a branded RBC document released by a mobile specialist in 2011 that purported a number of controversial claims about mortgage brokers, including “brokers will farm out your mortgage to a number of companies and then will set you up with a financial institution based on only the lowest rate, no other factors.”

Farnsworth, a broker entering his tenth year in the business, specifically took umbrage with the MoneySense article’s assertion that brokers are inexperienced.

“There was another point that said all mortgage brokers are newbies (and) we’re not educated enough,” Farnsworth said. “It’s like a direct, personal attack against mortgage brokers.”

With brokers constantly jockeying for market share with the banks, Farnsworth feels the information presented in the article corroborates the untruths told by bankers to their clients.

“She just put a really negative spin on it: ‘Mortgage brokers are paid commission so they’re going to screw you every time,’ is what it sounds like (she is saying),” Farnsworth said. “Where she could have (also) said, maybe they’ll work really hard for you because if they don’t get the mortgage completed they don’t get paid.”

And it seems readers agree, with one commenter stating, “your mandate is to educate your readers and I think this article did the opposite.”

Click here to read the article.
 
  • Joe Janovich on 2014-02-06 12:16:54 PM

    They should be called MoneySenseless, not MoneySense. This is what as known as "yellow" journalism.

  • Blair Anderson on 2014-02-06 12:18:51 PM

    Kent, thanks for bringing Kira Vermond’s article to light. Another example of the crack journalism witnessed today, which doesn’t require much research. I have to believe the consumer is getting wiser to this brand of journalism and will see it for what it is. The comments at the end of the article bear witness to that.

  • Carol McCaffrey on 2014-02-06 12:23:04 PM

    Maybe our fees to CAAMP might warrant a rebuttle to this article...take them to task

  • @kiltedbroker on 2014-02-06 12:29:36 PM

    I actually thought the article could have been a lot more one sided and mean than it was.

    I like what Gord McCallum had to say on the matter: "Much comes down to the broker's experience and ethics"

    Rather than get mad at the author and cry foul, my response was to record a 10 minute audio clip to address the concerns of the author. I worked through the identical points and called it "5 things your mortgage broker just told you".

    Money Sense actually grabbed hold of my post and shared it on all their social platforms. This generated a lot of traffic to our site.

    I believe media attention like this should be used as an opportunity to share what we actually do and stand for rather than complain about how some people perceive us.

    You can find my audio and transcript here:

    http://www.firstfoundation.ca/blog/5-things-your-mortgage-broker-just-told-you-audio-commentary/

  • Peter Dale on 2014-02-06 12:44:27 PM

    So called mortgage specialists working for banks are also paid a commission. It's called a bonus and it's based on volume.

  • Scott Bentley on 2014-02-06 12:48:32 PM

    Before I could dig up and post the link to kiltedbroker's response to this article from a week ago, there it is just above, well thought out response from Jackson Middleton (who is probably wearing a kilt right now). A good read.

  • Gale Tracey AMP, Mortgage Architects on 2014-02-06 12:54:14 PM

    It appears Ms. Vermond likes to use Rob McLister of CMT as a source for her columns including this one. Therefore must have respect for his expertise as a Mortgage Broker and financial guru of Canadian Mortgage Trends. Why would she not ask his opinion of the damaging article she was about to publish about his Mortgage Broker Peers without a rebuttal. She seems to be a very intelligent women and writes many articles on finance but then writes this unintelligent, ill-informed article which has now called her credibility into question? Makes one wonder where the pay cheque came from?

  • Kent Farnsworth on 2014-02-06 2:04:41 PM

    I see that she has written articles on topics from trucking, and child rearing to finance and economics. What I don't see is any credentials such as an economics degree or any experience in finance at all except for writing about it. |Not surprising is that she has done "corporate writing" for two of the major banks.. Conflict of interest? Could be.. As she would say.

    From my perspective it's less the meat of the article that does the damage but more the headline and headers of the 5 points she's making. She could not possibly deny that she is clearly leading the reader into looking negatively at brokers. It's on purpose and it's wrong. This isn't journalism, it's a personal attack on all of us. This isn't a credible article, and it states plenty about the person that wrote it.

    What truly pisses me off is that a local newspaper in my community picked up this story and published it. Then an add rep that actually calls me to advertise in his publication almost monthly, posts it on his personal Facebook page! Nice.. Way to attack a small business that you are working on building a relationship with.

  • Lynn Eggert, AMP Mortgage Intelligence on 2014-02-06 2:40:08 PM

    As a Mortgage Agent with a background in Retail Banking, I also find this article to be completely one sided. Particularly “There was another point that said all mortgage brokers are newbies (and) we’re not educated enough,” Farnsworth said. What is education?? A University degree, or Completion of a Mortgage Agent course does not make you an expert in mortgage/credit underwriting. For my personal banking I still deal with a major Bank yet I find it laughable going into a branch now to do anything credit related especially if it is after normal "Banker's Hours". It is the equivalent of having your order taken at a fast food restaurant.

  • Jason on 2014-02-06 2:45:53 PM

    Ummm... people think this is a bad article? Why... because it asks consumers to be aware?

    Point 1 - come on folks - let's be truthful here... MOST brokers send business to lenders based on compensation of one kind or another - be it Commission, Volume Bonus, reward points, or even minimum volume requirements from the lender. Protest all you want, but it is the truth and there is not one sinlge broker in Canada that can deny they have never sent a deal to a specific lender because of one of those four things.

    Point 2 - This is a simple fact in the broker industry. LOTS of brokers advertise that they deal with 40 lenders, and the truth is that NO broker does - why? Again, Volume requirements, VB structure, Points, etc. Telling consumers that you deal with 40 or more lenders is false advertising, it is a gimmick to get them to do business with you. Most national broker NETWORKS do not deal with that many lenders, so how could an individual broker make the claim? Heck, on many many many broker websites I still see brokers advertising that they actively do business with FirstLine, ING, Merix, Maple Trust, etc... all lenders that EXITED the broker market.

    Points 3, 4, and 5 are actually good points to make because they give the consumer a realistic picture of the truth about brokers. That and they are 100% TRUE.

    I mean seriously guys, broker run around bashing banks at every opportunity, God forbid someone come out with an article that does not paint mortgage brokers as the perfect little angels that they claim to be.

    I wonder what the consumer reaction would be if they found out about Volume Bonus, Points Programs, or worse yet minimum volume requirements? You think that would look good for brokers? No matter how you spun those, they would be viewed as extreme negatives by the consumer.

    Count your blessings that the author didn't go on a real rant.

  • @kiltedbroker on 2014-02-06 2:50:44 PM

    Actually we discussed this very topic on Canadian Mortgage Hangout #cmhTV this morning. I have the video cued up for you.

    http://www.youtube.com/watch?v=P03L80bNKi8&feature=share&t=5m38s

    Let us know what you think, would love to continue the conversation here on the MBN site.

    Also I would like to say that I agree with Jason.

  • Ed Novak on 2014-02-06 2:53:18 PM

    Welcome to the world of real estate brokers. We are ALL unprofessional scum who are only concerend with their commission. Yep. Nothing new

  • Kent Farnsworth on 2014-02-06 3:09:49 PM

    @Jason.. First of all, where do you work?
    Second, Whatever... I don't know when the last time it was when I saw a broker advertize that they utilize 40 different lenders. And in truth, I do regularily use about 7 or 8 A lenders, 4 subprime lenders and a handful of private lenders, not to mention different lenders for commercial on a regular basis. I don't know where you or she is coming up with this 3 or 4 lenders. I doubt that too many brokers are limiting themselves to that few. If they are then they are missing the boat. As far as points 3, 4 and 5, ok let's go over them.

    3. Newbies.. All brokers are newbies?

    4. Fine Print.. Are you serious? I have yet to see any "fine print" in any mortgage commitment that any of my lenders offer. Secondly, the customers lawyer is even a SECOND level of protection. One could make this point about banks a heck of a lot easier. Wasn't it CIBC that had a class action lawsuit against them for not clearly explaining interest penalties in the "FINE PRINT"?

    5. I could give you a long list of my clients that would differ with that statement. She is basically saying that if the bank can't approve you, don't bother. Again. WRONG and so are you.

  • Kent Farnsworth on 2014-02-06 3:10:03 PM

    @Jason.. First of all, where do you work?
    Second, Whatever... I don't know when the last time it was when I saw a broker advertize that they utilize 40 different lenders. And in truth, I do regularily use about 7 or 8 A lenders, 4 subprime lenders and a handful of private lenders, not to mention different lenders for commercial on a regular basis. I don't know where you or she is coming up with this 3 or 4 lenders. I doubt that too many brokers are limiting themselves to that few. If they are then they are missing the boat. As far as points 3, 4 and 5, ok let's go over them.

    3. Newbies.. All brokers are newbies?

    4. Fine Print.. Are you serious? I have yet to see any "fine print" in any mortgage commitment that any of my lenders offer. Secondly, the customers lawyer is even a SECOND level of protection. One could make this point about banks a heck of a lot easier. Wasn't it CIBC that had a class action lawsuit against them for not clearly explaining interest penalties in the "FINE PRINT"?

    5. I could give you a long list of my clients that would differ with that statement. She is basically saying that if the bank can't approve you, don't bother. Again. WRONG and so are you.

  • Ron Butler on 2014-02-06 5:08:59 PM

    Mortgages are real news these days, RBC lowers a rate and it is on BNN and in every newspaper the next day. Times have changed. Did you ever think there would be a TV channel devoted to buying houses and home renovation. A whole channel? 24/7. Really, we need that?

    We will see more media interest in our business. Media say what they think, they don't care what we think. They direct their message to consumers and they want to say things they think consumers will find valuable.

    We could argue about some aspects of the article. But Jackson and others are right, some things are just true. We earn commissions, some of us use 3 or 4 lenders for almost all our business, some new mortgage people know very little about our business, there are other aspects of what was said that were dead wrong but not everything was wrong.

    You never get it all your own way with the media.

  • Kent Farnsworth on 2014-02-06 6:07:31 PM

    She needs to go back to writing children's novels and leave the financial writing to the grown ups. You know, the people that actually care about facts. lol

  • Mukesh (muky) on 2014-02-06 11:14:20 PM

    The reader that wrote "“your mandate is to educate your readers and I think this article did the opposite.” was me, a mortgage broker for the past 15 years. I do have a subscription to the magazine since it was founded, and for the most part the magazine is informative and educational.

    I don't disagree with the fact that we are paid "commissions" (how are we supposed to eat?) and that we don't use all 40 available lenders (why?), but we still get the client into a better product than the bank in all cases because we have better offerings, especially when it comes to IRD penalties. It's a simple fact of life in any industry, the client ends up better off when the number of choices for him/her increase.

    At the end of the day, even with all 5 points made, the client is still better off dealing with a mortgage broker, the biggest fraud in our industry is the major banks not disclosing to clients the exact details on their IRD penalties and how they are exacting calculated. I had a client last year that was charged approx. 45k on the IRD penalty on a 600K mortgage by Royal Bank. I don't think this client cared about a 0.1% difference in their mortgage rate at that point or that a mortgage broker only works with 3-4 lenders or that a mortgage broker earns commission from the lender. He was wishing he had gone through a mortgage broker in the first place.

  • Dave , Broker on 2014-02-07 9:26:28 AM

    Its amazing how Moneytrash, I mean Moneysense, publishes a reckless, negative article about brokers which is completely misleading, yet I have never seen an article like that with the "Banks" as the topic.

    Where is the media articles about what the banks do without "really" telling customers or the public? How they quietly sneak in clauses and fine print to screw their customers. Don't see the 2 old TD guys in commercials showing off contract clauses that come along with that mortgage payment vacation do we?? Most expensive vacation a TD client will ever take!

    Think about it folks, have you seen ONE article from the Star, Globe, FP, etc. about TD's new "Trigger Point" which will force clients to write a cheque to TD in the event of a real estate correction, which is very likely in the next couple years. How is this not major news?? NOT ONE ARTICLE!??

    Or how TD's mortgage payment vacation really just jams the client with tons of interest on that skipped payment . Again, NOT ONE ARTICLE!?!

    I'm 100% convinced the banks pay the major media outlets not to say ANYTHING negative.

  • Blair Anderson on 2014-02-07 9:50:31 AM

    This is the age of social media. We are all self-ordained journalists. Share your valuable, front-line, in-the-field, opinions on current issues like this where they get noticed. Use your facebook page, linkedIn groups, twitter, google+ to get your message out. Oh, and here’s one more good outlet, with a Canada-wide target audience – www.MortgageResource.ca.

    Register your free account today and join your peers in helping educate Canadians.

  • Jason on 2014-02-07 12:45:18 PM

    @Kent Farnsworth
    First of all, where do you work?
    >>> What does this have to do with anything? Does it invalidate my opinion or my right to have one? Are you that elitist?
    For the record – I am a mortgage broker, and have been in the industry for over 24 years. I started in banking, then moved to brokering 17 years ago. I have a great little boutique operation that keeps me and my family financially very secure. I do not belong to a large network, but know many brokers who do. I have a great client base and I have not advertised in close to ten years, 100% of my business is referrals. I have been married to the same lovely woman for 32 years, have three children, a dog and my house has been mortgage free for the past two years (it was our 30 year anniversary present to ourselves). Is there anything else that I need to tell you to justify my opinion? Shoe size? Hair colour?
    Second, Whatever... I don't know when the last time it was when I saw a broker advertize that they utilize 40 different lenders..
    >>> Kent… it is called Google, it is a great invention, you can go there and look up things on something called the internet. When I do that and search mortgage brokers I find many websites that advertise this. In fact I found this website http://simplymortgagesnb.ca/ that indicates they still deal with two now defunct lenders: FirstLine Mortgages, and Resmor Trust Company – right there on the front page! There are TONS of websites for brokers that advertise 40+ lenders, take some time and as George W. Bush once said… “You can go on The Google to find some neat stuff on the interweb”

    3. Newbies.. All brokers are newbies?
    >>> Umm – this point clearly indicates that EXPERIENCE MATTERS – or did you only read the first two words and then pass judgment on the whole point? Here it is again: I’m a newbie. In the brokerage business, experience matters.

    4. Fine Print.. Are you serious? I have yet to see any "fine print" in any mortgage commitment that any of my lenders offer. Secondly, the customers lawyer is even a SECOND level of protection. One could make this point about banks a heck of a lot easier. Wasn't it CIBC that had a class action lawsuit against them for not clearly explaining interest penalties in the "FINE PRINT"?
    >>> OK so apparently you have never taken the time to understand that a mortgage commitment is not the final mortgage document – if you actually read the commitment it will refer (quite often I might add) to the “Standard Charge Terms” – these are the actual legal terms registered with the various land title offices across Canada. These terms are the actual make up of the mortgage which the consumer is obtaining. They receive a copy of these at the lawyers office when at closing, in addition to the actual mortgage loan document which they also sign at the lawyers office – and which is again, not the same as a mortgage commitment.

    5. I could give you a long list of my clients that would differ with that statement. She is basically saying that if the bank can't approve you, don't bother. Again. WRONG and so are you.
    >>> Once again, taking the time to read the full statement is very helpful. She has not said that the banks can’t approve you – she is saying that MORTGAGE BROKERS ARE NOT MIRACLE WORKERS. She is telling the consumer to have REALISTIC EXPECTATIONS. If you have poor credit, LOTS of unpaid bills – YOU PROBABLY DO NOT QUALIFY FOR TRIPLE A LENDING. Actually what she is saying here should HELP brokers, because if a consumer understands this they are less likely to shop for rate and utilize the advisory services that brokers should be providing their customers.

  • Kent Farnsworth on 2014-02-07 1:37:19 PM

    Easy with the novel and insults there sunshine. And I don't care if you have 20 cats dressed up as ballerinas living in your bedroom.

    I asked where you worked Jason because mortgage specialists and their counterparts come on to this forum frequently for one purpose, and your post sounded much like the ones posted in the past by bankers.

    It's ironic that you seem to be the only one that feels that she wrote an unbiased and educating article.

    The title of the article and the headers of the paragraphs are clearly meant to be negative and demonizing. If you can't see that then you're blind as a bat.

    Most of this article could have easily been written about mortgage specialists. Other parts could have been written about loans officers. The one about the fine print?? come on man. Our lenders? What about collateral charges on what bank customers thought were conventional mortgages or basing interest penalties on posted rates.

    It's clear to me that you are just the type that likes to hear himself talk even if it is the opposite of what most of your other colleagues think. THE WOMAN PURPOSELY WROTE THE ARTICLE TO SHOW BROKERS IN A NEGATIVE LIGHT. You seriously can't see that? Are you illiterate?

    Why don't you go back to your "Boutique" and sell lingerie or flower arrangements and whatever else you do there and stop being so condescending because someone disagrees with your opinion. Which I might add IS WRONG.

  • Jason on 2014-02-07 1:56:15 PM

    @Kent Farnsworth - Your response speaks for itself. Thanks for proving my point.

  • Kent Farnsworth on 2014-02-07 1:59:16 PM

    @Jason. you are the one that decided to to get sarcastic my friend. Expect the same.

  • M. Robertson on 2014-02-07 2:06:04 PM

    Hate to break it to you Kent, but if you read your original response to Jason you were dripping with disdain. You also resorted to personal attacks against the author of the article.

    While I do not agree with everything in the article, and not necessarily everything that was said by Jason - the tone in his response to you was actually set by you. Instead of asking for clarification from him on his thoughts you attacked his credibility.

    Yes there are some things about the article that are concerning, but let's face facts - it is not a total lie. A reasonable professional would take the time to state his case for why he objects with rational thought, as opposed to resporting to attacks.

    We reap what we sow in this life.

  • Leah Smyth on 2014-02-07 2:13:55 PM

    I am not a mortgage broker, and I am not a banker - but I have had about five mortgages in my lifetime. I am by no means an expert, I am just a consumer.

    I read the article, and to be honest I did not think it was all that bad for brokers, but then maybe it is?

    I can tell you that I have dealt with three different brokers in my life, and to be honest... they really did not do much more than what I get when i deal with the bank direct. The rates were the same, I got the same advice, and it was actually faster when I dealth with my bank directly becasue I did not have to give as much documents.

    I never got a choice of lenders with my brokers, they all gave me an approval from one lender only. Two were from TD and Scotiabank, the other was from Street Capital. They were all good mortgages - I have no complaints.

    I just found in my experience that it was faster, less of a hassle and no difference in rates when I went direct with my bank.

    I also have to say that the bank rep I dealt with was really wonderful. Asked me all sorts of questions about my retirement goals, etc. Never had a broker ask me that before.

  • Ron Butler on 2014-02-07 2:46:30 PM

    @ Kent / Jason, I wish the fight had not developed and I take no side but I have to say: "20 cats dressed up like ballerinas living in your bedroom". I will have a hard time getting that image out of my head.

    @ Leah, thanks for contributing, I love to hear the consumer's perspective and I found it very interesting.

  • Gale Tracey AMP, Mortgage Architects on 2014-02-07 3:00:42 PM

    Great way to end it!! It is Friday and everyone have a great weekend!

  • Kent Farnsworth on 2014-02-07 3:17:05 PM

    @Jason. My apologies. I tend to get a little.. passionate sometimes. That's how I'll describe it anyway. We all deserve our own opinion whether I agree with it or not. I'm certainly not the panacea on all things mortgages.

    Anyway, I hope everyone has a great weekend!

  • Mukesh (muky) on 2014-02-07 4:18:48 PM

    Leah,

    I would never ask a client about their retirement goals or their investments. I am not licensed or regulated to do so.

    If you are looking for retirement planning, you should take to a professional in that field or in your case a banker.

  • Gale Tracey AMP, Mortgage Architects on 2014-02-07 4:42:25 PM

    I have been a Broker/Mortgage Planner for nearly 15 years and a Personal Banker prior to that for many more moons and I have always asked my client what their short and long term goals are as that is directly related to the mortgage options you will be presenting them to suit their needs.

  • Charis on 2014-11-15 5:11:53 PM

    It's fantastic that you are getting ideas from this post as well as from our dialogue made at this place.

  • Charis on 2014-11-15 5:12:05 PM

    It's fantastic that you are getting ideas from this post as well as from our dialogue made at this place.

  • Charis on 2014-11-15 5:12:08 PM

    It's fantastic that you are getting ideas from this post as well as from our dialogue made at this place.

  • Sammy on 2015-04-09 12:20:27 AM

    Write more, thats all I have to say. Literally, it seems as though you relied on the video to make your point. You clearly know what youre talking about, why waste your intelligence on just posting videos to your site when you could be giving us something informative to read?

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