Broker calls for higher fees to weed out part-timers

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Brokers often complain about the prevalence of part-time brokers and one industry professional has suggested higher fees and emulating the real estate agent model could rectify the problem.

“One of my pet peeves has always been inexperienced people and part-timers in the industry; I think fees should be higher to make it more difficult to become a broker,” George Christopoulos of The Mortgage Centre told “I would pay extra licensing and educational fees – look at the cost to be a Realtor. If you’re a good broker you’re making a good dollar and if it’s going to cost you three or four times the amount of fess it’s a tax writeoff anyway. The part-timers are just doing too much damage [to the reputation of the industry].

“Take more of a real estate model and drive up the professionalism of the industry.”

The Mortgage Broker Regulators’ Council of Canada (MBRCC) conducted a survey this past September -- that included responses from 1,113 mortgage brokers in Alberta, Ontario and Newfoundland -- that found that 55 per cent of brokers in Ontario admitted brokering mortgages was not their primary source of income. It also found that only 34 per cent of those surveyed have been licensed for at least five years.

Further, only 40 per cent of those polled admitted to doing their own industry-related research to keep up-to-date on trends and mortgage products.

“Without any financial training you should not be in this industry,” Christopoulos said. “If I’m not in the office every day I have no clue what’s going on because everything changes so quickly.”

But will forcing mortgage brokers to pay more fees increase the professionalism of those currently operating in the industry? Not according to one broker who has first-hand knowledge about how both the Realtor and broker industries operate.

“Do I agree with that? Not really. I think ethics come from somewhere different than that and one of the problems we have with mortgage brokers is that most of them are there just in it for the commission today; they don’t really care where the client is going to be three to five years from today,” Omer Quenneville, who operates as both a mortgage broker and real estate agent told “They’re not counting on that repeat, referral business and that’s not something you can change with increased licensing fees or educational requirements, in my opinion.”
  • James Shinners on 2015-03-10 12:00:36 PM

    Higher fees will weed out the bad brokers that give us mortgage professionals a bad name. However, I'd prefer to pay higher fees to some sort of self-regulatory body, similar to the real estate industry.

  • Jim Thornton on 2015-03-10 12:16:29 PM

    Are you crazy? Since when do higher fees make an industry more professional. Real Estate has a worse reputation than mortgage brokers! So, how can higher fees be the answer?

    The only thing that will add to professionalism in our industry is to have a designation system. A REAL one. The AMP is not properly administered and really doesn't provide true professionalism.

    In addition, adding CE credits to the mortgage industry would be a good thing. Significant CE credits (like 25 per year or something). In effect, this will do as you suggest in adding to the overall cost of the industry, but at least you will be getting something out of it and forcing all agents and brokers to update their knowledge.

  • Jean-Francois Trahan on 2015-03-10 12:19:03 PM

    I'm a full time broker and witht the market I serve pretty small population of 16,000 with the average loan around 105,000$ I totally disagree with higher fees. Every client should have access to a broker and yes if you are doing it on a temp basis it not good for the image but there some market that are small and that are not as lucrative. It easy to make good money when your average loan is 300,000$ plus try the same with my average. I meet as many clients if not more thant so call big broker but make a lot less just because of house value.

  • Robbie Ryan on 2015-03-10 12:22:08 PM

    Brokerages need to have higher expectations of the designates. Setting min. funding requirements and sticking to their guns would help weed out the part timers.

  • Sean Ryan on 2015-03-10 12:32:27 PM

    Higher fees may indeed be one solution,but I can't help thinking if IMBA and CAAMP didn't literally hand out these so called "professional designations" to these part-timers then we wouldn't have them running around out there masquerading as Mortgage professionals. The industry is it's own worst enemy in this matter.

  • Jim Thornton on 2015-03-10 12:34:58 PM

    Sean: That's exactly what I'm saying. Have a true designation system that you have to actually Educate yourself for. Just signing up for a designation doesn't make it more professional. There needs to be education that goes along with it.

  • Angela Jenkins on 2015-03-10 12:37:11 PM

    Unfortunatly its not only the agents/brokers who are in the industry part time who are doing the damage. Its common knowledge amongst pockets of industry professionals where the "dodgy" brokers practice, and some of these people have been agents/brokers for years and are very succesfull unfortunatly. The Mortgage industry is no different than that of the Real Estate Industry when it comes to so called industry professionals who are in it just to grab a commission cheque - they are every where and unfortunatly there is no way to control or vet someone's morals when it comes to trading as a Mortgage Broker or a realtor. Increasing the fees I personally dont think is the answer - however I dont know what is the answer either.

  • Robbie Ryan on 2015-03-10 12:37:39 PM

    we all know the AMP designation is a cash grab.

  • Robbie Ryan on 2015-03-10 12:40:48 PM

    in my opinion the answer is self-governance. Report unprofessional behavior to your brokers of record.Hell, call the broker out on it. Report incentive or inducements. We have to police ourselves if we expect to be taken seriously.

  • Sean Ryan on 2015-03-10 12:43:04 PM

    I totally agree with you Jim. This issue has gone unnoticed or ignored for far too long now by these organizations and it needs to stop, and a proper implementation of these designations put in place that truly helps the industry and not just the coffers of IMBA and CAAMP.

  • Ron Butler on 2015-03-10 1:10:53 PM

    It is absolutely clear that higher fees do not equal better trained, more professional and more knowledgeable brokers, so that part of the idea is just silly. Will higher fees eliminate part-time mortgage agents? Possibly, but it will also means all mortgage brokers will be paying a lot more in fees. I often worry that the urge to reduce mortgage broker numbers is based on the belief that it will create more business for those that remain; if so, that is a pretty selfish motive. Should mortgage brokering be a full time profession? In a perfect world: yes, definitely; but we don't live in a perfect world. Given the choice of much higher fees FOR SURE versus MAYBE fewer part-time agents my instinct is to pass on much higher fees.

  • Paul Bojakli on 2015-03-10 1:25:19 PM

    Good question. I don't think there is an easy answer? This should start with education? It’s our national common ground, it can be what separates us and it is what our associations should be investing in. What if the Associations standardized education across the country. We have some smart people in our industry, surely we can figure this out? It’s just a matter of time before our regulators begin standardizing across the country. Why can’t we be proactive? Maybe we can even move towards becoming a professional association instead of a trade association. We do not need to reinvent the wheel, we can model similar to other professions? Cost would be similar to belonging to our national and a provincial association? Just some thoughts? I would be glad to consider reasonable higher fees if it meant our industry was progressing.

  • KED on 2015-03-10 1:33:33 PM

    In my opinion Part-Time does not equal less qualified. Yes things change everyday but a broker does not need to be in the office every day to absorb the changes. Technology allows us access to e-mails and updates pretty much everywhere so if you are at home with a new baby like me this allows me to be a part-time broker while juggling a young family. Eventually I will be able to be at an office full-time if I choose to (when the kids go to school) but this nonsense of part-timers being less knowledgeable is just plain ignorant.

  • Jim Thornton on 2015-03-10 1:36:18 PM

    Let's take a look at what fees get us. FSCO charges bi-annual fees now. They are *suppose* to be regulating the industries. Recently I have had a situation where I reported a person for holding themselves out as a mortgage agent without a valid license. The principal broker was the wife of this supposed agent. It was (in my opinion) a scam designed to sell financial products. When reporting it to both the OSC and FSCO I got no where. The OSC said they weren't technically in contravention to the laws. And FSCO told me to contact the principal broker. I explained that the principal broker was the wife of the invalid license mortgage agent and they said that was who had to police it. More fees would mean more wasted dollars. A professional association is the way to go in my opinion.

  • Gary on 2015-03-10 1:42:44 PM

    Deep six the higher fees concept...the Broker of record has a responsibility, and any/all part time brokers/agents are the BoR's responsibility. If that means holding mandatory staff & training meetings then so be it. The BoR should be reviewing the paperwork before it goes out to the client anyway...if for no other reason than to ensure that it is the proper program for the client, and that the broker/agent is fully able to explain it properly to the client. Increasing fees is not a solution, and AMP accreditations and $1.60 will get you a medium coffee at your local Timmy's. Don't even suggest higher fees to the gov't...they get a hint of potential money and they will be all over it in a heartbeat...

  • Omer Quenneville on 2015-03-10 2:34:50 PM

    As a realtor and a mortgage broker I can tell you that higher fees could have an adverse effect. More deals for less agents = greater attraction to those that don't treat the industry as a profession. You also have to realize that we are competing with one of the sleaziest business out there, the banks. Have you seen what banks do to people? TD collateral mortgage is a perfect example. Have you heard what the banks say about us to their customers?

  • Kuldip S Panesar Homeland Mortgage Corp. on 2015-03-10 3:14:58 PM

    Higher licensing fee or increase in licensing fee for mortgage brokers is not the solution of the problem. If you are comparing licensing fee of the mortgage broker with Real Estate Sales Person ( Realtor ) You should also compare the commission of earned by the mortgage broker and Real Estate Sales Persons.
    To raise the standard and to have make more professionalism in the industry , Multiple Licensing should be stopped .
    If multiple licensing is stopped only then the full time broker will come in the mortgage industry and they will keep themselves up to date knowledge.
    They will also stay in the industry for longer time.

  • Anthony C. on 2015-03-10 3:41:24 PM

    Part time or full time should not be the issue...nor should increased fees lead to better qualified or more committed representatives...

    What we need is Coast to coast mandatory educational standards under one charter in addition to a minimum apprenticeship period, with new mortgage agent/brokers commencing their careers as a Nominee or Candidate, supervised under the tutelage and guarantee of a qualified Broker of Record...

    Perhaps in addition to the ridiculously MAP 100 or MBP 100 (I can only speak of Ontario standards) offered through Seneca, we consider raising the educational requirements to include some additional finance programs, which go beyond compliance matters (which naturally would be guaranteed, addressed and monitored by the Candidate's supervisor or Broker of Record.

    If what your being taught at Seneca (or any other institute for the matter) does not parlay into actual and hands-on applicable knowledge that can add value to our lender partners and consumers, such as preparing or reading a Financial Net Worth Statement, create a realistic Budget for a consumer, diagnose a simple Notice to Reader Financial Statement, or understanding Credit Analysis and how it applies to our industry, can you really say you are a qualified financial services provider.

    Time for the hammer to fall on all unqualified mortgage agents/ it is presently happening in the Appraisal, Accounting and other financial services related industries.

  • George Christopoulos on 2015-03-10 3:55:35 PM

    Well that stirred the pot today.
    No simple solution but we all agree something needs to be done to elevate of industry.
    Every Broker of Record I talk with says the same thing, they carry a lot of dead weight under their license. So clean it up , cut loose the part timers.

  • Faye Drope on 2015-03-10 4:41:01 PM

    Round in circles. Every year.

  • Omer Quenneville on 2015-03-10 5:35:35 PM

    I would gladly give up my mortgage brokers license is I could find a consistent competent mortgage broker to handle my clients. I turn my back and before I know it, they got my clients locked into 5 year fixed collateral charge fully life insured.

  • Mortgage Guy Geoff on 2015-03-10 5:58:47 PM

    Agreed...higher fees do not necessarily make us better operators. Being genuinely committed to ensuring we achieve a beneficial outcome for our clients makes us better operators, regardless of whether we are brokering part time or full time. Having the knowledge, or {since we can't know everything about everything} knowing where to look for it, should be the bare minimum standard.

    To that end perhaps it should be much more difficult to become licensed in the first place. During the CAAMP licensing course I took a few years ago we spent a whole morning discussing and doing examples of simple interest calculations. From what I could see half the room still didn't get it. But regardless of whether it was a lack of intellectual ability or even if just a language barrier, the complexity of our industry and the critical fine print that comes with it should suggest that people who struggle with this most basic of concepts do not possess the skills required to properly execute our duties as Brokers.

    Accepting mediocrity as an appropriate entrance standard can not possibly lead to anything other than the same in practice.

    Sorry if I've hurt anyone's feelings or sensitivities.

    ps. self-policing doesn't work - just look at RECO for Realtors in Ontario.

  • Julie Steinman on 2015-03-10 7:50:41 PM

    Higher fees are not the way to go. Maybe a higher designation could only be obtainable for a person who has done X amount of mortgages a year consistantly for a 3 yr consecutive period. (something nominal like 12 mortgages within a year, based on current day back and not calendar year, because then generally, the associate should be keeping up on most everything, and if the associate/broker does not qualify, then they would have the option to write an equivalency exam that would be good for a rolling 12 month period, on various current day mortgage situations, ie. what would be your first line of placement and why. What documents would be required, what potential problems do you see with the file. Not A,B,C,D answers.

  • MPatel on 2015-03-11 3:53:42 AM

    CAAMP is useless, I still don't understand how this organiztion still exists ?? It's a total money grab that doesn't give back any value to the average mortgage agent. When my broker told me I had to get the AMP designation, I told him "no problem, you pay for it". We agreed I didn't need it.

  • Old Broker on 2015-03-11 11:52:31 AM

    Not a problem with the agents as I see it. I have interviewed a number of agents who tell me they have no training, the company training is only online, they have to pay for company training and there is no one t contact after office hours for questions from a client. I also hear a lot of "who does your salary letters and NOA's for you". All very common comments. Is this not the responsibility of the broker to train you agent properly and honestly and be available at any time to answer questions. After all, the agent is the one paying your bills.

  • Chris Karram on 2015-03-11 12:03:30 PM

    A very interesting dialogue to say the least with many different perspectives having been brought to the table. Thanks for a healthy and spirited conversation.

    One question comes to mind. Is it possible that the onus of hiring part timers should fall on those actually hiring part timers, as opposed to hoping that any governing body or change in licensing fees will do the work for us? I realize that not everyone has the responsibility of hiring, but for those that do, it's our job to ensure we hire professional, full time, committed individuals. Based on other industries such as real estate, it's clear that higher fees alone won't do the trick. It's also clear that even a designation whether for full time or part time sales professionals won't do the trick either. The only way to change this issue in our industry is to ensure that those responsible for hiring actually only hire full time Mortgage Agents. Until then, this will be the never ending debate sadly.

  • Chris Karram on 2015-03-11 12:03:41 PM

    A very interesting dialogue to say the least with many different perspectives having been brought to the table. Thanks for a healthy and spirited conversation.

    One question comes to mind. Is it possible that the onus of hiring part timers should fall on those actually hiring part timers, as opposed to hoping that any governing body or change in licensing fees will do the work for us? I realize that not everyone has the responsibility of hiring, but for those that do, it's our job to ensure we hire professional, full time, committed individuals. Based on other industries such as real estate, it's clear that higher fees alone won't do the trick. It's also clear that even a designation whether for full time or part time sales professionals won't do the trick either. The only way to change this issue in our industry is to ensure that those responsible for hiring actually only hire full time Mortgage Agents. Until then, this will be the never ending debate sadly.

  • Lior Hershkovitz, Mortgage Edge on 2015-03-12 9:37:28 AM

    With all due respect to Mr. Christopoulos the last thing the mortgage broker industry needs to do is take notes from RECO on that issue. Over 9 out of 10 Realtors do 6 or less deals per year. Half of the nearly 40,000 agents registered with TREB earn no income at all from real estate. If you were purchasing any product as a consumer, would you trust the advice you get from someone who can count the number of transactions they do each year on one hand? Clearly the high fees to get into real estate and the continuing education requirements and expenses are keeping a lot of part timers in that business.

    The mortgage broker industry should instead look to the reputation and standards of the CIFP. There are a shitload of part time Realtors and almost no part time CFPs. What's needed to keep part timers out of the business are brokerages who actually do something for the commission split that they earn and invest in their staff. Most brokerages out do absolutely nothing to help their agents succeed. Giving them a website with the same template as everyone else? CRM system? Please! What a pile of crap! What good is a CRM system if an agent doesn't know how to prospect for business? A CRM system is useless without anyone to put in there. What good is a website if the agent is literally unknown in their community? We should look at it from a different perspective: we shouldn't focus on keeping the part timers out by raising fees. We should instead double up on our efforts to help the part timers with coaching, skills, and instilling confidence in them to build their book of business so that they can become full-time. It's a far more effective approach than raising licensing prices on everyone else. The real estate industry clearly shows this approach doesn't work.

  • Jim Thornton on 2015-03-12 9:52:21 AM

    Lior, great post! One big thing to note though. There is legislation in place that prohibits CFP (or anyone licensed to sell life insurance and/or mutual fund/investment produts) from working in other industries. Your license does not allow you to work in another field.

    As far as the CFP though, I totally agree. However, in order to maintain that you need 30 hours of CE credits per year. If they added the same thing in the mortgage industry, it wouldn't get rid of part timers, but it would weed out the ones that don't want to spend the time educating themselves.

  • George Christopoulos on 2015-03-12 10:18:51 AM

    Lior the higher fees was a suggestion only. Clearly the bar is set too low for people entering our industry.
    Many brokers are content having agents on their roster and charging them a monthly fee.
    No matter how much you train someone who is P/T their mindset will always be that of a P/T. Quote the lowest rate with no knowledge of the clients financial needs or if they can even be approved.
    A few bucks added to their full time income is all they care about.
    And you are correct re CFP's ,Insurance industry is similar.

  • Lou Piriano on 2015-03-14 11:56:10 AM

    Just curious Jim Thornton, what is your source for your comment "Real Estate has a worse reputation than mortgage brokers! " or was that just your opinion?

  • Jim Thornton on 2015-03-14 3:33:21 PM

    My personal opinion supported by the number of clients that talk very poorly about the Realtors and how they don't feel they are worth the money. I do NOT support this view and back them up all the time. But there are many many people that sell/buy privately because they don't feel Realtors are worth it.

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