Broker: massive broker cull to cut buy-downs

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With the Ontario regulator now releasing its final tally on relicensing casualties, a leading broker is arguing the high losses will help cut the pressure to buy down rate.

“It’s one of the positives that should stem from so many agents and brokers leaving the business,” Chris Bisson, principal broker for The Mortgage Centre in Guelph, told “Those marginal performers who were buying down rate in order to do any business at all have likely left the business and that means that other brokers will face less pressure to buy down their own rates in order to keep from losing clients to those agents.”

It’s another positive spin on what FSCO numbers suggest is the single largest cull of mortgage professionals in five years.

As of April 1 – one day after Ontario’s final deadline– some 21 per cent of the province’s 9,707 agents had failed to renew their licenses. That’s a loss of 2050 agents alone, although nearly 200 mortgage brokers also missed the renewal date, representing a 12 per cent drop in the number of those licensees.

While the numbers represent a bump-up from initial FSCO relicensing stats, they exceed industry estimates for a total loss of 10 per cent to 15 per cent.

The bloodletting was likely self-inflicted, said Bisson, suggesting most of those exiting mortgage professionals had simply failed to survive the conspiracy of increased bank competition and shifting payout penalties that made it harder to woo clients away from their existing lenders.

Still, their loss may ultimately be the industry’s gain, if their departure improves the collective skill level of mortgage professionals in this country, said another experienced broker.

“The net benefit is the client will be better off in coming to the experienced broker first off before an inexperienced agent who works at it part-time has had a chance to make a mess of things,” said John Panagakos, principal broker at Dominion Lending Centre Home Financial. “The trick in this business is to go it full-time and learn from a team.”

  • Jim on 2012-04-20 11:30:08 AM

    The loss of these marginal brokers will not eliminate or reduce buy downs. Buy downs were not a result of marginal brokers - they are a result of more experienced brokers trying to compete with branches. Having said that, the loss of these agents is positive for the industry as there are way too many of us in the bis.

  • Ron Butler on 2012-04-20 11:13:58 PM

    I agree with Jim, advertising low rates and working with rate websites is very expensive, only very successful brokers can afford those costs so the non-renewal of licences idea does not wash. Buying down rates is here to stay, you are entitled not to like it but it won't be going away.

  • Kevin J. Power, President Power Mortgages Inc on 2012-04-20 11:28:24 PM

    Between the agents who buy rates down tot get the deal and pay finders fees of up to 50% to referral sources including bank reps are bad for any industry. The hidden referral fees are unethical and illegal. People who do that cater to the lowest common denominator, greed. Any business that they develop is always up for auction. That program never works in the long term.

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