A leading Toronto broker is asking lenders to consider returning limited approval power to BDMs, at the same time making those front-line reps more accountable for their underwriting decisions.
“I am very fortunate to have worked with competent BDMs who are generally responsive and proactive in their approach to problem resolution,” Calum Ross, senior VP of The Mortgage Centre-Mortgage Professionals Inc., told MortgageBrokerNews.ca. “I also believe BDMs should be given discretion to make exceptions on mortgage deals but only if they are also held responsible if the mortgage ends up in default.”
The suggestion is being echoed by brokers across Canada as they look to streamline an approvals process, which many argue has become increasingly bogged down in red tape. Some have also registered concerns about underwriter rejections that are ultimately resolved only after being escalated, usually at the urging of a BDM.
Even with a successful resolution, that process usually costs the broker and the client valuable time. Ostensibly, returning even limited vetting power to BDMs would speed up approvals on relatively straightforward and sound applications. Holding them accountable for future defaults would continue to protect broker channel lenders from potentially fraudulent and inherently weak files.
Any lender move to beef up the BDM role would run counter to the growing trend to further remove BDMs from the underwriting and appeals process, argue some brokers. Many lenders have, in fact, moved to strengthen the direct broker-to-underwriter relationship, reducing the need for an intermediary. That effectively frees up BDMs to focus on chasing down new business, leaving existing broker-clients to deal directly with underwriters. When an impasse is reached on an application, mortgage professionals must then ask the underwriter to escalate the file, not the BDM.
“We are planning to introduce BDMs next year,” CEO for newcomer Equity Financial Trust, Nick Kyprianou, told MortgageBrokerNews.ca. “But their duties will be focused on where they are really needed: bringing in new business and troubleshooting in cases where we see a significant drop-off in deals being submitted by an existing broker partner and need to find out what we need to do to change that. In all other cases, our underwriters will deal with existing broker clients directly.
“What the BDMs won’t be doing is visiting those brokers that we already have good existing relationship with – those where the broker sending in a good flow of business each month. Where is the value proposition in having the BDM going to see that client?”
Regardless for whether lenders hand their BDMs more vetting power, Ross wants to see those financial institutions get a better handle on how they evaluate the performance of their BDMs.
“I think one of the biggest challenges for the management of BDMs is the need to align their compensation with performance metrics that are within their control,” said the high-volume broker. “Many exceed, or fail to meet, performance targets based on working in the right territory and/or a change in pricing or policy by the lender they represent.”