The issue of trailer fees is once again sparking debate among brokers as they look to secure their financial futures in very insecure times.
“Counting on other people to give you the money when you retire is unreliable,” says Angela Wong-Liao, an industry veteran and Invis agent. “There are so many new lenders out there, offering trailer fees; but why do we put our future in someone else’s hands?’”
On Thursday, MortgageBrokerNews.ca broke the story that controlling interest in Merix Financial had been sold to Culpeper Capital Partners. The sale will keep the current management in place, including the company`s long-standing support of trailer fees.
Still, a recent case of a credit union slow to honour renewal fees has ignited some concern about mononline included its sister firm Paradigm Quest, the industry’s leading mortgage servicing company.
The popularity of trailer fees among brokers is that it serves as a retirement fund for them, paying out commissions over many years and allowing for a more steady stream of income, say proponents.
For small lenders, it allows them to conduct business with brokers without paying all funds upfront and to minimize the threat of switching. Still some brokers making note of a lending landscape in a state of flux are recommiting themselves to upfront commission.
“I do my own investing, I get my money upfront,” says Wong-Liao. “They market trailer fees as helping you look after your retirement – but how many of these small lenders will still be around 20 or 30 years from now?”
Other lenders who have left the channel, like Macquarie Financial, continue to issue trailer fee commissions to brokers. However, some cite the B.C. example of Northern Savings Credit Union, which discontinued its trailer fees back in 2010, only reinstating them after a public outcry in the brokering community.
“I only deal with the big lenders,” says Wong-Liao. “The smaller ones get bought by the larger lenders, even ING was taken over by Scotia."