An Alberta broker is frustrated by what he calls a disturbing trend: banks in the broker channel turning down his deals only to then fund those same deals through a road rep.
“It’s happened with three deals in the last two months – two with one big bank that uses brokers and the other with another of the big banks using the broker channel,” Rohit Bagga, an Edmonton agent with Invis, told MortgageBrokersNews.ca. “I’m sorry to say that the banks seem to have one set of rules for deals submitted by brokers and another set of rules for deals submitted by mobile mortgage specialists.”
All three were A deals, although challenged by proof of income and relying, at least in part, on foreign funds, he said. Each was rejected based on those challenges and, at Bagga’s own urging, his clients then submitted those same deals – with the same terms – to the same lenders, but through a bank rep. The outcome was remarkably different, despite the income and other challenges attached to those apps.
“I was working with a realtor on the deals, so I know where they went and who then submitted them,” he said. “I understand why they weren’t funded, but I don’t understand why they could then be funded when submitted by a mobile specialist.”
The concerns add a new twist to the continuing rate wars, with banks on one side and brokers on the other.
While brokers have routinely pointed to discrepancies between the rates they access through some banks using the broker channel versus special discounts their branch personnel and road reps tap into, Bagga’s fears add a new dimension to industry concerns around fair competition.
It also comes as the big banks ramp up recruitment efforts, looking to bolster their mortgage sales teams ahead of the busy spring season.
RBC, alone, took on 1,000 new sales employees in the last 14 months – a large percentage of them mortgage specialists and five times as many as it took on the previous year. And, BMO, which left the channel in 2007, added 1,000 frontline workers of its own in the second quarter of fiscal 2011. They helped drive sales, with the bank bumping up the value of its residential mortgages by $2 billion, year-over-year.
Bank want ads calling for those specialists now crowd online headhunting sites, among them positions at the four Big Six using brokers to originate mortgages.
Bagga is still prepared to send deals to the banks, if, in fact, it’s in the client’s best interest, although wants to see underwriters at those institutions employ the same kind of flexibility with broker deals as they do with mortgage specialists.
“It must be fair,” he said.