Brokers anticipate wave of compensation cuts

Brokers anticipate wave of compensation cuts

Mortgage professionals are fearful a recent move by First National to lower commissions will kick start a trend, as channel lenders face fewer competitors for broker business.

“First National sent brokers a message last Thursday that they will be lowering brokers fees across the board by 5 bps,” Brad Geisler, a broker with the Mortgage Centre in Alberta, told “They say the move is aimed at reducing costs, but I suspect it is partly the result of FirstLine exiting the market.

“With less competition, lenders can afford to lower their fees. I hope this does not become a trend.”

First National denies that as the reason behind its move.

“Yes, we have reduced our fees across the board effective last Friday,” Karen Biernaski, with First National, told MortgageBrokerNews late last week. “But the speculation that this is tied to competition is not valid.

“We looked at it from a cost perspective.”

Still, Geisler and others are concerned FirstLine’s shutdown last month now holds repercussions for their remuneration as lenders benefit from the mono-line’s withdrawal.

“First National was big winner when FirstLine left the scene,” said Geisler, “I’ve been told that they had been swamped since FirstLine left.”

Biernaski refutes Geisler’s theory, reiterating that the lender examined its operating expenses and found the need to improve cost-effectiveness in the following three areas:

•    Portfolio leases
•    Securitization
•    Broker compensation

With regards to broker compensation, Biernaski said, First National found out that its Wizard Reward Program was not working out as intended.

“This was a loyalty program designed to reward top performing brokers, but with brokers pooling their numbers, First National was not getting the operating efficiencies it was targeting,” she said. “For instance some brokers were not using the (Wizard) online mortgage system which was meant to make transactions more efficient.”

  • @kiltedbroker 2012-08-21 3:05:09 AM
    I don't blame First National at all for cutting broker compensation. I would probably do the same thing... Don't get me wrong, I am not happy about it, but I think we should look at the business we put forward as a channel before pointing the finger at First National. Ask yourself, would First National have cut our commissions if our average funding ratio was 85% as an industry?
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  • KL 2012-08-21 3:05:19 AM
    Cease the pooling ! Cease the rate discounting below BPR and make our lenders happy. Greedy [brokers] buying down deals - loosing 40 - 50 bps of their commish, just so they can get the deal !! Really ...!!! . Our lenders have been our way to make hay for the past 30 years (support them accordingly) - and now lenders tighten their draw strings and brokers will exit -?? C'mon Man ! If any of you know anything about our biz - it is the pooling that hurts ! why should one dude giving one deal a year get the same as the dude with 100 ! Big brokerage or not - this has gotta stop or other mono lines will follow ! You will see other Loyalty prograqms dimish, these are expensive and if the brokers look for best rates with best loyality and rewards - could be trouble. I beliee you will see a choice - you can have this plus this, but not that ? Time will tell !!!
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  • Stan 2012-08-21 3:19:33 AM
    Simply stop dealing with them and see what happen!!!
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