Brokers call for ‘real’ industry designation

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Brokers are calling for a higher barrier to entry into the industry, and many believe the first step lies in establishing a more rigorous curriculum for attaining the broker designation.

“The only thing that will add to professionalism in our industry is to have a designation system -- a real one; the AMP is not properly administered and really doesn't provide true professionalism,” Jim Thornton of Real Mortgage Associates wrote on MortgageBrokerNews.ca. “In addition, adding continuing education credits to the mortgage industry would be a good thing. In effect, this will do as you suggest in adding to the overall cost of the industry, but at least you will be getting something out of it and forcing all agents and brokers to update their knowledge.”

The conversation was spawned by a MortgageBrokerNews.ca article about the prevalence of part-time mortgage brokers operating within the industry. And many industry players believe it’s too easy to become, and remain, a broker in Canada.

To become a broker in Ontario, for example, one is must be 18 years of age, a Canadian resident, authorized by a brokerage to deal in mortgages, and complete an approved educational course.

And while one broker suggested higher licensing fees to weed out part-timers, others believe the key lies in creating a broker designation that requires ongoing education and more rigorous course material.

“I can't help thinking if IMBA and CAAMP didn't literally hand out these so called ‘professional designations’ to these part-timers then we wouldn't have them running around out there masquerading as mortgage professionals,” one reader, Sean Ryan, commented. “The industry is its own worst enemy in this matter.”

The Mortgage Broker Regulators’ Council of Canada (MBRCC) conducted a survey this past September -- that included responses from 1,113 mortgage brokers in Alberta, Ontario and Newfoundland -- that found that 55 per cent of brokers in Ontario admitted brokering mortgages was not their primary source of income. It also found that only 34 per cent of those surveyed have been licensed for at least five years.

Further, only 40 per cent of those polled admitted to doing their own industry-related research to keep up-to-date on trends and mortgage products.
  • Karen on 2015-03-12 12:11:05 PM

    The issue is not part time vs full time, it is about the ability to provide the proper advice. What is needed is some kind of mentorship program.

  • Riki on 2015-03-12 12:21:58 PM

    I do not think higher fees are the answer. As a newer broker myself, the start up fees are a difficult pill to swallow. Adding more won't increase professionalism it will only make the industry accessible for the already wealthy. I think people that want things like that want to weed out competition not inadequate brokers.

  • Judy on 2015-03-12 12:54:46 PM

    I agree with Karen ... even on the discussion yesterday, I noticed some of those denigrating "part-time" brokers were, in fact, also realtors (&/or other professionals) ... are they not, then, "part-time" brokers also? I also have 2 professions, not just mortgage broker. I certainly don't consider my self "part-time" ... Ii come to the office every day & work more than 40 hours per week on average, but mortgage brokering is not my only profession. I've been in the banking/brokerage industry for 40 years, so even if I dropped my other profession & semi-retired am I to be lumped in with the "part-time" brokers?

  • Mortgage Delivery Guy on 2015-03-12 1:10:52 PM

    While P/T or F/T status does have some impact on performance, we should not get stuck on it. Giving away certificates in a week is one part of the problem. Failing to understand the essence of mortgages & its impact on clients, lenders & our system as a whole is another equally important factor which plays role.
    Jacking up the fees will not help the issue.
    There could be many many mortgage brokers /agents but there are only hand full good ones, is what i will say.

    Karen, Riky & Judy I agree with your thoughts.

  • David Betty on 2015-03-12 1:25:58 PM

    While this seems to be the beginning of a worthwhile discourse on the means by which Mortgage Brokers can go about raising the bar of professionalism within the industry, the premise of the current conversation is incorrect. Solutions should be preface by genuine problems and I am hard press to see “too much part-time mortgage brokers” as the problem. Is it that we are saying the level of income in the industry is insufficient to support a cadre of highly professional mortgage brokers that are dedicated to their craft? Or are we on the other hand saying; due to asymmetric information the consumers are unable to judge quality?

  • Mortgage Guy Geoff on 2015-03-12 2:43:57 PM

    Great point David! A huge lack of consumer awareness already makes it tough enough to compete broker to broker, a challenge that I welcome. The struggle however is that as brokers our biggest competitors are the behemoth banks and their ability to compete using their $8B in quarterly profits and favourable rules against us. Unlike us as brokers, bank reps do not work in the best interest of consumers but rather in that of their employer.

    Accordingly wouldn't it make sense, from a consumer protection point of view, to only allow brokers to arrange mortgages? Perhaps then if those behemoths are indeed the best fit for our clients' home funding then of course that's where we will send the business.

    If this were the case then perhaps there would be more attention - good and bad - on brokers and the good ones would rise to the top. And if you are one of the good ones then guess what, you'll be busy enough that you will have no choice but to practice full time.

    Ahhh but we can dream...

  • CV Mortgages on 2015-03-12 2:52:20 PM

    I was a licensed assistant for 5 years before becoming an independent broker, and this experience was invaluable in making me the broker I am today. I think there is some merit in the idea of a mentorship program as mentioned above, or some sort of "articling period" like a lawyer or an accountant complete. I am not saying 5 years is necessary, but at least 2 years... I also think a minimum level of education prior to taking the Mortgage Brokers Licensing course would be prudent in raising the bar - for example, a 2 year business diploma program or equivalent experience. I have a business degree and I use it to the benefit of my clients every day.

    Just my two cents...

  • Brian Lambert on 2015-03-12 2:55:42 PM

    The idea of establishing another designation to brokers and increasing fees is ludicrous. Designations are not what makes a professional and all you people who feel that displaying those designations on your business card or hanging out a sign will bring you in more business, it won't. Case in point, Investment Advisors with a CFP does not make them better than a individual without the CFP, it is how the individual applies their craft. I was in the medical fielf for 21 years and taught at a medical school for six years. During my teaching years we dramatically changed the exam process based on a McMaster's study that showed the best medical doctors were not the ones that were book smart. Some people are naturally talented at writing exams, but when it came down to practical application they failed miserably. We changed our exam scoring system to include a 50/50 split on written and practical examination. Well, that had some students heads spinning because some of the most book-smart students failed on practical application.
    The basic mortgage agent course is a joke and leaves the student with little knowledge and no practical skills. We need a two part training system, first being basic knowledge with written exam and second part being placement with a brokerage of the student's choice for practical training. The should be mandated by FSCO to sign off on that training and the Broker be responsible for proper supervision of all trades going forward. There should be an expectation from the student to complete (X) number of trades before being signed off on their training and supervision should continue for two - three year period before being recommended to apply for a Brokers License.
    If you work as a Broker, it should be expected that you are full time in this business. If you cannot fulfill that obligation of full time status then you should be deemed a Mortgage Agent and be working under supervision of a Broker.

    All the problems in our business stem from poor training and little to no supervision. How are we to advance our industry with out the proper oversight. Brokerages can't do it? In most cases they are to far from the agents. It has to be done by the Brokers, it is the Brokers who should be enforcing the Policy & Procedures and Code of Ethics in your organization.
    If any designations were to change, There should be an AMP designation for Agents and an Accredited Broker designation for Brokers. In the financial Services sector they go further and add a Branch Managers designation for those that run a commercial office (not a home office) and supervise agents. I've taken the course.

    The mortgage industry is still far behind the investment and insurance industry for regulatory oversight. We just have to look to them for better ideas. These organizations have been around a lot longer than ours and they have gone through all the same hurdles.

  • Brandi Pierik on 2015-03-12 3:10:17 PM

    well thought out comment Brian! Do you see CAAMP having a role in implementing the necessary changes?

  • Sardool Bhogal on 2015-03-12 3:37:37 PM

    Problem lies at the point of entry to mortgage business. One week course for Mortgage agent is a joke, considering we have people joining the business who can barely write a legible sentence in English, or communicate fluently. Copy the model of real estate industry. 3 modules of extensive training with 75% pass mark and then 3 more mandatory courses in the next 2 years with same 75% pass mark. Want to be a broker, go for 2 more modules of training again. Now you are a broker, there is re certification every 2 years. See the difference here?

  • Jerry Quigley on 2015-03-12 4:43:52 PM

    Presumably none of the commenters are licensed in BC. The course is 9 months to 1 year, with continuing education after that.The course costs $1000 and the License costs $1000 for 2 years. The continuing education is approx $125 per segment.

  • mo money on 2015-03-12 7:12:32 PM

    yes professionalism is a great idea, however as brian said, you can't learn professionalism from a book.

    so paying fees and taking courses is a waste of time.

    I am afraid our business is very similar to real estate business...... license a whole bunch of people and the good ones will naturally rise to be the cream of the crop .... the others will linger around or quit.

  • Tyler Williams on 2015-03-12 7:22:48 PM

    I'm not sure that there is a future in the mortgage brokerage industry. Realtors are getting pinched by technology but there's a very real physical component to home sales that can't be overlooked, so the role of a realtor can't be easily substituted with an app-- only marginalized. I just stumbled upon this James app, www.jamesmortgages.com for example that allows you to go through the mortgage acquisition process on your phone. I could see how it could completely cut out the traditional broker role in the future. I may be wrong, but I'm not sure there will be mortgage brokers in ten years, or less.

  • Bert Czombos on 2015-03-12 9:45:29 PM

    Part time or full time is not the issue. Competence / honesty / acting in the client's best interest must be forefront, however until our industry spends the time and effort to educate the customer on what a particular designation means, everything else is moot. How many of our clients, if asked, could tell us what an A.M.P. designation even stands for, let alone how it affects / benefits them. Presently, a logo from one of the banks on a business card goes a lot farther than an AMP or broker designation. Until our industry changes that, and educates the consumer accordingly, designations and continuing education is just another way for CAAMP & IMBA to generate revenue while elevating the perception of the industry only to those within it.

  • J Smith on 2015-03-13 2:18:12 AM

    The qualifying requirement in BC seems more demanding than the Ontario one week course! Is the one week course in Ontario true???!!!

  • Sardool Bhogal on 2015-03-13 9:36:30 AM

    Yes J Smith, it is true. One weeks training to become mortgage agent.

  • Brian Lambert on 2015-03-13 11:46:00 AM

    Great comments on this issue. For the point of FT versus PT there is a major difference. No true industry can be reliant on a PT sales force. Being full time is a dedication to your career, it builds on your knowledge of the industry and sets a foundation for future growth. Anyone that is PT should be deemed a Mortgage agent and supervised by a FT Broker.

    There is a lack of hierarchy structures in this industry. In a Hierarchy Structure Agents recognize defined levels of leadership within an organization, authority and levels of responsibility are obvious. Opportunities for promotion motivate agents to preform well. Hierarchy structures promote developing agents as specialists. Mortgage Hierarchy should be structure in this fashion. FSCO, CAAMP, Super Brokerages/Independent Brokerages, Brokers, Agents. with each subset having individual responsibilities.

    I have written about this subject before, referring to the Banks. The provincial & Federal government really need more oversight concerning mortgage employee's of the bank. This same issue came up 10-12
    years ago with bank employee's not being licensed as Investment Advisors and the federal gov. implemented changes were by bank employee's working in provincial jurisdictions had to be licensed. If the Federal gov. implemented licensing requirements, these bank employee's would have to follow key Code of Ethics in providing proper mortgage advise and full disclosure requirements. They would be upheld to the same standards as other licensed mortgage professionals. ( look at how much more money CAAMP would make?)

    Increased fees are not the answer.
    CE credits lack sufficient education content and becomes just a money grab. If you are going to produce a meaning full continuing education format, it has to be done professionally and content should be what is needed as directed from working professionals in our industry.

  • Judy on 2015-03-13 12:05:56 PM

    I totally disagree PT vs FT ... I believe it is completely experience & dedication vs. inexperience lesser dedication. It's all fine for those in a larger centres that there is enough work to keep you busy full-time. Not true in the smaller centres &, even if enough work, if I decided to be selective about my clients? Should I be only an agent, with my extensive experience in the field? Makes no sense to me....

  • Anthony C. on 2015-03-13 12:06:01 PM

    @ Tyler Williams...

    I must ask if there is something clouding your vision if you can see how "James" is going eliminate the mortgage brokering industry.

    And for the record, it appears James is nothing more than a referral based system to drive leads to mortgage brokers whom he is evidently getting a cut of the pie, without even having any breadth of knowledge as to who his clients whom he is referring are....if not, then the lack of disclosure as to whether he is a licensed mortgage agent, broker or brokerage is in contravention to compliance rules, under the MBLAA.

    And further, unless you have used the James App and have gone through his so-called "mortgage acquisition process" on his phone, don't be so sure that it is as effortless as it has identified.

    Artificial Intelligence...really...? On a mobile phone app for mortgage financing...? "Less human input so we can pass the savings onto you..."...what a joke!

    If anything, he is himself or with his broker partners buying down the rate...there you have it...no secret.

    Lenders still heavily rely on the "human component" to analyze, underwrite, instruct and administer...lawyers still need a physical body for signing under the "KYC" rules...and mortgage brokers still, for the most part, have thorough discussions with their clients at one point or another during the application process. And sometimes, (God forbid) they actually meet with their clients. How dreadful that must be for them...

    NASA hasn't figured out the technology, yet "James" has...what a joke...but as in all things, there will be believers...

    The only way we will ever rid ourselves of the paper process and human interaction, which "James " is apparently trying to eliminate through his "breakthrough technology", is when (with dread) we commence walking around with our entire life's summary imbedded in a Chip on the end of our finger, and a swipe is all that is required.

    Until that Orwellian notion comes to pass, mortgage brokering will still be a viable and useful option for those seeking great rates, great service and expediency of delivery.

    And for the record, I have been using e-signatures by Silanis over the last year with expected and lukewarm responses from my clients and the Lenders, who are just trying to learn and better understand the legal implications and adaptability of electronic signatures.

    I welcome your well thought out reply...

  • Omer Quenneville on 2015-03-13 6:05:51 PM

    Look at what TD bank does with their collateral mortgages and they still manage to get them CMHC insured. What needs to happen is a Re-write of the mortgage act to clean up the industry so that a mortgage remains a mortgage and not a collateral charge guaranteed by the taxpayer.

  • mo money on 2015-03-13 7:42:23 PM

    Hey, the bank act will always rule over us mortgage brokers, they pay off the politicians with plum jobs once they leave office.

    There is absolutely no way the big 5 will ever let us brokers and other lenders on equal ground.

  • Doug King on 2015-03-14 2:00:11 PM

    Good luck on raising the bar! I agree it should be raised... but here in Alberta, RECA, the organization which regulates both Realtors and Mortgage Brokers has recently lowered the requirements for prospective Realtors to all those with an intermittent pulse.

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