Brokers call for stricter education requirements

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Brokers, who have dealt with the fallout created by inexperienced peers, are calling for stricter education requirements for incoming mortgage professionals, even as Ontario reviews its regulations.

“Untrained individuals are concerning,” David O’Gorman, president and principal broker at MortgageLand told MortgageBrokerNews.ca.  “The five day wonders, I call them, who do a course and think they know everything. I’ve had to clean up (some of their) dirt in the past; deals that have been messed up.”

O’Gorman points to a recent incident where an appraisal was botched, overvaluing a house and requiring a re-appraisal. The problem, according to some brokers, is the lack of formal education required to become a mortgage broker.

“They need to implement mandatory, continuous education at a high level,” O’Gorman said. “A six- to eight-week mortgage education that includes appraisals, underwriting, understanding building titles, understanding reports; it needs to be more formalized.”

It’s an opinion shared by many experienced brokers – players who have put in the time, climbing the ranks in an industry that now, more than ever, attracts newcomers looking to cash in.

“I’m concerned by the quality of brokers in general,” Robert Floris of Mortgage Architects told MortgageBrokerNews.ca. “The ultimate goal should be to help clients but some view it as a way to make a quick buck.”

Floris has found himself fixing the work of inexperienced brokers as well. He’s had to do it six times this year alone, as a matter of fact. Recently, he was able to save a new client money by advising him to carry over a CMHC port – something the client’s original agent failed to mention.

“He was downsizing and he could take (his mortgage) with him and all he had to do was port his mortgage (to avoid paying CMHC penalties),” he said.

  • Versico on 2013-09-27 7:19:33 AM

    It is very interesting to see those same established brokers who complained about the more extensive education prior to June 2008 now noticing that 5 days does not make for a competent professional.

  • John G. on 2013-09-27 7:26:28 AM

    Is it the education or the industry? Who is hiring someone who doesn't know this stuff? The course they take doesn't get them licensed, these brokerages get them licensed. While I agree the licensing course should be longer, brokerages should interview these new agents. But it's like it's always been in this industry: have a pulse then you get a job.

  • JERRY ROSE on 2013-09-27 7:40:01 AM

    IT IS MY BELIEF THAT ALL PROSPECTIVE AGENTS SHOULD BE REQUIRED TO HAVE A MINIMUM APPRENTICESHIP UNDER A LICENSED BROKER BEFOR THEY RECEIVE THEIR AGENTS LICENSE AND THIS APP. COULD BE SERVE AFTER THEY TAKE THE AGENTS COURSE.ALL BROKERS SHOULD BE REQUIRED TO HAVE A MINIMUM OF THREE YEARS IN THE INDUSTRY.
    IT MAKES NO SENSE TO IMPLEMENT ANY ADDITIONAL REQUIREMENTS FOR LICENSING AS LONG AS BANK EMPLOYEE'S DO NOT REQUIRE AN AGENTS LICENSE TO DEAL IN MORTGAGES OUTSIDE THEIR OWN INSTITUTION.

  • Paul Mangion on 2013-09-27 7:53:55 AM

    I say have new agents apprentice for a couple of years along with minimum activity requirements to be eligible for a full license at renewal time.

  • M. Robertson on 2013-09-27 9:05:53 AM

    Once again some brokers are pushing their responsibility under the act onto someone else’s shoulders. That is the real issue here: Let’s not be accountable for our businesses or the activities that occur under our watch, let’s shove that off on someone else.

    You say that agents should have to apprentice… guess what… they do today! It is why you have to have an agents license under an experienced mortgage broker for 2 years before they can go for a broker license. That means that every single agent and every single transaction they complete is 100% the responsibility of the broker to manage and review. The issue is not training, the issue is that brokers are not doing their jobs and monitoring the agents the way they are required to under the act. If brokers spent more time actually managing their agents and their businesses this issue would be significantly reduced. Five days training or five weeks, it would weed out some but not all, and no matter how much classroom training you have – you still need real world experience.

    You want to improve the way agents are trained? Then make licensing broker more accountable for the transaction that occur under their license. Broker with a rogue agent? Lose your license and get a massive fine. Weed out the brokers that do not take the time to manage their agents properly and that will do far more to solve the issue.

    As for the ‘experienced’ brokers who complain about new agents making mistakes… So you were never new? You never made mistakes? You came out of the gate knowing exactly what to do in every single situation? I bet you did, and you either struggled through and figured it out on your own, or you had a broker who mentored you and spent time with you to help you. If you have been in the industry since before 2008, you had less training than a new agent has today. So let’s say that a five week course requirement comes in… are you prepared to take the five week course to maintain your license?

  • Paul Mangion on 2013-09-27 9:15:57 AM

    M. Robertson. I think you missed the point. I will agree with that there are many poor brokers and that needs to be cleaned up. Maybe not allowing brokers that cant prove proper experience or income should not be allowed to be a broker. After all an unsuccessful fellow has no right to be training new people. So if you are new and plant your but at a poor brokerage and close two deals during that time you have no right to be called and agent or a broker. So minimum volume will eliminate the useless agents and by default will eventually eliminate the brokers they work with. Maybe an agent can even get an extension on the two years if they move to another brokerage. The solution is not so simple but if something isn't changed this industry will continue to race to the bottom.

  • B. Lancaster on 2013-09-27 9:20:08 AM

    Apprenticeship eh? Anyone think this through? You want new agents to be apprentices? That means that they won't have a full license, or will have to put something like that on their business card? What member of the public will do business with this person? I'd do business with a fully licensed agent before an "apprentice". Come on folks, train the agents better and have more oversight and you fix the problem. The government can't fix everything for us.
    We complain of too much legislation, then not enough.

  • Paul Mangion on 2013-09-27 9:25:03 AM

    B. Lancaster has a great point as well. How about minimum proficiency standards at renewal by way of income or deals closed. Something to get rid of the one deal a year wonders!

  • B. Lancaster on 2013-09-27 9:51:11 AM

    Paul, I think that should be up to the brokerage and not the government. Once we start letting the government in on how much business one should be doing to maintain a license we're on a slippery slope.
    When we start telling the government that we can't even hire the right people we look foolish.
    If an agent isn't producing, fire him or her. Period.
    The problem isn't the education or the licensing, it's the fact that another brokerage will hire this person. And I guarantee someone will.
    Is that the government's issue, or ours?

  • M. Robertson on 2013-09-27 10:19:52 AM

    No matter what happens, more education or an apprenticeship – the reality here is that it is the managing brokers responsibility to manage their agents. If broker will not take accountability for this, then nothing will change. Under the act today brokers are responsible – so… be responsible. If you have an agent that is not conducting themselves ethically, then report them to the regulator – with evidence (if you are doing your job you should have evidence). If you don’t report then the regulator can’t do anything.

    When a broker hires an agent they are accepting responsibility for that agent, no different than an employer has responsibility for the actions of their employee. Take that responsibility seriously and manage the business instead of focusing on doing deals yourself. That coaching and oversight will make all the difference in the world, not just for weeding out bad apples, but also for helping your agents be more successful – that in turn means that your business will be more successful.

  • Mashugana Mike on 2013-09-27 10:22:52 AM

    The only entity who pushed for the 5 day course in Ontario was CAAMP. More corpses with a license meant more membership fees!

    Paul, you won't get FSCO to agree to minimum volumes. It doesn't work in insurance, mutual funds or other securities sales & just because someone does high volume doesn't necessarily mean they are good agents/brokers in the long run.

    Higher formal education means a) you have met a higher standard/barrier to entry b) you have skin in the game, so you are less likely to be unethical/crooked. Always with no guarantees.
    We could, for example, do like they do in real estate in Ontario. Take your first 3 courses & get a probationary license, then take additional courses in the next 2 years to get a permanent license. You have "done some time/apprenticeship" & have your education. You have invested time & money & you have something to lose.
    I am not saying that is the only solution but I would like to here comments

  • B. Lancaster on 2013-09-27 10:33:48 AM

    5 days or 3 months, what's the difference? The Seneca course was 3 months, but still only 40 some odd hours. So the course length hasn't changed in years. That includes when these brokers who have been around for years took that course. The difference is that the Seneca course was never legally required to become an agent. However, the broker course was 14 courses and now it's only one.
    Seems to me that it's the same to get an agent license and EASIER to get a broker's license.
    The real difference is that there are too many brokers who can easily and quickly start a brokerage or franchise and then can hire inexperienced agents and charge them monthly fees. The model has changed so that brokers make money off of monthly fees, not off of agents earning commissions.


  • Shayne on 2013-09-27 12:03:51 PM

    It sounds like the people complaining are just treating the symptoms (getting the deals done) rather than working on a cure. I would be curious if any of the people complaining about cleaning up after an inexperienced agent reached out to them at all? A 10 minute phone conversation may help a newbie.

    I know there were some very helpful brokers outside of my company who were more than willing to give me advice.








  • Shayne on 2013-09-27 12:04:05 PM

    It sounds like the people complaining are just treating the symptoms (getting the deals done) rather than working on a cure. I would be curious if any of the people complaining about cleaning up after an inexperienced agent reached out to them at all? A 10 minute phone conversation may help a newbie.

    I know there were some very helpful brokers outside of my company who were more than willing to give me advice.








  • Jeremy Nagel on 2013-09-27 12:09:34 PM

    M. Robertson...you are bang on! From what I see and read, a good many want to deflect the responsibility. If you can't take responsibility and your associate and he/she is fined, the broker and brokerage should receive a fine double the amount of their associate. Let's be honest, in some cases the broker doesn't own the brokerage but is being dictated to by someone unlicensed and who is clearly numbers driven...one more deal than I had yesterday. Pathetic!

    It is our job to clean up our own industry, not the regulator. This goes for the big super brokerages and networks too. Time too clean house!! It could work from the bottom up but we would have to unite and pressure the brokers, brokerages and super brokerages/networks. It'll work a whole lot faster if it came from the top down.

  • Tom B on 2013-09-27 12:12:49 PM

    I think John G hit the nail on the head - why would a broker hire an unexperienced agent and then just turn them loose - GREED - like any business the more people you have selling for you the more you make. More training is great but the onerous should be on the broker to ensure that their agents have met minimum education standards as well as being put on probation for 6 to 12 months. During the probationary period every deal should be reviewed and signed off by the brokerage to make sure the customer received the correct advice and are in the right product. Putting more onerous on the brokers will likely cause them to be more picky about who they hire. They wont want to waste their own time and money on substandard agents.

  • Shayne on 2013-09-27 12:58:56 PM

    @Jeremy Nagel It is also our job to ensure we are giving clients accurate information.

    I would love for the industry to review all mortgage comparisons. Rate, term, refinance scenarios, etc. Even the most seasoned broker is misleading the public in some cases.

    Sales skills and pretty presentations are being put before accuracy.

  • M. Robertson on 2013-09-27 1:53:15 PM

    Paul - You are missing something... what minimum volume requirements would you have them adhere too? Units or dollars? Dollars only works when you have a level price point for homes across the country (NFLD is a lot less expensive than Toronto)! Who monitors and enforces it? What about pooling deals to meet minimum lender requirements? Would you be prepared to stop pooling volume to accommodate a change in regulations? What about deal quality? Do you include private where you can pretty much fund anything or anyone, or just A and B business? What about commercial? A commercial deal typically takes 5X the work – does one commercial deal count for 5 residential? Minimums are complicated and difficult to monitor and enforce unless they are contract standards when an agent is hired at the brokerage.

    No matter how you slice the pie on this is 100% boils down to the Broker being responsible for the business which is being conducted under their license. That means taking accountability and regulators taking a firmer stance against those brokerages that do not accept that responsibility.

    Maybe Ontario needs to be more like B.C. in that it is not just the agent that gets hit with a penalty and license taken away. The broker of record gets nailed also. The regulator in BC will fine and shut down a brokerage if the rules are not being followed – they actually believe that the broker of record should be held accountable. The number of issues in the province per capita are significantly lower there – actually among the lowest , if not the lowest, in the country.

  • Keith on 2013-09-27 2:02:15 PM

    Jeremy Nagel - 100% agree with you, it is up to us as an industry to police ourselves and clean things up. The last thing we need is to run to the government and tell them that we cannot even sweep our own floors… that is a pretty sure fire way to get them to either over regulate us or shut us down totally.

    As for the super brokers… I am not sure if anyone pays much attention to this, but I know of at least one brand that has actually made a conscious effort to clean up their own network. It surprised me when I learned who it was, and I bet it will surprise pretty much anyone. It is Centum. I heard that the new guy there has cleaned out something like 80 franchises since he has been there. If it is even partially true, good for them. It was needed.

  • Keith on 2013-09-27 2:02:24 PM

    Jeremy Nagel - 100% agree with you, it is up to us as an industry to police ourselves and clean things up. The last thing we need is to run to the government and tell them that we cannot even sweep our own floors… that is a pretty sure fire way to get them to either over regulate us or shut us down totally.

    As for the super brokers… I am not sure if anyone pays much attention to this, but I know of at least one brand that has actually made a conscious effort to clean up their own network. It surprised me when I learned who it was, and I bet it will surprise pretty much anyone. It is Centum. I heard that the new guy there has cleaned out something like 80 franchises since he has been there. If it is even partially true, good for them. It was needed.

  • David O'Gorman on 2013-09-27 8:31:09 PM

    to Shayne
    Why would I reach out to an agent of another brokerage? Isn't that interfering with another brokerage's employee?Why is the agent paying his split to his brokerage? For guidance & support.Is it my fault that the principal broker is more than 100 miles from his agent & either hasn't trained his people properly to ask for help when needed or isn't available when help is needed?
    I would respectfully suggest to you Shayne that it is hardly "treating the symptom" to the consumer whose purchase would not have closed on time because of the incompetence/ignorance of a poorly trained/unsupervised agent.

    to Versico: your innuendo that I was ever a supporter of 5 day education is utterly false.I have been of the belief, since before MBLA Act became law in 2008, that the proposed/current educational standard is totally inadequate & in no way helps build a strong industry or helps protect consumers & I have been open & vocal about it.
    To put a temporarily licensed trained agent on the street, should be a minimum of 90-120 hours of training, with another 60 to 80 hours of specialized training in the first two years in the business, prior to getting a permanent license, or qualifying as a broker, & to keep the "geezers" current, throw in 18 hours of mandatory CE every two years

  • Shayne on 2013-09-28 9:40:40 AM

    @David

    A friendly phone call to the agent explaining how you were able to get the deal done when he/she couldn't would likely be very educational for the agent and appreciated.

    If you are not comfortable with that, give the broker the head ups as they should have concerns.

    It is not your fault at all, but when you become aware of it and you have it in your power to communicate to the agent or broker, perhaps it doesn't happen again. Who wins? Future clients and the industry.

    I am not down playing you getting the deal done, as I am 100% confident that the client appreciated it and it does help our industry. That being said, if the same agent keeps "blotching" deals it does not "cure" the problem.

    Everyone in the industry has a responsibility to ensure we are doing the best for our clients and our image. As mentioned before, change will likely have to come from within.

Broker news forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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