Brokers: Cut pooling? Cut volume requirements

Brokers: Cut pooling? Cut volume requirements

Brokers: Cut pooling? Cut volume requirements

Fair is fair, says one seasoned mortgage professional: If lenders are bent on scrapping volume pooling, then, they must consider lowering their minimum volume requirements.

“Taking away pooling is a sign that First National is cutting back because they realized they went too far with incentives,” said Len Lane, owner/broker of Verico Broker for Life in Edmonton. “But if lenders will take away volume pooling, then they need to lower their limits for status.”

The controversial issue of pooled volumes and minimum volume requirements resurfaced this week on the heels of an email sent by First National to its broker partners outlining the decision to cut  compensation on all its products by 5 bps. It has also pulled its Wizard Spending Account incentive program.

First Nat is blaming, in part, volume pooling, suggesting it has led to a loss of efficiency in terms of having to deal with agents submitting under one broker and not just that mortgage professional.

All brokers are well aware of the pros and cons associated with volume pooling. However, channel lenders may ultimately be weakening their broker ties at a time when the funded volumes are expected to fall.

“There are lots of comments about pooled volumes being the reason behind poor performers getting the same bonuses as top performing brokers,” Lane told “But for small brokerages and independent brokers, pulling their volumes together is the only way to submit enough transactions to these lenders and get preferred rates.”

To replace this lost incentive, he said, lenders could lower their minimum volume requirements.

“Many lenders, like First National, require brokers to submit to them anywhere between $10 million a year to $20 million a year in order for brokers to qualify for higher level of discounts and bonus payments,” Lane said. “A lot of brokers can’t generate that much volume without pooling, so it would be a great help if the bar were lowered.”

The slowing market has already prompted similar calls from other brokers.

“If the lenders gave brokerages a little more slack in terms of meeting minimum volume requirements to maintain status, it would really help those in small markets,” according to Kent Brewer, broker with Mortgage Alliance Front Gate Mortgages in Fredericton, NB. “The way things are some brokers bring their deals to a smaller number of lenders just to maintain minimum volumes.”

  • Moira 2012-08-23 2:37:58 AM
    I agree. Perhaps volume bonus should be replaced in part by an "efficiency bonus" that way, smaller firms or independans can compete on issues such as funding ratio's or conversion of pre-approvals to live deals. It seems to me that lenders have been paying VB for business they would probably have received anyway, but without the "quality control" that would ultmately have resulted in a cost efficiency. Just my thoughts.
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  • Liz 2012-08-23 4:17:56 AM
    ING has been doing just that for a couple years now.
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  • Julia Krause 2012-08-23 4:38:13 AM
    Yup... it's been quantity over quality for so long, it was only a matter of time before lenders started to see that this wasn't the way to go. But I've been saying this for YEARS. Try rewarding the brokers who send good quality applications and make the underwriter's job easy with complete applications, the correct documentation, and no arguing. What a concept!! But no, instead they reward brokers who send them a hundred crappy deals and make underwriters' lives miserable... typical of the direction this industry has taken in the last ten or so years. And sad, too :(
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