Brokers: Time for mono-lines to eat refi fees

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It’s increasingly apparent all mono-lines will have little choice but to cover legal and appraisal costs for refis, argue leading Toronto agents, billing it as essential to satisfying clients – now inundated with no-fee offers from the banks.


“One lender offered brokers an incentive to bring bank refi clients over to the broker channel,” Darin Bauer, with Mortgage Intelligence in Toronto, told MortgageBrokerNews.ca. “But I think the incentive has to be for the client, not the broker, because they’re already getting that offer from bank branches, which are covering their legal and appraisal costs. To draw business from the branches broker channel lenders have to match that.”

His analysis reflects that of a growing number of brokers, struggling to grow their refi portfolios in order to compensate for a weaker real estate market. Consumer interest, spurred by rock-bottom rates, has also played a part.

Still, renewed aggression at the bank branch level means that most are prepared to assume a client’s associated legal costs, including disbursements, said another Ontario agent,Sudip Adhikari, with CENTUM Gold Mortgages. As a result, brokers are opting to cover those costs themselves.

Both Bauer and Adhikari want to see that burden lifted from off the backs of brokers.

“It would be better overall if the mono-lines offered to cover those costs,” he said, identifying an average range of between $500 and $800. The bill is likely to be smaller for broker channel lenders, most, in fact, using title companies like FCT.

More and more clients are also expecting to see lenders cover appraisal fees, something many broker channel players have resisted, although several have made special offers specially focused on legal expenses.

Regularizing those offers would help to remove the obstacle brokers still face in selling mono-lines and other broker channel lenders to clients wary of corporate names outside the Big Five,” said Bauer.
“Aside from no-fee offers, mono-lines have to look at offering products that really set it apart from the banks,” he told MortgageBrokerNews.ca. “Brokers need that to better sell them to clients.”
  • common sense on 2011-10-20 4:31:28 AM

    This isn't news

  • MortgageFlex on 2011-10-20 4:39:10 AM

    There is only so much money in profits. If the lenders start offering free legal fees, closing costs, and other fees, it ultimately comes out of our commission.

    I totally agree with Bauer who says, "mono-lines have to look at offering products that really set it apart from the banks".

    The product is what will make it easy for us to sell. If all we have is rate, then we will die by the rate.

  • AB Mortgage Broker on 2011-10-20 4:44:26 AM

    Oh my, now I have heard it all. First brokers buying down rates and now brokers paying for legals. If you find yourself doing either of the above, it's because your customer sees NO value in your service-you are a commodity! My office has NEVER had to pay legal fees, nor would we, and our clients simply don't ask. They see the value we offer and at the end understand there we be some costs they will have to absorb.

    Change the way you look at things, and the things you look at will change. Einstein said it best, "Insanity: doing the same thing over and over again and expecting different results". Time to change the way you do things and stop blaming others for not doing enough. Hold yourself as willing and able!



  • An Ontario Principal Broker on 2011-10-20 4:56:50 AM

    Why should the monolines subsidize mortgage agents/brokers?
    If they offer $500 to the client the banks will offer $750. The banks will make it up on over priced products they cross sell to the client, like "garbage life". The monolines don't have that luxury.
    Point out the benefits of the monos,show the drawbacks of dealing with one institution, especially a bank. Explain the difference & protection of the borrower using their lawyer & not some "closing shop" which does not offer legal advice or protection.
    Is there really an appraisal or is a computer spitting out a value?

    "Mortgage Specialists" hate brokers/agents who sell rate, because they are paid based on rate. The higher the mortgage rate they can have an uneducated borrower agree to, the higher their commission. ( I have had reps tell me when they are forced to match the discounted rate a broker provides, the "MS" will only do the deal if the borrower takes "garbage life insurance"! ( the ill-legallity of tied selling?)...and the "bonuses" & lower rates the banks offer now will be gone by January.

    You have to be your own solution. Don't blame lenders/appraisers/insurers/government...the banks are your "enemy". They are trying to take food from your family's table.Know your "enemies" strengths & weaknesses and "attack" their weak side. Big plodding organizations take forever to move. You need to plan & execute your plan swiftly.Start by trying educate your consumers & "attack"( in the business sense) a Mortgage Specialist or two in your area. Show the consumer what they really are, one-trick ponies.
    Show why you are better & different, if you can't do that, then......

  • Chad on 2011-10-20 4:58:59 AM

    Hmm.. Pay us more, drop the rate, pay legal fee, pay that, pay at renewal, pay pay pay.. How long do you think this will go on for before lenders leave the space. I agree with AB Mortgage sell Value. Sell relationship, sell product.

  • Robert / Ottawa on 2011-10-20 6:09:27 AM

    AB mortgage broker is correct. if you rely on "free" services from lenders and the best rate in the market, you are selling on rate and have offered no value. Been in the industry for over 10 years and I have never paid for legals or appraisals and have NEVER lost a deal because of it. I have still kept my clients even when their bank had a bit better rate than I could offer. Why?? They saw value in dealing with me. I am getting pretty tired of listening to the whiners wanting everything for free rather than assessing how they do their business and why they need to offer freebies to get clients.

  • Chris / Winnipeg on 2011-10-20 6:37:45 AM

    Never been asked to pay legal, comes down to the quality of your business I think. There are lenders out there that'll eat the appraisal for you if you're nice to them.

  • Angela Wong-Liao, Invis Inc on 2011-10-20 12:16:55 PM

    I agree with both AB Mortgage Broker and Robert/Ottawa, if we focus on pricing and fees and the clients that we attract will be focused on pricing and fees. I do not believe in rate buy down and absorbing fees because we are business entrepreneur, we have to make our living on a certain profit margins, otherwise, why are we in this business. Competitions are healthy because it make us more alert and flexible at our business strategies. We should constantly review and update our business strategies to succeed.

  • @kiltedbroker on 2011-10-21 1:09:38 AM

    Demanding that the mono-lines eat refi fees or pay for appraisals is ridiculous. I believe that our service should differentiate us in the marketplace, if we press our lending partners for competitive advantage we give them the control.

  • Ad Lakhanpal, Mortgage Alliance on 2011-10-21 1:47:21 PM

    I don't think it is appropriate for brokers to "demand" things from lenders. Mono-lines are businesses, who compete with the banks, and also with each other. It is up to them to offer products and features that will attract more business to them. Job of brokers is to provide good service to the clients and scan the lending landscape for the best product that meets the needs of the clients.Lenders and brokers who provide the right service or product will prosper and others will exit the business.This is the normal way things happen in the free market world.As brokers we should stay focused on doing what we do, to the best of our ability instead of trying to change business models of others in the marketplace.

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