Flippant brokers mar the industry

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Are sleazy brokers cheapening the industry?

Brokers say inexperienced agents – including those who sat dormant until real estate sales picked up this summer -- are flooding the market to make a quick buck.

“Quality of agents in the industry and the quality of mortgage brokerage operators (is my biggest concern right now),” Paul Mangion, principal broker and partner at the Mortgage Centre M.O.S. MortgageOne Solutions Ltd., told MortgageBrokerNews.ca.  “We look more like used car salesmen today than ten years ago. People join because they think it’s easy and quick money; they don’t treat it as a career.”

These fly-by-night brokers can have a detrimental impact on the reputation of their more scrupulous and experienced peers – and it’s a lot easier to damage a reputation than to maintain one.

“They last long enough to do damage and then they move one,” Mangion said. “When (brokers) do a good job, customers tell one person, if you do a bad job, they tell 10.”

Some industry leaders have inherited clients from these brokers… and the headaches that come with them as well.

“When these clients come to me, it complicates matters and they are flagged by CMHC because their prior documentation wasn’t properly taken,” Jeff Mayer told MBN. “I’ll give an example: We got a red flag (which requires all documentation up front) and that was only because another broker gave them the wrong phone number. Why would you flag something just for having the wrong phone number?”

And this lack of thoroughness may be due to an lack of caring and ignorance.

“There are too many guys out there with no clue on what’s going on in the market; they’re blasting all these deals and they’re getting the information wrong,” Mayer said. “Most new agents don’t give full information or documentation. All they care about what they make and where they work.”

As for a solution, perhaps it can only come from a regulatory standpoint.

“There should be minimum requirements to hold their licensees and you should be active to hold it,” Mangion believes.

  • Garry on 2013-09-13 8:46:35 AM

    I agree with the article's comments. In addition there are too many agents and brokers in the industry who have personal poor credit or financial issues which in my opinion lessens their own abilities to make concientious decisions for the benefit of their clients

  • Ron Price on 2013-09-13 9:03:36 AM

    Toughen up our educational requirements.
    Include much more course content on the business side including marketing, selling etc.
    Why not emulate the real estate model which puts the new agent on a probationary/apprentice period of two years during which time 3 additional courses much be taken, passed etc.

  • Mark on 2013-09-13 9:31:01 AM

    Agreed! As well, a minimum funding requirement should also be part of the probationary evaluation. If an agent cant fund 3M at least annually for two years, then it would be obvious that they are not in for the right reasons.

  • Ron Price on 2013-09-13 9:33:53 AM

    Absolutely Mark
    Great point re minimum funding requirement
    It's high time something like this was put in place

  • Cameron Mackie on 2013-09-13 9:58:21 AM

    The last FSCO re-licensing course removed 30% of the bad apples. I’m hoping to see with the latest industry changes, this upcoming renewal another 30% drop off. This will help eliminate the majority of the fly by nighters.

    I believe it’s now up to us brokers to push out the rest if they are not performing. But most crucial in re-facing our profession is the change in training to become an agent. I still have agents coming fresh from training, pumped and ready to sell and they still don’t understand qualifying ratios or what a buy down is.

    Until I know the training becomes more advanced or at least geared to the new rules I have not and will not hire any further “new bees”, I’m not just sacrificing time and money, we also uphold a professional image in the community, and this can so easily be tarnished with inexperience.

  • Donna on 2013-09-13 12:17:15 PM

    I agree with this article whole heartedly and I'm a relatively new agent myself. I'm working at this full time and am employed by a great brokerage but am finding this year particularily difficult. I had some great momentum in 2011 and 2012 and it has all but evaporated this year. Given the obvious industry changes that have made the market more difficult I get extremely frustrated having to compete against not only the seasoned agents/brokers, whom I have a great respect for, but also those "fly by nighters" and uneducated agents as well. I may be new but I have a university degree in accounting finance and completed 4 full courses at Seneca to complete my license, in addition to AMP. I come up against those who have no financial background and have taken a one week course to secure their license all the time. Something's definately not right here.

  • Paolo Di Petta | dipettamortgage.com on 2013-09-13 1:04:28 PM

    @ Donna - While I agree more education is needed the AMP courses are little more than a cash grab. Not to mention the whole REDX debacle.

    @ Cameron - that 30% was heavily weighted by inactive Mortgage Brokers (usually Realtors that got the mortgage license when they used to be handed out together). They weren't the problem because they didn't even practice - the problem is small number of active agents who act dishonestly and give the rest of us a bad name.

    @ Ron/Mark - Not everyone works in the same niche. Private deals are often much smaller, and doing 3M of volume (on average) 60k at a time is MUCH different than doing 3M, 400k at a time.

    @Ron - I agree educational requirements are important, but taking the Real Estate Industry's model is a poor choice - they too have a ton of fluffy cashgrab courses ("MLS for iPad") comes to mind.

    We need to take our education models from professional industries like accounting or actuarial sciences where there's a graduated licensing system that corresponds to qualifications and courses that are relevant and filled with actual content.

  • Jeremy Nagel on 2013-09-13 2:26:09 PM

    All very good comments and while I agree, I think we need to look at those who are more senior as well. There are many bad apples who have been in the industry for many years who right bad business and talk out their ass (bait and switch). You know who you are!

    Problem I see is that the "big" brokerage houses and lenders continue to support those brokers simply due to their volume. Brokerages, Broker Networks, etc... as well as our lenders need to take responsibility! The attitude, if we let them go then someone else will get the volume, boo hoo hoo... has to stop! It's time we all stop passing the buck.

    What happened to doing reference checks? Stop harboring these losers and allowing them a place to do bad business.



  • Mary on 2013-09-13 9:11:40 PM

    When a broker hires a 'newbie' to the industry then I think they have to realize they must take the time and the responsibility in coaching and mentoring those newbies ... it seems to me everyone here is taking an easy out saying it is the newbies that are the problem... I would say that while some newbies may not represent the industry well there are also some very experienced people that also fail to impress. A newbie is in their brokers hands, and that broker needs to take responsibility for training and molding those newbies, otherwise just don't hire newbies.

  • Shayne on 2013-09-15 6:20:47 PM

    @Mark @Ron

    Minimum funding volume or ratio? What is better, a closing ratio of 50% and 6 million in volume or a closing ratio of 90% and 3 million in volume. And better for whom?

    You can have quality brokers that don't do a lot of volume.

  • Colin on 2013-09-16 5:44:11 AM

    How would implementing mandatory funding requirements address the issue of a lack of thoroughness? The article noted that the red flag was the result of a funded deal.

    I would like to see more training and education on areas that strengthen our credibility. I would like to see more training on privacy regulations, protecting and securing confidential information and more training on industry related Acts and regulations.

    I would also like to see governing bodies like FSCO publish the results of their audits on individual brokers. This would hold brokers much more accountable.

  • Mark on 2013-09-16 8:04:27 AM

    @Paolo Di Petta
    Brokers and agents who deal strictly in private mortgages are of no concern to the industry as a whole.

    @Shayne
    Funding ratios should be controlled by the lenders, that is their problem. Funding volumes tell a great deal about the time and effort that an agent is putting into this business. Our main concern is finding those brokers/agents who are in this for the long haul on a full time basis. Therefore, it doesn't matter how they get their volumes as long as they are putting in the time and effort.

  • Harsh on 2013-09-16 9:00:00 AM

    Interesting article and comments. I think a newbie Agent's biggest challenge is the support or mentorship (or lack of it) that the seasoned brokers can provide. I appreciate the time that a seasoned broker will need to spend on a newbie. Perhaps a structured approach may be better where regular mentoring sessions of pre-defined duration and topic can be offered - even if in a group setting. Of course, you can not eliminate the need for a one on one support - at least while a serious (about a career) Agent is still learning the tricks.

  • Paolo Di Petta | dipettamortgage.com on 2013-09-16 9:52:29 AM

    @Jeremy/Mary - I don't think time/experience is a relevant factor either way - this is about ethics - if someone's an ethical person, they're going to act ethically, it's as simple as that.

    @Shayne/Colin - I wholoeheartedly agree - Volume (Quantity) is not equal to quality.

    @Mark - I really don't appreciate you marginalizing brokers in the Private (especially non-institutional private) niche. First of all, we offer products and services that the banks can't, and that not even many brokers can. It's a very specialized niche that often helps people get back on track. To call our niche trivial is an insult.

    The fact is, we don't matter as much when banks are falling over themselves to hand out cheap money to rapidly appreciating properties, but as the market slows, you're going to understand more and more why we're important - any broker worth his salt that was around in the last downturn will tell you that.

    At the end of the day, anyone can sell a great rate on an A deal - even the banks - and that's why there's a story every few weeks about how some bank stole a client or renewal. But not everyone can solve the tough deals that require specialized knowledge - our value proposition has nothing to do with rate - it has to do with the helping hand that we can offer after everyone else has already turned them away.

  • John Dearin on 2013-09-17 3:56:06 AM

    It's not just newbees, in fact the last couple I hired were great. The last two "seasoned" agents were...well suffice to say we are still feeling the pain and paying the piper

    You can't train ethics or morals...you can teach it all you want. An unethical or immoral person will still be unethical and immoral at the end of the sessions. They will pass the test as well.

    My issue was giving faith to these people. Going forward, it is my responsibility as the broker to review every friggin file, every application that is pulled via Filogix to ensure my brokerage is in good standing. That takes a lot of time, including calling every client. At the end of the day, I have to take responsibility for my brokerage, and those that represent it.

  • Bryan Jaskolka on 2013-09-18 3:53:10 AM

    Unfortunately, there will always be "brokers" that mar our industry and make us all look bad. The only real way to solve the problem is to establish a great client base, and establish yourself as a reputable and knowledgeable agent in your area. I don't understand why this particular agent is calling clients passed down from these brokers "problem clients." Yes you may have to do a bit more work with them, but that's what a good agent does, and they don't complain about it. Also, as for the "red flag" story, it sounds like he's complaining more about CMHC than he is about the past broker.

  • Mark on 2013-09-18 8:54:34 AM

    @Paolo Di Petta
    I am not sure if you are reading and commenting on the same article as the rest of us, but it seems to me that you are just in it for the rant. In relation to the article and issue which it raises, specifically the over abundance of inexperienced fly by night agents (just to remind you what the article was about) giving our industry a bad name, brokers/agents dealing in the private lending sector are a no concern. I am NOT marginalizing the niche as a whole or the service which it provides (specifically charging clients who are in dire straits an arm and a leg to keep them afloat, you angels), I am just saying that inexperienced brokers/agents who deal in private lending do not pose a threat to the industry in that regard. The discussion is trying to figure out how we go about weeding out the inexperienced apples, and not the important of mortgage brokers to the consumers at large.

  • Paolo Di Petta | dipettamortgage.com on 2013-09-18 9:05:37 AM

    @Mark

    Maybe you misread the article. The first line says "Are sleazy brokers cheapening the industry?" and the article talks about quality and ethics VS. experience.

    Then you commented that there should be minimum funding requirements.

    Then I said that a minimum funding requirement isn't fair to people serving niches where deals are smaller and doing that sort of volume is much tougher.

    Then you said "Brokers and agents who deal strictly in private mortgages are of no concern to the industry as a whole."

    As a broker in that niche, it's hard to not be highly offended by that comment. WIth that comment you've basically said that we don't matter.

    The fact is we have uniform licensing across the board, regardless of what niche a broker works in. So if your solution to get rid of inexperienced or "bad" brokers by instituting funding minimums, then you're inadvertently going to take out an important part of the industry (that you've said are "of no concern to the industry as a whole").

    Also, there's plenty of bad brokers out there that do volume. Volume does not equal quality. Volume just means you're a good salesperson, not necessarily someone who's ethical and acts in the best interest of their clients.

  • Mark on 2013-09-19 8:31:06 AM

    @Paolo Di Petta
    Nice try but you have completely supported my assertion that you did not understand the article one bit. Most of what you were talking about in your comment had to do with the importance brokers bring to the consumer, where the article is talking about sleazy, inexperienced, fly-by-night brokers. Don't just read that first line of the article, read the 2nd (3rd, 4th, and so forth). Discussion is about inexperience. Volumes might not attest to great brokers, but it does attest to serious brokers. People who have made this their priority. Their qualify is a whole other discussion, but its to be expected that level will differ from one to the next as is the case in any industry.

  • Paolo Di Petta | dipettamortgage.com on 2013-09-20 9:23:18 AM

    @ Mark - The conversation EVOLVED beyond the original topic.

    The article topic agent quality/ethics vs experience (or length of time in the industry) and whether that determined quality. For this discussion to go on any futher, you need to at least agree on that.

    Various comments debated the validity of that - and seeing as there are good agents that are new, and bad agents that have been around a while, it's pretty safe to say experience doesn't necessarily equal quality.

    Other commenters have proposed other possible ways to judge quality (you included) and hence, they're up for discussion.

    You made the comment that minimum funding should be a 3M requirement. (Even though you said it should be during a probationary period). That implies that you think funding volume = agent quality.

    I said that 3M wasn't realistic for someone starting out in certain niches (namely Private Lending). A good agent in those niches might get locked out because of those requirements.

    You said, (Copied and pasted directly): "Brokers and agents who deal strictly in private mortgages are of no concern to the industry as a whole."

    That sure sounded a lot like "Too bad, you guys don't matter." I was just explaining why we do matter, and why funding volume isn't a good indicator of agent quality.

    It seems you see funding volume as some sort of metric of quality. But again, there's plenty of bad brokers that do enough volume to slip under the radar. And there's plenty of good agents who may have taken a little bit more time to get into the groove.

    My argument is that your suggestion that funding requirements being a good metric of quality is invalid, and that it's unfair to lower volume niches.

    I'm not sure what you don't understand about how the conversation evolved, but hopefully this clears it up for you.

  • Paul Therien - CENTUM on 2013-09-20 11:57:17 AM

    I believe that we need to be very careful that we do not arbitrarily paint all new entrants to our industry with the same brush. All industries where you have a sales force that is based on independent contractors suffers challenges with some that are less ethical or scrupulous than others. Recent cases of serious infringement have not occurred with newer agents, but rather with some “experienced” people who have been in the system for some time.

    As the industry continues to experience challenges with a market in flux there will always be those that will look for shortcuts to shore up their business. Increasing regulatory, educational requirements and having a probationary period are only partial solutions. Pushing responsibility onto the regulator and educators will not solve the problem either – they do not have the resources to monitor the daily activities of every single person in our industry. Minimum finding requirements might be a solution, but if you have a dollar volume amount on that… then it becomes regionally biased. One mortgage in West Vancouver could easily meet 3-5 million in funding requirements – it would have to be based on units. Enter in the issue surrounding pooling of business for points and volume bonus. The question then becomes… who polices all of this on a daily basis? We have an issue already with law enforcement not having the resources and a population that is not prepared to pay the tax bill needed to resolve that.

    Brokerage owners and brokers of record have a duty, and legal requirement, to conduct oversight on all activities that occur in their business and under their license. Ultimately it is that oversight which will best curb situations that expose the consumer and our industry to risk. It could also be argued that if those owners and brokers had better procedures in place, agents would be less able to get away with the activities that this article highlights. Perhaps the solution is in addition to the penalties the agents has, also holding the brokerage owners and brokers of record more accountable through the levy of very large fines, loss of license, etc.

  • Colin on 2013-09-20 12:36:47 PM

    I agree that the oversight rests with the broker of record.

    I also think that there is a definite need for a cultural shift in an industry that still determines entrants based on funding volumes and not based on professionalism, knowledge and ethics.

  • Anthony on 2013-09-20 1:48:13 PM

    @Cameron Mackie, I hope everyone does not think like you about not hiring a "newbee". Reading your statement I think you are just greedy. If no one hire the newbies, what will happen when the veterans retired. Most unethical stuff that the newbie learn is from the so-called experienced agents/brokers. In every industry there are going to be immoral and unethical people. Most of the charges I read about is unfortunately are the experienced brokers/agents who think they are too smart and experienced to get caught.

  • Cameron Mackie on 2013-09-20 3:17:38 PM

    @Anthony.
    It’s not greed. It’s business. To make my point more clear. If the Government creates more red tape for the experienced agents and brokers then why doesn't the Government advance the training course? We need to put the horse before the cart….

    Years ago if you wanted to become an Electrician you bought a truck and slapped your logo on the side of the door and you were in business. Now with all the training involved and safety regulations, once you get in and licensed you rarely get out because all the time you put into it. Same goes with Dentists and many other professions. It was the Government who forced qualifications. The Ontario Building Code book and Electical Safety Authority regulations change every year thus having the training change frequently too.

    Bottom line
    You increase training requirements and keep them up to date you eliminate more fly by nighters and create a stronger image on the profession.

  • Anthony on 2013-09-21 7:29:00 AM

    @Cameron Mackie,
    Your argument is very flawed. Years ago I became a CGA and I was not or did not have to go back to school if I did not want to but I would still hold that designation. Years ago also you could have being a mortgage agent without licensed by FSCO but they changed that and force people to go back and get their licensed, I personally know of a so-called great mortgage agent in his colleagues and other people eyes, but he could not pass the test so he exited the industry, my point is that people thought he was experienced and good at his job, he was just a very good salesperson that was taught how to do a job and was doing it how he was taught.....I will stress again I have never met a newbie who knows all the loopholes or unethical stuff, usually it is the experienced broker/agent that knows all that stuff.
    I don't rely on the Government to make me good at my job and I hope don't rely on the Government to make you good at your job.
    Question for you Mr Mackie, were you a newbie/rookie once in this field? What if the person who gave you that opportunity were thinking the same as you are thinking now that you will never hire a newbie...Remember most student learn what their teacher thought them...For the record I am not objecting that there should be ongoing upgrading and higher designation....Hire the newbie and teach them the right way and if they cannot follow then get rid of them...This industry is not only for the experienced but as well for the newbie who wants to learn and one day become a very good ethical broker/agent.

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