A former top-producer at one of Canada’s largest banks and current Toronto-based mortgage broker spoke with MortgageBrokerNews.ca on condition of anonymity and revealed a number of controversial practices that were rampant when he was a road rep.
“The bank pays realtors 50bps to send deals to road reps but in 99 per cent of cases the Realtors are not disclosing this to their clients and in over 80 per cent of deals the rates and products are far worse than that in the broker channel,” the broker told MortgageBrokerNews.ca. “Also all mortgages are collateral charges and the road reps do not disclose this in the mortgage commitments.”
MortgageBrokerNews.ca recently ran a story revealing a number of bank rep secrets, one being that many who transition to the broker channel eventually return to the banks.
“Many road reps who go over to the broker channel often come back to the bank,” the bank source said, “and it’s not because they can’t make it without a big bank name behind them. No, it’s because the deals that come to them as brokers aren’t generally of the quality that we see in the bank… the prestige isn’t there.”
It’s a claim the anonymous broker refutes, believing many who have made the transition to the broker side stay due to the objective nature of the job, which allows brokers to provide unbiased advice and product recommendations, as opposed to being tied to one institution’s products and services.
According to the broker, his former bank employer required 70 per cent insurance penetration, as well as incentives for tied selling.
“They would allow lower rates if you sold the client insurance and or a bank account,” he said.
Another banking veteran, now a broker, is criticizing the increasingly close relationship between Realtors and some of the big six banks, suggesting it comes at a disadvantage to clients.