In the face of increased competition from conventional lenders, HomEquity Bank has bumped up its broker referral fees by 30 per cent.
"Effective August 1, 2012 HomEquity’s broker compensation model has been adjusted to reflect an increase in compensation to 65 bps from 50 bps for all brokers at all firms, regardless of volume,” Arthur Krzycki, director of marketing and public relations told MortgageBrokerNews.ca.
“It is important to note that brokers will continue to be responsible only for generating referals,” Krzycki said. “CHIP Home Income Plan business development managers will take care of the rest such as contacting and meeting with the client, ordering the appraisal and completing all paperwork.”
The referral fee will paid upon funding, he added.
The news comes as the country’s leading reverse mortgage provider reports an 18 per cent slide in originations for its second quarter, compared to the year-ago period.
HomEquity Bank blames the decline in business on a rise in competition from low-rate conventional mortgages and secured lines of credit. During that period there was also a marked increase in broker-arrange conventional deals brought about by a rate war.
The increase in referral compensation will likely help the lender grow originations coming by way of the broker channel.
Some mortgage professionals had cited the lender’s past compensation model as a key reason for not referring clients.
Still, HomEquity Bank has in the past noted the growing importance of the broker channel to its bottom line.
“Brokers are a very fast growing channel for us, and we see it as a growing in the next two or three years,” Steven Ranson, president and CEO of HOMEQ told MortgageBrokerNews.ca last year.