Mono-lines play David to banks' Goliath

Mono-lines play David to banks' Goliath

Mono-lines play David to banks

It may be another case of David kicking Goliath’s butt, with mono-lines now taking back some of the business brokers were prepared to send to the banks, according to the latest quarterly report from D+H.

While banks still claimed the single-largest share of broker business in the first quarter, that 48.2 per cent cut represents an eight-percentage-point slide from the year-ago period when they claimed 56.5 per cent of the consolidated volume.

For mono-lines, the story is the reverse, with “mortgage banks” growing their market share to 36.4 per cent from the 26.7 per cent in Q1 2011. The quarter-over-quarter jump was also impressive, representing a gain of nearly four percentage points.

The changing fortunes represent real progress for mono-lines increasingly pressured to step up their game in the fight to stem broker flight to the banks.

Street, alone, is being credited for leading the mono-lines into battle. It effectively doubled its percentage share of broker originations in the first quarter compared to a year earlier.

In the process, it gained third spot by volume, just after Scotia and, another mono-line, First National.
Still, brokers continue to look for non-bank lenders to address key concerns around service and product.

Below is a list of the Top Five improvements, brokers tell their mono-lines need to make to make further inroads into bank territory. It ran on the website earlier this month.

1.    Marketing meltdown:  Mono-lines just have to do a better job of telling consumers who they are, say brokers.
“Oftentimes a considerable part of the consultation/sales process is having the consumer become familiar with a brand they may have never heard of,” says Scott Bentley, with Verico Premiere Mortgage in Halifax. “Many request 'a Big Bank' simply because that is who they know, even if rates, terms, privileges and prepayment penalty policies are not as favourable as the mono-line.”

2.    Paperwork problems: Quite simply, many mono-lines have onerous, time-consuming instructing documents, complain brokers. Some real estate lawyers agree, arguing the banks have them beat in terms of fewer specific requirements.

“I have had complaints from lawyers that the paperwork for monoline and non-bank lenders took more time,” said Mike Missere, a mortgage agent with Mortgage Intelligence in Thunder Bay, Ont. “I was able to stop that, but from my standpoint I have to field more queries from the lawyers about the legal paperwork when the lender’s not one of the chartered banks.”

3.    Rascally rate premiums: Applied to BFS and rental deals, they somethings stick in the craws of clients and brokers, alike. Mono-lines attach those extra bps for a good reason, although the fact banks don’t presents a challenge.

4.    Forgetting to share: Several mono-lines do a good job of sharing the client with the broker by mentioning them in correspondence with the borrower. But some drop the ball here, say brokers.
“I’m talking about mentioning the broker by name in correspondence with the client, reinforcing the idea, in the client’s mind, that the lender and the broker are partners,” said Mauro DiCosola, with Dominion Lending Centres Mortgage Village in Mississauga. "Some mono-lines do this already and the others should follow that lead."

5.    Confounding conditions: Brokers frequently complain about the conditions mono-lines place on their deals and the extra legwork required of clients. That just makes it easier for the banks to snag them after commitment letters have been dispatched.
“My biggest beef is around conditions,” says Paul Mangion, with MCC in Mississauga, “We need more reasonable conditions and common sense here since we lose deals to branches when we send clients in there for more info or to ask for too much unnecessary documentation.”


  • Angela Wong-Liao, Invis Inc 2012-05-30 5:47:32 AM
    I fully agree that monolines have to step up in both pricing and conditions in order to have the same playing field as some major banks.
    I refer a bulk of my businesses to Scotiabank because they have a Broker Relationship Manager who is looking after my deals, we have a very good business relationship that I can push for a 2 to 4 hours turnaround time if required. She trust and respect my banking experience that I have minimal approval conditions.
    However, with the recent intense competitions from RBC and BMO (who do not deal with brokers), I want to establish some good business relationships with the monolines, ie: Merix; First National,MCAP, they are amazing monolines who are working hard to improve their pricing and service levels.
    As an Invis agent, I am also consider of using our company's private label "Partner Mortgage" in future for some of my deals.
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