There’s real concern that an increasing number of mortgage specialists may now have their hands out to collect “co-brokering” fees from brokers gifted with their referrals.
“We had the most overt example of this recently when a referring mortgage specialist at a commercial bank directly asked one of my agents for 50 per cent of the commission on the deal he referred,” Terry Kilakos, owner of VERICO North East Mortgages, told MortgageBrokerNews.ca. “We were taken aback because we’d never had someone come right out in that way and ask for it.
"I’m worried that other brokers may now have created that kind of expectation in the minds of mortgage specialists.”
That may prove to be a particularly dangerous precedent, with an increasing number of brokers actively cultivating relationships with branch reps --a way of winning the Alt-A and B deals they need to broaden revenue streams.
While most banks sanction those relationships as a way of helping clients that they can’t or won’t service as mortgage borrowers, they generally forbid employees from accepting referral fees.
“It’s not only considered unethical,” said Kilakos, “but they do it because they don’t want mortgage specialists to be giving brokers deals that the banks themselves can do just in order to get the commission."
In Kilakos`s case, that request from a mortgage specialist was ultimately forwarded to the banker`s supervisor, who dealt with the employee.
Still, brokers may increasingly have to face those kinds of requests – whether presented on or under the table – said Kilakos, a high-volume chartered broker working the Montreal market.
He wants them to resist the urge to cede to those demands.
“Obviously if you’re secretly paying for something it also speaks to the fact that you as a broker know you shouldn’t be paying an unlicensed agent a co-brokering fee,” he told MortgageBrokerNews.ca.