Mortgage specialists hunting for referral payoffs?

Mortgage specialists hunting for referral payoffs?

Mortgage specialists hunting for referral payoffs?

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 “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

  • LizD 2012-03-15 5:42:27 AM
    A heads-up for those licensed in Ontario - hopefully anyone who has completed the required Mortgage Broker Re-Licensing 2012 course should be aware that:

    According to Ontario regulations, a 'referral fee' may be paid to an unlicensed individual ONLY AS LONG AS:
    (1) it is a 'simple referral' only, ie name and contact info of the potential borrower are permitted with no details specific to the borrower's financial or credit situation provided.

    (2) the referral fee is truly a referral fee, meaning it is not a large percentage of the overall compensation received;

    Once either of these two guidelines are crossed, (ie. details about the borrower's needs or situation are shared OR the referral fee is a significant proportion of the overall commission received by the originator) then the referrer MUST BE LICENSED and can be charged under the Mortgage Brokers Lenders and Administrators Act with 'Brokering Without a License' - a serious offence.
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  • Elfie Hayes 2012-03-15 5:47:44 AM
    Is everyone standing around with their hands out these days instead of doing the work??? I was out networking and I introduced myself to a financial Planner. The first words out of his mouth were "how much do you pay for referrals"? I replied NOTHIING! and turned away to speak to someone else. Realtors in my area are also asking to be paid for deals. I wonder if these folks who are sellign their clients to the highest bidder realize you need to disclose that you are being paid to refer if you are being financially compensated. RECO rules say you can receive fees but it had better be in the offer for all parties to see. If I was the client I would think that person is not credible. It's a tough job selling RE and Mortgages but remember if you start paying for business, you'll only be as good as your last referral cheque. The highest bidder will walk away with the business next week!
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  • Stephane Prevost Mortgage Agent DLC Alliance 2012-03-15 5:48:00 AM
    I had the same thing happen with our local ... bank rep. In fact the manager was also requesting I pay a referral fee. Turns out the bank manager was his wife. I Chose not do the deal but did explain that even if was to do the deal with the referral I would have to disclose this to the borrowers.
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