The majority of the industry is concerned about an upcoming disclosure rule change and, perhaps, rightfully so, as one company already trying to take advantage.
MortgageBrokerNews.ca recently held a poll to determine what percentage of readers are concerned about a FICOM-proposed change to disclosure, which will require all brokers to clearly demarcate on documents how much they earn in commission. Not only did a record number of readers take part; the results show the majority of brokers are worried.
Of those who took part, 57% said they are worried about the proposed disclosure rule. 16% said they are unsure. 27%, meanwhile, said they aren’t worried.
A number of industry players have already expressed their concern.
In an open letter to the industry, DLC
President Gary Mauris
pointed to the fact that players outside the channel will take advantage of the disclosure in a bid to sway potential clients.
“Imagine this: FICOM continues with this mandate and regulates that all mortgages originated via the mortgage broker channel have to disclose their exact compensation, where the bank staff and their MMSF (and other lenders) do not,” Mauris said. “Instantly there becomes a significant advantage to the banks in Canada as their staff and mobile mortgage sales force start advertising and start saying ‘why would you use a mortgage professional and pay a fee when you can get your mortgage through us and it’s free?’”
And it seems that fear has become a reality.
MortgageBrokerNews.ca recently received an email from a DIY mortgage company that mentions broker commissions while trying to promote its services.
“I was surprised to recently learn just how much mortgage brokers get as commission,” a PR rep for doyourownmortgage.com wrote to MortgageBrokerNews.ca in an email. “In a move to save both lenders and home-buyers thousands, Do Your Own Mortgage (DYOM), a one-of-its kind new service, is helping Canadian mortgage seekers save money and actually get paid to ‘DIY.'"
The company claims to allow clients to become their own broker – by gaining access to “50 competing institutions” – and earn their own commission on mortgages they originate for themselves.