REDX sparks broker concerns

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A system to flag “fraud and misrepresentation” has been misused by lenders, quick to pin incident reports to brokers, who have little way of getting those records removed, charges a seasoned mortgage professional – preparing to lodge his own complaint.

“I agree that if somebody is doing something fraudulent and has had a pattern of problems develop then, absolutely, that agent should lose the benefit of the doubt,” Paul Mangion, a broker with The Mortgage Centre in Mississauga, told MortgageBrokerNews.ca, “but posting records against an agent that would have had no control over the outcome of a case and then not to allow that agent any real appeal to an impartial third party represents a misuse of REDX.”

His criticism focuses on REDX’s Non-Public Incident Reports, which act as a sort of credit agency for brokers. Its electronic database of agent names contains information contributed by REDX subscribers “regarding incidents of alleged fraud and material misrepresentation and is exchanged on an anonymous basis,” according to the company’s website. Those subscribers not only include lenders and insurers, but other industry service providers, who append those reports to individual broker names as a red flag alerting other subscribers to their concerns.

The anonymous nature of those complaints and the fact that they have the potential to limit a broker’s access to other lenders is problematic, argues Mangion, who worries that brokers are not only being  criticized for incidents out of their control, but those that may not, in and of themselves, amount to “fraud or material misrepresentation.”

“I'm talking about cases where marital breakups have led to loan delinquency and the lender is alleging the broker misrepresented the file because he may have known about the marital problems in advance,” the high-volume broker told MortgageBrokerNews.ca. “Or cases involving volume pooling – something lenders themselves encourage – where the broker whose name the deal is submitted under gets a record attached to their name and not the agent who originated the questionable deal in the first place.”

The result can be unwarranted blacklisting for a mortgage professional, charges Mangion, who is personally disputing records attached to his name by an underwriter. His recourse to get those reports expunged involves getting the complainant to agree to remove them, although brokers applying to get copies of those records are not given the names of complainants.

“Upon receipt of each request, we will search the REDX database for REDX reports that reference the name of the requestor,” said REDX, in an email response to MortgageBrokerNews.ca. “Reports provided back to the requestor will contain the same information that was provided to the subscriber… . The name of the submitting subscriber will not be supplied to the requestor.”

That process doesn’t provide a direct avenue for brokers to request records be expunged, although REDX points out that subscriber comments are “a result of their own investigations into incidents of property-related alleged fraud, material misrepresentation, or serious misconduct on the part of mortgage and real estate industry entities with whom they do business.”

Still, that leaves brokers vulnerable to irresponsible reporting from lenders, said Mangion, and no choice but to ask them to remove the record.
“The appeals process is ultimately left to the person who put it there, and not by an impartial third party,” he told MortgageBrokerNews.ca. “The other problem is, why is it done anonymously? When there are no repercussions then people tend to exaggerate the truth.”

The potential harm associated with any improper use of the REDX system is a concern for brokers, especially those committed to the industry in the long term, said Mangion.

“I have seen lenders putting comments onto reports such as a mortgage went delinquent within 6 months or that you cancelled your amp and then subsequently got it back,” he added. “But when a lender checks your report they are only looking at the number of submissions and not what is actually being said in those submissions. So the higher the volume, the more likely you will have more records than a broker who does only a small amount of deals yearly.”

  • Kathleen in Halifax on 2011-10-13 2:25:49 AM

    I had no idea such a system existed.
    The anonymity of it is horrifying & rather McCarthy-esque. It sounds to me like a big law suit waiting to happen!

  • John Pasley on 2011-10-13 2:39:14 AM

    Even the credit reporting companies allow consumers to know who has put derogatory content on their files and can have removed if they are false or proven to be incorrect.Why the secrecy.Does REDX allow comments and flags to be reported about the banks mortgage officers,both in the branch and on the road,to be reported on this website?Just wondering.

  • AB Mortgage Broker on 2011-10-13 2:42:38 AM

    I couldn't disagree more with the article. Persoanlly, I have no issue with the existing Redx system. We pool, but then again I only bring on ethical, full-time associates, so it's not a problem for my office. Those who operate ethically will never have a problem.

    I'd suggest those that worry, do so because they have a reason to be. Just saying...

    Mistakes happen, I get that, but if more than one lender has complained the broker should also be informed so they can punt them out on their head. Brokerages need to be head accountable for their associates and today that isn't happening.

    On with the mortgage revolution!

  • Chandra Neogy CENTUM PREMIER on 2011-10-13 2:47:57 AM

    I fully agree with Paul, I am a victim of similar situation and don't how to rectify with Redx, I feel the lenders are misusing their power to malign brokers for reasons which they don't have control over. I feel CAAMP or IMBA should help brokers as we pay them membership every year . How can I contact Paul ? need to rectify my Redex situation too, thanks.

  • AB Mortgage Broker on 2011-10-13 3:05:19 AM

    There was an article posted in CMP or the Mortgage Journal, I think, where they discussed Redx. They went on to say that anyone can request a copy of their Redx file at any time. My understanding is that once you have your file, you can then take up the concern with the respective lender.

    I challenge all the brokerage houses to take an interest in the caliber of associates you bring on. I challenge you to take a zero tolerance approach and when you see that associate re-license with another brokerage, make a call to inform them of that associates behavior. A leopard NEVER changes its spots!! Regardless of what CAAMP might suggest, you can't teach someone ethics, PERIOD!!

    Rise up brokerage houses and take an interest in your industry! Profit is important, but it shouldn't come at the cost of our industry! My brokerage is doing its part, but we can't do it alone!

    On with the mortgage revolution!

  • John T. on 2011-10-13 3:19:26 AM

    There are clients bringing fraud to brokers and realtors are as well. No matter how much we educate ourselves on fraud prevention theres always one or two deals that manage to slip past us. REDX is not fair and I believe that professionals like ourselves should stand up to REDX and shut them down. When a matter gets taken to court it gets fully investigated and once someone is found guilty then they are punished or given a bad name only if they have committed such an act. REDX gives brokers a bad name and makes it harder for them to resolve any issues and we all know how small the broker community is. People just bad mouth one another because someone has a REDX hit. In my mind.. CAAMP should NOT be supporting these agencies and Lenders should not be either. As brokers we should stand up to this and put an end to it!

  • Don Estrada on 2011-10-13 3:56:00 AM

    A company that has numerous brokers working for it and submits the deals in the DI name is asking for trouble. The DI has no idea that something has gone wrong. The banks never tell the DI they just report.
    There is a big difference between a company doing a hundred million a year and one that does ten million a year.
    The comments stay on your record for 10 years !
    You are guilty and have no chance of defending yourself !!

  • JM on 2011-10-13 4:23:40 AM

    Paul Mangion along with every single other broker in the industry has a concerned right to address this issue with REDX. This site is a free for all to possibly make false and career damaging accusations against anyone's good character. Any person who has had any attempt to have his or her good character damaged has every right to address this issue and every right to defend themselves against any attempt of defamtion against them. There would be anarchy if evry Tom, Dick, or Harry were stating things that in fact on many instances one could imagine where in fact not true, especially when one is trying to make an honest and decent living in this already most challenging industry. Bottom line here is if REDX wants to operate and operate properly, they better start to look upon making a equal playing field here. This is not a third world country where anyone can make a wrong, slanderous or defaming comment or career damaging accusation about someone's good character and the person has just to sit back and except that. Absoulutely ridiculous and wrong. I suggest to all brokers if your good character (the one that you have spent a life time in building) send out your rightful concerns to REDX and tell them YOUR RIGHTS. We have every right to defend ourselves against what could easily boil down to personal character destruction, and they think this is okay. Stand up for yourselves people. Now.

  • Rudy on 2011-10-13 4:24:14 AM

    The REDX system is an inherently unfair system. A broker is not even notified and would never know that his or her name has been tarnished or that he or she is under suspicion. In the mean time the accuser has a complete cloak of anonymity, and can say anything they like on the report. This is exactly the kind of unfairness that a broker representative body like CAAMP should be championing. If they don't they will lose all credibility as a representative body.

  • David - Alberta on 2011-10-13 4:50:23 AM

    This article is not accurate, and does not properly represent the way Redx is used, nor interpreted.

    Lenders do not black list brokers. In order for something to be posted on REDX, it has to meet stringent requirements. Those that think otherwise, simply are wrong.

    If you are concerned about REDX, then you should look internally at your own processes. WE have operated for 6 years, and do not have a single REDX on our file, because we do, what we are supposed to do.

    REDX actually has a privacy exemption, and to meet that criteria, their process has to be thorough. Spend less time worrying about REDX and more time worrying about your own internal procedures. If you are pooling volumes, then make sure whoever is the submitting agent is keeping an eye on what is being submitted under their name, to do anything else would be foolish.

    We have a responsibilty people, WAKE UP, or find yourself extinct. Just ask the American brokers.....

  • Ron Butler on 2011-10-13 6:21:57 AM

    I have been in this business for 16 years at a high volume level and as of the last time I had a RedX member look at RedX on my behalf there were zero entries. On the other hand I know of a very successful broker who has 3 RedX entries from a large Lender who entered the Equity lending market in 2006, accepted NIQ deals for a few years and and then fled the equity lending space in 2009. After 3 of the broker's NIQ deals defaulted, the lender reported the files to RedX due to "false income information".

    Well, I guess all income info is "false" if a lender tells you to enter a income in Expert box to make the ratios work and then takes a self declared letter to verify that invented income. Those were the rules in those days. The RedX entry was just sour grapes on the lender's part. That's a fact not a rumor.

    There is no doubt many of the entries in RedX are true but there are certainly wrong ones and any system that is one sided and disallows the accused from facing their accuser is wrong, end of story.

    On with the Rule of Law Revolution.

  • robert mantoya on 2011-10-13 9:26:53 AM

    I do believe if someone start a law suit againt this redx and its board of directors, president... For damaging his name I am sure this redx will vanish completely .

  • Sua Truong on 2011-10-13 9:54:18 AM

    RedX sounds like they work the way the old legal system in Britain/France during the middle ages. You are GUILTY until you can prove your innocence. However, in this case you are GUILTY and nobody even told you that but everyone else knows except you. I thought they banned this kind of archaic justice system before the industrial revolution. I am not concerned for myself but systems like these should not be allowed to exist without due process and allowing anonymity of accuser. Hearing Ron Butlers story - that can happen to anyone.

  • Paul Mangion on 2011-10-13 10:07:26 AM

    I disagree with AB Mortgage Broker. Have you checked your REDX lately? If you decide to drop the AMP designation it shows up there. I had a husband and wife default when the wife left the country and that showed up. What about a underwriter who decided to check employment on a lunch break only to go to the wrong address then tell you that the company doesn't exist and is completely wrong but refuses to admit to the mistake and flags you. Don't get me wrong, there is room for a system like this but there needs to be better control and it should not be done anonymously. Why can't we report things about the underwriters and prevent them from gaining employment. One more question. Why do you post anonymously AB? Maybe you are a little more vocal with no repercussions.

  • Paul Mangion on 2011-10-13 10:20:48 AM

    I do think REDX can be good for the industry but it needs to have some guidelines and possibly be a little more factual on how the lender came to the conclusion and the bad agents will definitely develop a pattern so we can finally get rid of them. But it is also used to report lawyers and real estate agents as well so how about making it affordable so we the front line workers can report on what I believe is the number one cause of the fraud in the first place and prevent some of these terrible real estate agents from jumping from agent to agent and informing the Broker of Record about these allegations so they can do their own investigation.

  • sam on 2011-10-13 11:57:06 AM

    I do agree with Paul Mangion REDX is very unfair and biased system of reporting against brokers they have found a way to make money by circulating one sided reporting by lenders without a say if you don't check redx you even would not known
    it is clearly breach of privacy by this organisation

  • AB Mortgage Broker on 2011-10-13 12:38:34 PM

    I have not checked my REDX file and don't see the need to. My reputation with the lenders is such that I know it's not a concern for me. What somebody says about me or my business is none of my business, period! I don't worry about what others think, nor do I care.

    Like David from Alberta said earlier, there are checks and balances in place at this time. Like any system, mistakes are made and you have every opportunity to pull your file. REDX is no different than Equifax and we all no that Equifax is not perfect. If you want to keep your name clean, don't be an idiot! It's that simple.

    There is always more that can be done!

    Lastly, too many brokers will put clients into difficult positions knowing full well the clients can't qualify. But hey, it's a commission and if I don't do it, somebody else will. I don't agree with that mentality. I have no issues with lenders posting foreclosures against the names of the respective broker, in fact, I encourage it. We need to take responsibility for our actions and stop putting it on the lender. It may be stated income, but use common sense! Come on people! If there are those here that don't get my point, please exit the industry now as we don't need you.

  • Paul McCain on 2011-10-13 12:56:22 PM

    But who give redx the capacity to rate the brokers.

  • Ron Butler on 2011-10-14 3:30:12 AM

    I have to ask the question: Is AB Mortgage Broker actually a mortgage broker?

    He is saying all mortgage defaults are the fault of the Mortgage Broker? We need to take responcibility for every default, we should have known about every future marriage break-up, every future job loss?

    I am sorry but I am not taking reposcibility for future events. I find it idiotic to suggest any mortgage broker should.

  • AB Mortgage Broker on 2011-10-14 5:27:54 AM

    @Ron. Unfortunate circumstances are exactly that, unfortunate-life happens. As I said earlier on, there are always exceptions to every rule. It's the brokers where many of their files have gone into foreclosure that is the big issue. If you are structuring stated income deals for a client whose gross is $25k but you structure it stating $50k, $70k, etc...time for a reality check. In those cases, damn right the respective broker should be held accountable. There was a case by where the client successfully sued the broker who put the client into the difficult position knowing full well they couldn't afford it.

    And yes, I am a successful broker and have been for 9 years! Love the industry, but do think it's time for an industry shake up.

  • Paul Mangion on 2011-10-15 2:23:10 AM

    I will agree with you on your last post but I want to make clear that in my circumstances they had a marital break up and one spouse just packed up and left. This was put on my REDX as if I should be able to forsee the future and to answer your question, YES we do need an industry shakeup. Maybe raise the FSCO fee's to $3000.00 per year would do more good than harm.

  • AB Mortgage Broker on 2011-10-15 10:18:57 AM

    @Paul I hear what you are saying and I agree with your frustration. I also agree that if we increase the fees significantly, that alone would weed out some of the rift raft. But I think that alone isn't enough. The brokerage houses need to be more accountable for their associates, period!

    @Shawn I agree with your cash grab comment, what a joke the AMP is. The fact that CAAMP would post something like that speaks to their character, or should I say lack of. I thought they are suppose to represent the membership, hmmm.

    I think the best course of action might be to call out the lenders that are making these ridiculous accusations to REDX. I hear many brokers complaining, so lets call them out and give them a chance to back pedal...oops, I mean explain. What do you say?

  • Paul Mangion on 2011-10-18 3:15:43 AM

    I feel for you Shawn. Which proves my point that lenders are obviously not reading these REDX reports. They are looking at the number of hits then forming an opinion. So a broker that does 600 deals a year with two hits is rated worst than a broker with 50 deals a year and one hit. Maybe we need to be more selective in where we send our deals.

  • AMP broker on 2011-10-19 5:10:06 AM

    CAAMP should notify REDX if the broker drops the professional designation. It protects
    the public from dealing with unprofessional brokers.

  • SOS Mortgage Broker on 2013-04-09 2:49:43 AM

    REDX- GREAT Idea- BAD system. For those of you Brokers and agent that are unaware, when it comes to Mortgage Brokering this country moves from DEMORACY to COMMUNISIM real fast. If you are in this industry you either kiss underwriters’ rear nugget to get your deals approved, or you get a declined on the simplest thing. Case in point, last year a certain lender declined a deal I submitted, the client went to another Agent and the deal approved with the same lender, different underwriter. How is this right? When I protest and provide evidence of unfairness to both the lender and the Cash Grab arm of the Government, CMHC, their response was one very matter-of-fact. Which organization represent Brokers interest in this industry? Please don’t say CAAMP! Shouldn’t Brokers have a BLACKX system for these lenders? How do we make our voices heard? How do we get the industry to move away from the BOYS club to a more fair and mutual system. For now I try to do my best in keeping it real with clients and lenders. last but not least, if a Broker is reponsible for a deal that defaults and get REDX for that, where is the system that gives credit for the deals that stays in good standing? Another thing, if a Broker places a deal for a term of 1 year, that year expires, and the lender team back doors the Broker and renew without notice or compensation to the Broker, who is responsible if this client defaults during the new extended/renewed term? Lot of thoughts so little time. Happy Brokering..SMB

  • RANJIT DHILLON, Principal Broker, CENTUM MORTGAGE on 2011-10-13 5:41:59 AM

    RedX is a one sided system. I know few agents who had wrongful reporting on their systems and eventually created a Bad Name for them with the new Lenders who have to register them.

    There has to be System for a Agent/Brokers to see why & what & who reported against him/her.
    if an agent have anything against him/her in RedX, He/She should be informed about it and should be investigated. I am fully against any misrepresentation or fraudulent activity and the agents who do this, they should not be in this business, an action should be taken against them as well.
    But flagging someone for misrepresentation without even asking his or her story, is a unbalanced, unfair, unethical and one-sided judgment. I think RedX need to justify this as it might be affecting the career of some serious mortgage professionals.
    REDX needs to do some changes so that they can ask both the parties before issuing their unbalanced decisions. And they should be approachable and transparent to the Agents involved and should not be allowed to write anything against an agent without the final decisions based on the committee of Qualified Professional Judges from the industry.
    I am in favor of getting together on this and asking our associations like CAAMP or IMBA to involve in this, who are being run by our mortgage professionals
    regards,
    RANJIT DHILLON, AMP, Principal Broker

  • MortgageFlex on 2011-10-15 5:17:36 AM

    The issue that I have with Redx is that it does not give the broker a chance to defend themselves. The posting is done without the broker knowing.

    Innocent until proven guilty is a foundation principle of any democracy. Without that principle, a nation would be borderline communist.

    Redx assumes guilt based on the report of one side only. It does not give the other side the opportunity to defend itself, and does not even inform them that report has been filed.

    Rule of the law is a necessary part of our country, and should be applied to any organization such as Redx.

  • Shawn Allen www.matrixmortgageglobal.com on 2011-10-15 5:33:24 AM

    I think REDX is a piece of ... I have 2 "incidents" on my REDX file. You know what they are people: Wait for it...In 2008 it said that I was an AMP and in 2010 after I cancelled my "CASH GRAB" CAAMP and AMP membership they created another incident saying that I was not an AMP.

    You know what this got me? It got me turned down from being an approved broker for a lender.

    DOWN WITH REDX!!!

  • Sue on 2011-10-18 1:53:48 PM

    The Web needs to bee fair, Do they account how much fraud from bank specialists? why it just focused on brokers?
    CAAMP , IMBA and FSCO need help broker side to make fair policy. Caamp, please do not just collect money to just hold a annual conference .

  • Shawn Allen on 2011-10-19 7:32:46 AM

    AMP Broker...How can you saw that being an AMP makes you more professional than someone who is not? The bar is set so low to be an AMP and the fact that nobody in the general public nor FSCO for that matter even recognizes the designation proves the point very clearly. If you are saying CAAMPs AMP designation is the standard for professionalism then what about those people that hold only IMBA or AMBA designations? Are they less professional than you, the anonymous AMP Broker?

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