Two of FirstLine’s top broker partners are now confirming Firstline will, in fact, wind down operations at the end of next month, with news about how exactly CIBC will handle rate buydown and other point programs to come with a final announcement.
The news comes courtesy of the broker lender’s BDMs, in on a conference call with CIBC execs Wednesday. The big bank has reportedly failed to come to a sale agreement with one of the broker channel’s biggest companies that would have seen FirstLine kept a going concern, say sources.
“It’s regrettable,” said broker veteran Ron Butler, reacting to the news. “The loss of a Big Five bank is a loss.”
A formal announcement from CIBC is expected as early as the end of the week, with FirstLine’s broker partners anxiously awaiting confirmation on how exactly the bank will deal with their outstanding points. Details on the servicing of existing files should also come then, although CIBC is expected to transfer that to the bank.
Collectively, brokers had millions points accumulated in Firstline’s rate buydown program that have yet to be used up, according to sources within the CIBC family.
They’ve watched as the once leading lender has quietly pulled back on its offerings and rate competitiveness over the last year.
It’s been a “death by a thousand cuts,” said one Ontario broker Wednesday. “They should have cut their losses and sold up a year ago when there was still value in the brand.”
Earlier this month, Pacific Mortgage Group founder Alex Haditaghi denied rumours that the company would purchase the broker lender.
“No truth to that rumour,” said he said, following the Mortgage Summit. “Pacific Mortgage Group is not buying FirstLine and MCC.”
Since speculation of an eventual sale surfaced early this year, FirstLine has suffered a precipitous drop in broker market share, but it nonetheless remained in the top four lenders by funded volume in the last quarter. That was despite news CIBC was preparing to sell and was actively fighting to convert clients.
Just how well FirstLine did in the four months ending April 30 has surprised some mortgage professionals given the lender attracted 7.8 per cent of overall broker market share by volume, according to a D+H quarterly report.
A sizable chunk of that business came after news in February CIBC was scouting for a buyer.
The performance, while nearly 10 percentage points off of FirstLine’s 2011 showing, was still enough to place it fourth in the rankings and just below Street Capital.