Top brokerage head: Time for graduated licensing

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Inexperienced part-timers and newcomers to the industry should undergo a two-year apprenticeship before being eligible for licensing as agents, said a respected veteran broker.

“Allow part-timers and new agents, with no experience who wish to develop into full time agents, but do not allow them to be licensed,” Brian Matthey, head of Verico The Mortgage Professionals in Kingston, Ont., told “Have a minimum two-year supervisory period during which they have to work for a licensed broker who has a minimum of five years’ experience. That broker (would then) have to sign off on everything they do and assume responsibility.

“Even someone with five years’ experience is far from a seasoned broker, but at that point, they should, with the benefit of their experience, be in a position to assist someone in their development.”

The suggestion would effectively raise the bar on qualifying standards for mortgage agents in all regulated provinces. Currently, agent-candidates have only to pass a licensing exam and be employed by a brokerage. Matthey joins the growing number of industry professionals arguing the threshold is simply too easy for candidates to cross.

In addition to that two-year apprenticeship program, Matthey, whose firm won the CMP award for Mortgage Brokerage of the Year (more than 25 employees), wants to introduce a probationary period.

“At the end of the two years give them a one-year probationary license still under the supervision of a broker,” he said. “During the probationary period mandate a required education curriculum … and mandate a proficiency report, which must be submitted to the whatever provincial regulating body or provincial association, that outlines and identifies their readiness to assume the title of a mortgage agent.”

Matthey is among the first to offer a comprehensive plan to overhaul the licensing protocol for an industry grappling to improve its profile and expand its market share. Part of that challenge, say brokers, is increasing professional standards and further distancing themselves from the growing number of bank mobile mortgage specialists.

More and more mortgage professionals are, in fact, calling for better defined rules around part-time brokering, concerned the practice has undermined the industry. Matthey’s plan addresses that as well.

“As far as part-time agents or new agents who have previous financing experience, give them a one-year probationary licence under the supervision of a broker and follow the same mandate as above,” he said, adding his brokerage has successfully used a similar protocol.

“We use the essence of this program in our office with new completely inexperienced agents who work for an agent as an underwriter for two years,” Matthey said. “We have graduated four successful agents who were prepared to carry our card and represent themselves as mortgage professionals. We have spent 22 years developing a name and a reputation. Why would we settle for putting anybody on the street who would jeopardize that? Why would we not try to give an agent the best chance at success?”

  • LSGB on 2011-10-28 3:39:28 AM

    I have yet to see any of the Big six put anything negative out about the mobile specialist they employ, now do you wonder why they are leading in lending? listen to this if a client was to read this, and many of the articles circulating what do you think there going to do? run to the bank. Yes the pie its getting a little smaller, but you can't stop the young from advancing, all things change as time goes on. Big boys get your postive message out by getting some air time on the TV, radio, social media. Come on your not paying anyone agents a weekly pay check, as for as I understand it this is on a commision basis. Your not only putting down those new to the industry, part-timers and the like, your making it look as if the industry as a whole is lacking.

  • Good Suggestion But... on 2011-10-28 3:40:58 AM

    I would argue if there is a blanket change that it applies to everybody. No grandfathering so that everyone is on the same playing field. There are so called "seasoned" brokers who are just as incompetent.

  • allan zider maple leaf mortgages on 2011-10-28 3:42:25 AM

    I agree with the provation period, because most new agents come in with no experience and are looking for very large splits instead of a good training to be successfull in this business

  • John on 2011-10-28 3:49:27 AM

    Agreed. Makes perfect sense.

  • @kiltedbroker on 2011-10-28 4:03:48 AM

    I like it

  • Julia Krause on 2011-10-28 4:33:31 AM

    A great idea and a step in the right direction, but I'd like to point out some things I saw during 3 years of training brokers across Canada (as a neutral, 3rd party trainer)... sometimes 'old dogs' pass on 'old tricks' to new brokers. Sometimes the 'old dogs' have no interest in training, or they really aren't good at training/educating/explaining, they just want more money. And a lot of the time, the 'old dog' is also an active busy broker, and not readily available when the new broker needs help. This is why I believe each company needs a dedicated, full-time TRAINER, always available, and always providing consistent, ethical advice & assistance to new brokers. It really is the answer...

  • Mike Distefano on 2011-10-28 4:56:09 AM

    I agree I think this is a great idea!

  • Paul Meredith on 2011-10-28 5:17:07 AM

    The problem with it is that time is by no means an indication of how seasoned an agent is. You can have an agent who has only been doing it for two years who has closed more deals than an agent who has been doing it for 10 years. TIme is irrelevant. Base it on the number of deals closed, then I think the program would be a fantastic idea. Their are way too many agents out there who don't know what they are doing. We should have a point system in place as well (similar to that of AMP and RECO) to ensure everyone is always keeping up on their skills.

  • Joe on 2011-10-28 6:03:27 AM

    Yes this great to keep regulating more and more in an industry where 90% of mortgages are handled by the banks and 10% by brokers. What brokers doing to eliminate the two tier system of independent agents/brokers and the Banks mortgage specialists/advisers where they do not need to be licensed?

  • Indy Broker on 2011-10-28 6:16:15 AM

    Do you know why they make newbies "work" under an experienced advisor. They know the washout rate is high before the end of 2 years in the business. They oversee new reps to pick up ALL those clients and the trailers when the trainee doesn't succeed.

    What mortgage agents and insurance agents differ is; an isurance agent is collecting monthly trailers for all there deals. Its financially viable to oversee and protect client loss. Most mortgage agents are one-hit wonders, book the mortgage collect the fee and hope they call to refi or renew. The pricing model in mortgage industry does not justify this.

  • AB Dan on 2011-10-28 6:25:03 AM

    I'm all for better training, ethics, supervision, etc. But we need to do all of these things internally rather than just create all kinds of entry barriers for prospective new brokers. Think about anyone young and inexperienced looking to enter the mortgage business. Do you really think that they are going to spend all the time and money to jump through all these hoops your're proposing, or are they going to sign up with the bank that does not require all of this. I'm all for increasing our standards, but unless the bank mortgage reps are required to do so as well, putting up all these barriers to entry is suicide for the broker industry. If we can't attract and sustain new people, we will continue to lose market share to the banks, and once all the "Seasoned Borkers" retire in the next 5-10 years, who will even be left as mortgage brokers?

  • W Patterson on 2011-10-28 6:29:15 AM

    Inexperienced part-timers and newcomers to the industry should undergo a two-year apprenticeship before being eligible for licensing as agents. Really, once you are hired to a Broker are you not really an apprentice until you are able to handle the process on your own. The broker is responsible for you as you are progressing and guiding you along the way. All this appears to me is a chance for SOME BROKERS to pay the agent less commission while they use this period to there own benifit.

  • Mortgage Queen on 2011-10-28 6:41:46 AM

    I concur. Further, I am in full support of steep educational requirements and testing being required not only of newbies but of all who hold licenses. I don't know how comprehensive Ontario's re-licensing exam is but I hope it's reflective of the knowledge required to successfully navigate clients through the process and assist in product selection. I don't believe in entitlement so I say no to grandfathering as I don't feel we can expect of others anything different than what we ourselves would be willing to do.

  • A mortgage broker on 2011-10-28 8:44:37 AM

    I wonder these so called "Seasoned Brokers". Have they themself went through such a process. When they were new in the industry. If not, which I am very sure they didn't . I just want to let them know that If you have succeed in this Industry. The other will also survive. Most of the brokerages already have best of the splits in their own favor for new Broker. Inspite of that none of them provide any training or care about the new broker. Most of them don't even have a Trainer, but they still demand better cuts in there favor being a new broker. How do you think any new broker in this

  • MR Broker on 2011-10-29 7:44:16 AM

    I'm all for ongoing training and setting standards, however, I agree that pressure needs to be put on the bank "specialists" to have them licensed as well and to go through all of the same requirements as independent brokers. After all, the client is buying the same product from them so should expect that they have some training/regulations to follow as well. Would you not expect a doctor that is employed by a hospital to have the same training as one who works out of his own practice?
    Lets level the playing field a bit!

  • Angela Wong-Liao, Invis Inc on 2011-10-29 12:08:06 PM

    Thank you Brian Matthey, what a brilliant program/system that you have developed for your mortgage professional team. One of the challenge in our industry is poor quality mortgage agents. I met with one lender last week, who used to be an underwriter and she told me that some of the mortgage agents do not understand GDSR and TDSR, which is the very basic of mortgage brokering. I understand that a lot of brokerages are using team submission for deals, especially for new mortgage agents. In my opinion, it can be risky because the team leader may potentially protecting a mortgage person who had some past history of fraudulent activities and potential misrepresentation if the new mortgage agent misinform the team leader. There is an old saying "It takes years to build your business and reputation and it only takes minutes to destroy all your years of hard works."

  • Paul on 2011-11-01 5:21:17 AM

    The reality is that in the Provinces of BC and Ontario you have to be a "sub broker" for two years prior to being able to become a broker of record. The broker of record is responsible for their sub brokers behavior and conduct - this is what is being suggested in this article. I see nothing wrong with this being established elsewhere in Canada, it has proven effective in BC for years. BUT... If the pattern is going to continue with brokers dealing with tightened licensing and education the question must become: What of the mobile sales force of the Banks? These individuals do not need to be licensed, they do not have continuing education requirements... yet they conduct business the same way that the independent broker does. Independent brokers across Canada are calling for tighter educational requirements, stricter licensing, etc. We are creating our own unlevel playing field - those that cannot "make it" on their own simply hang their hats with a bank. I am not suggesting that we forego stricter requirements, what I am suggesting however is that they apply to ALL people who make the claim of being a mortgage professional - Independent or with a Bank.

  • Michael Cameron on 2011-10-28 2:37:03 AM

    YES! YES! YES! We are doing the same internally here. Well said Brian!

  • Raoul Carriere on 2011-10-28 3:28:27 AM

    This has merit but the length of time depends on the sub broker. I know a broker in Vancouver who after her first year had done more business than a lot of seasoned brokers have over 2-5 years, and I have seen some that have done little at 5 years.

    Possibly a check sheet showing what type of mortgages they have handled and to what expertise that the broker would have to sign off on. The main thing is that the broker should be responsible for their sub brokers.

  • George C on 2011-10-28 3:29:13 AM

    Agreed , our strength as brokers is our experience. Hiring inexperienced agents and cutting them loose into the market place causes problems on so many level's. Efficiency with our lenders drops , everything turns into a rate war and we spend more time putting out fires. We can look to Fisco but in the end it is self regulating as to what type of brokerage you want to run.

  • Victor on 2011-10-28 3:32:52 AM

    New Life Insurance agents, the so-called Financial Advisors out there have to go through a 2-year supervised periods, before being allowed to operate independently... I think that would make sense for new mortgage agents as well - get a sponsor...

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