The latest weapon in the war between the Big Banks and mortgage brokers is Realtor incentives and the newest trick was one bank’s offer to Realtors of 50 bps for every referral that ended in a closed deal. On today's Big Story, we spoke to Elisseos Iriotakis, owner of Verico Safebridge Mortgage Solutions, Ian Tenggardjaja, agent with The Mortgage Centre, Motgage Professionals and Mauro Di Cosola, broker with DLC Mortgage Village. Find out on today’s The Big Story, on MortgageBrokerNews.ca TV, your home for industry news, opinion and analysis.
Video transcript below:
John Tenpenny, Mortgage Brokers News TV
John Tenpenny: Hi, I’m John Tenpenny, Editor of CMP Magazine and welcome to the Big Story on Broker News TV.
The latest weapon in the war between the big banks and mortgage brokers is realtor incentives. The newest trick was one bank’s offer to realtors of 50 basis points for every referral that ended in a closed deal. While this may meet short term goals, in the long run all it does is jeopardise the relationships between banks and brokers. Elisseos Iriotakis, Verico Safebridge Mortgage Solutions.
Elisseos Iriotakis, Owner, Verico Safebridge Mortgage Solutions
Elisseos Iriotakis: Initially I was surprised when I heard that there was a lender out there that was paying commissions directly to the realtor. But then when you put two and two together it almost doesn’t really make sense. When you do the math on it, we are looking at 50 cents to the referring realtor and another 30 or 35 cents to the mortgage specialist of the lender and will back out with the paying of brokers. So what they are really doing is, they are jeopardising relationships with their producing brokers that have inhouse relationships with realtors and more or less shoot themselves in the foot.
John Tenpenny: The practice is nothing new and it’s not going away anytime soon. That being said disclosure regulatory enforcement are key to ensuring that the client’s interests are put first. The Mortgage Centre’s Ian Tenggardjaja.
Ian Tenggardjaja, Agent, The Mortgage Centre, Mortgage Professionals Inc.
Ian Tenggardjaja: If a real estate professional is being monetarily enticed by one particular lender over another, you know we have to keep in mind that the client’s best interest has to be kept at the forefront of the mortgage and the real estate purchase transaction. This being said, in order to do this we need to insure a client that these fees are being disclosed by the realtor, if they are receiving fees from that lender. More importantly this type of activity needs to be monitored effectively by the respective governing body.
John Tenpenny: The choice of lenders is what appeals to consumers, when working with mortgage brokers. That’s not the case with realtor incentives. Mauro Di Cosola, DLC, Mortgage Village.
Mauro Di Cosola, Dominion Lending Centres, Mortgage Village
Mauro Di Cosola: It may be a good idea for the lender but not necessarily what’s in the best interest of the client. When a broker or an agent sits down with a client, we are basically understanding what their needs and wants are and we have available to us a vast array of lenders and products at our disposal. What’s going to stand is what the client’s needs are, at that point we determine which lender will best suit their needs. That in my opinion is what’s in the best interest of the client. However, when a realtor recommends a specific bank or lender, they are basically restricting that client to that one particular Bank’s Products & Services. It’s almost like the last time my wife went to buy a pair of shoes she went to 10 different stores and it took her 10 different trips. Imagine me telling her that she has to buy her shoes from that one store and those are the only shoes that she can buy. It wouldn’t go over well and it’s not something I recommend.