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Mortgage Broker News | 27 Jun 2011, 10:00 AM Agree 0
A supporter of trailer fees is aiming to stem the loss of broker-channel lenders squeezed by thinning margins and commissions, suggesting brokers might be receptive to lower upfront payments in exchange for guaranteed renewal fees.
  • Michael Cameron | 27 Jun 2011, 07:58 AM Agree 0
    I don't think cutting commissions is the answer. I am not sure lenders are saying we need to be paid less, I think they are saying they want value for what they are paying us.

    It is time for us to step up and raise the bar on the level of professionalism. We need to become a more efficient distribution channel. How about a designation that is partially dependent on individual efficiency as well as education, experience and track record.
    One thing is for certain it is time for change. Broker owners need to make sure their brokers are efficient and if they aren't, stop allowing them to hang a license.
  • Werner K | 28 Jun 2011, 01:04 AM Agree 0
    I am not sure are you commenting about the article? What has to do "raise the bar on the level of professionalism... more efficient distribution channel", with banks pushing to cut commissions?
  • Taz Rajan | 28 Jun 2011, 01:09 AM Agree 0
    I absolutely agree and feel it's the only way to continue success for both lenders and brokers. Retention is a big issue for lenders and they often compete with brokers at this time. Paying on renewals would keep the playing field even, pay brokers for doing the right thing, encourage more brokers to keep in touch with clients which raises awareness and respect for brokers and keeps the lenders happy too.
  • Torrington Capital | 28 Jun 2011, 01:27 AM Agree 0
    Instead of paying everyone less, more lenders should take a look at MCAPs compensation structure which rewards efficiency. Cost effective brokers can and should be paid more. Lenders could also do themselves a favour by providing more education about their products and having comprehensive broker websites which not only provide product info but underwriting and process information. This makes everyone more efficient and keeps costs down. Trailers are great in theory and reward brokers in it for the long haul. The problem is you get less now and less later (factoring in true inflation and not having the funds available to invest in the business or a investment portfolio). Renewal fees make sense and should help prevent brokers churning their book and placing clients with another lender upon renewal.
  • Joe | 28 Jun 2011, 01:47 AM Agree 0
    Let's not shed too many tears for the monolines jumping ship. In most cases if their margins are eroding, taking care of their internal operations should be their first concern. In any event when rates move and the spreads get larger those who jumped ship will be looking to come back.
  • Come On!! | 28 Jun 2011, 02:15 AM Agree 0
    Can you say GREED?? That is what is running our industry these days. Maquarie was gone years ago for me, their arrogant stance did them in, not the margin spread. All you brokers that used them, you did it to line your pocket not because they had anything really good for clients.
    As for trailer fees, that only profits the broker owner. Been there done that and left the broker house that reduced my commission to fatten hers.

    Where in this article and replies does the customer count? Do you really put the deal where it should go, or where you get paid the most? As an agent do I want to feed my broker, or myself? As a broker do you hire me because you like me or for my numbers to line your pocket? Bottom line Greed and nothing more is fueling the banks these days. The greed has always been there, but with tighter market and less to go around it is more prominent!
    Mike Cameron , I like you and I like what you stand for, but enough of the paperwork. I don't need more letters behind my name to tell someone I am good at what I do,. I can stand alone on that, my customer repeat tells me I am good, that means more to me.
    Our american neighbours showed us what happens when you get to greedy.
    So is it time to cut commissions,,, no it is time to look after our customers, !
  • Dave | 28 Jun 2011, 02:31 AM Agree 0
    Are you not suggesting that Lenders adopt the same finders fee model that forced Macquarie out of business, that doesn't make sense.
  • @kiltedbroker | 28 Jun 2011, 03:24 AM Agree 0
    I'm with Mike and Torrington, I think efficiency is the answer. Lets face it, there is a lot more room for growth in efficiency for both lenders and brokers.

    Concentra and MacQuarie were not winning any gold stars for customer service and they were obviously having a hard time competing because they didn't have the products or customer service to attract top level brokers... Could you imagine doing all your A business with Concentra... I mean, the occasional rural property zoned agricultural or a progress draw... okay, but I couldn't imagine taking all my business there. It takes more than a few unique products or a different pay structure to compete in Canada's lending economy.

    My two cents anyway.
  • Michael Cameron | 28 Jun 2011, 03:42 AM Agree 0
    Werner K - I am absolutely commenting on this article. It is about margins and one way to improve margins is to improve inefficiencies. If we, as a channel, don't get more efficient then the alternatives are to cut compensation or leave the channel. I for one think we should focus on the efficiency side of the equation. ;0)
  • mortgage needs | 28 Jun 2011, 04:13 AM Agree 0
    Time to sit for the Real Estate exam for all those who are not yet licensed to be Realtors as well : )
  • Another Broker | 28 Jun 2011, 04:29 AM Agree 0
    I'm 100% with Michael Cameron. The requirements for a new agent to be able to practice in this business are not nearly enough for them to assist clients with hundreds of thousands of dollars of debt. Let's get rid of these false professional titles, put into place a candidate system like appraisers so the broker has to sign off on all deals before they are released to the lender and client and ensure that the new agents understand what the word " ethics " means. Maybe this way the lenders will start seeing quality in the work being sent to them and not have so much of their time (equals money) wasted.
  • Chicken Little | 28 Jun 2011, 09:47 AM Agree 0
    If lenders are feeling so squeezed why then is the big four slashing their variables to under cut the broker channel. I as well as other experience agents are seeing this everywhere. The big four are still offering their A clients prime -.95 on the five year. Give me a break, this article is absurd.
  • Alberta Broker | 28 Jun 2011, 11:30 AM Agree 0
    I'm with Kiltedbroker and Torrington Capital. I firmly believe that Concentra and MacQuarie are leaving the broker channel because they were inneficient within it. Aside from a few relatively small niches, there was really no reason to place a deal with them if you as a broker take your fiduciary duty to your clients seriously. We've lost some lenders in the last couple of years, but it's been the worst lenders that have exited, who cares, good riddence. If I start hearing that a good lender is struggling, maybe I'll start to be concerned.
    I firmly agree that there is a lot of room for improvemnet in terms of efficiency. However, this is something that is broker specific (you know who you are) and not industry wide. On the subject of lenders wanting to make themselves more profitable, the best thing you can do is get rid of volume bonuses and reward efficiency instead. I guaranty the lenders that take that approach have a lot better profit margins than the volume junkees.
  • Julia 'not-afraid-to-use-my-real-name' Krause | 28 Jun 2011, 02:17 PM Agree 0
    Cut commissions..?? How about cutting volume bonuses? Maybe that will help curb the quantity-over-quality attitude in the broker world today. A few people here are already suggesting this with comments about greed and inefficiency. Of course brokers have to make a living, but who-pays-the-most is now more important than what's best for the client. This makes brokers no different from banks. Our industry even recognizes brokers for quantity of work! Where does quality of work even fit in anymore?

    Here's a suggestion for lenders to cut their costs... how about not letting BDM's waste so much time training new brokers? This seems to be the accepted way to train new people! Let the BDM's focus on their actual jobs and make the national broker companies responsible for training their own rookie brokers. But please... don't make new brokers learn from the old boys... this is why we have the issue of unethical behaviour out there...
  • A | 28 Jun 2011, 11:19 PM Agree 0
    I think it is weird how people are discounting MAcQuarie as a lender now that they are not actively in the market. I believe they were the 6 biggest lender in the broker market originating BILLIONS in mortgages. They had 8.5 billion under servicing after midterm payouts. This was not a small lender leaving.

    I also find it interesting how some brokers are wondering why if the banks are struggling for spread are they undercutting the broker rates. The issue is simple the cost to originate is now less on the road rep side than the broker market which allows for better pricing. A bank rep at deep discount works for 35 bp while a broker cost averages over 120. if a broker was at 35 (which i am not saying is a realistic number) then the additional discount available for the same spread would be almost 20+ bp of rate. Thus the difference.

    MacQuarie did not say they would not be originating mortgages anymore just not with brokers. The same was said by BMO, HSBC who are hardly small players in the mortgage market. And lets not forget Royal who has never found the economics of originating in the broker channel to work.

    There are 2 directions the industry can go status quo which will lead to the cost being so high to originate that when there is trouble the industry will crumble like the US or Australia where the brokers work at higher but more comparable rates to the cost to originate.
  • vittorio | 29 Jun 2011, 12:39 AM Agree 0
    i agree with most people, as brokers we do not need to have a full commission on renewal, even 1/2 of what we had previously would be enough. the lenders in a way are getting themselves in this situation. They are looking for input from brokers, but they are not following the advice. I have had over 10 lenders asking for input, but only two lenders took it heart and they even sent their vp to find more, now they made some changes and they are stronger than ever, our quality volume has tripled with this lender and they showed their appreciation, by not giving us more money, but let us know that they are going to look after us when it comes to renewal. More lenders need to do more, as this can work for both channels we just need to work together and than we will both be successful.--as brokers we can not doing anything when it comes to the interest rate, that is something the lenders have to figure out. we sell what the lenders give us, if the interest has to be higher than be higher as long as everybody is playing on equal field, brokers will beat the mortgage specialist from the bank anytime.
  • Mr Lender | 01 Jul 2011, 01:41 AM Agree 0
    I'm tired of Brokers whining about commissions. They brought it on themselves. We are more than willing to pay commisions, but unfortunatley more often than not it is the Lender that has to do all the work in gathering the nessessary info to adjudicate the loan while the Broker sits back and waits for the commision cheque. I see this all too often and its those Brokers who are ruining the mortgage broker industry for the good brokers who take the time to submit the proper information to complete the file. I'm tired of Brokers who send in an app without supporting documentation and think that's all they have to do. As for the Brokers out there who supply the supporting documentation, your worth your weight in gold!!!
  • S | 01 Jul 2011, 01:58 AM Agree 0
    Get real everyone residential mortgages for the banks has alwasy been a lost leader there was very little spread once they had the client with the mortgage they could cross sell for other products , car loan, line of credit,bank account etc - that's where the money is - dont take it personally its not about the mortgage broker MacQuarie didn't have anything else to offer they made the right choice by leaving the market when they did the model for a company like theirs without a bank charter in Canada was never going to work not profitable enough.
  • Len Lane | 01 Jul 2011, 02:08 AM Agree 0
    Strangely enough I agree with Mr Lender and Mike, efficiency all the way around has to be a concern. I train our team to gather everything they can up front so that the U/W team has to merely review what we know to be correct. Cut commissions for those who aren't professional..maybe but they are only as good as the training they receive.
  • Kyle Green | 01 Jul 2011, 02:31 AM Agree 0
    Brokers need to be more efficient. Shocked at some comments re: removing volume bonus, etc. High volume brokers typically are at least 300% more efficient than inexperienced brokers and lose less deals to the banks after they've submitted their file to one of the broker lenders. If brokers as a whole were more organized and efficient, I don't think there would be any issues with lenders hanging around, at the comp levels we have been accustomed to. You have to EARN your commissions, and EARN your VB.
  • Another Broker | 02 Jul 2011, 11:18 PM Agree 0
    The comment about the volume bonus is right on. Thanks to the national brokerage house funelling all deals to the same lender under one agent. I'ver read stories where a new agent has been in the business a couple of months and is now a top agent. The broker channel dug its' own grave.
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