Broker association writes letter to FICOM

Broker association writes letter to FICOM

Broker association writes letter to FICOM Mortgage Professionals Canada penned a letter to FICOM and in it exposed problems with the regulator’s proposed compensation requirement.

The national association argues there are two issues a FICOM proposal that will require brokers to disclose specific dollar amounts for each deal.

“Firstly, the dollar amount would be a gross income number, which would not show any of the required business deductions for taxes, administrative costs such as licensing, rent, office equipment, connectivity etc., and as such presents an overly inflated impression to the client of the real net revenues generated,” Paul Taylor, president and CEO of Mortgage Professionals Canada wrote in the letter to FICOM. “Additionally, disclosure in this format does nothing to address the problem identified in the Open Letter: since it does not provide a consumer with any  information  regarding  the  broker’s  compensation  potential  with  other  lenders  he  or  she represents,  the  broker’s  motivation  for  selecting  any  particular  lender  cannot  be  determined.”

In an open letter to the industry, FICOM said industry players “want consumers to understand the disclosure being provided, particularly any dollar amounts.”

MPC says it does want transparency when it comes to compensation, but that it wants that disclosure to be meaningful.

Taylor argues that specific dollar amounts are virtually impossible to provide at the point of application.

“Consumers  are  often  approved to  borrow  up  to  a  specific  dollar  amount with the expectation that their closing costs may vary. Actual amounts borrowed therefore are often not known until the transaction is finalized,” Taylor wrote. “ Provision  of  a  percentage  or  basis  points calculation  is, therefore,  a  much  more  accurate  means  to  convey  to  a  consumer  what  their compensation will actually be.”

FICOM collected industry feedback on the change up until February 20. It has not yet said when it will officially announce its decision on the Form 10 disclosure rule interpretation.

To read MPC’s letter in its entirety, click here.
  • Dave 2016-02-24 8:56:54 AM
    FICOM should be more worried about money laundering from Asia than this nonsense...
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  • Nick Bachusky 2016-02-24 10:39:04 AM
    This is excellent. I hope that FICOM listens to this message but I still believe there is an ulterior motive at play here from the large financial institutions' lobbyists.
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  • David Larock 2016-02-24 1:38:50 PM
    If FICOM is worried about consumer protection and disclosure why don't they require the Big Six banks to disclose their fixed-rate mortgage penalties more adequately? That seems like much lower hanging fruit from my desk.
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