Mortgage brokers in Quebec have long contended with banks paying realtors referral fees, but a new bill could put an end to that.
At least, brokers hope it does.
“We’re basically lobbying for banks to pay somebody who has a financial or mortgage license,” said Montreal-based George Macris of DLC Centre-Ouest. “Mortgage Professionals Canada is lobbying for it. At the end of the day, the bank can pay a real estate broker or a firm right away, so one of the underlying points is the bank can continue to pay someone a referral, but it has to be someone from the financial field with a license in place. But one key point is to stop paying realtors referral fees.”
Realtors are typically paid in the range of 50 basis points, but Bill 141, being tabled in the National Assembly, could quash that. While the bill casts a wide net, it will regulate the province’s financial sector, parts of which haven’t been updated in over three decades.
Quebec is the only province that permits banks to pay realtors referral fees, and Macris says it cuts too deeply into mortgage brokers’ earnings.
“In Toronto, banks don’t pay basis points to realtors,” continued Macris. “Quebec is unique as a whole, but the bottom line is, as a professional in the mortgage industry, my business is growing and we’re actually taking up a lot more market share in Quebec, but each mortgage broker is still independent. We all work on our own.”
Most alarming, according to Macris, is that borrowers’ needs are superseded by realtors’ and banks’ bottom lines. Neither act in the borrower’s best interest. Mortgage brokers have a slew of lenders they can draw upon to secure the best deal possible for their clients, but realtors don’t.
“Each real estate broker works differently but I have clients telling me they went to the bank by themselves, or they don’t know where their file is today because it takes too long to process,” he said. “A real estate broker’s commission is on the line. By limiting the client to three lenders—three banks— that limits the client’s choice.”
Jason Zuckerman, a broker with Mortgage Architects in Montreal, says that, without a doubt, realtors can be useful to mortgage brokers, but banks have complicated that relationship and prevented it from fully blossoming.
“Right now my personal experience is I don’t deal with a lot of realtors partly because banks interfere and pay them half a point commission and they don’t care,” said Zuckerman. “We’re the only province who allows that, so during networking groups when we meet other realtors, we have to be straight with them and tell them that we’re not going to be able to give them what the banks give them.
“I have some contacts, but we have a distant relationship, and it’s something that would benefit us if banks weren’t allowed to pay realtors the 0.5%.”