Unlike rest of country, Quebec brokers lobbying for more regulation

Unlike rest of country, Quebec brokers lobbying for more regulation

Unlike rest of country, Quebec brokers lobbying for more regulation

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Most alarming, according to Macris, is that borrowers’ needs are superseded by realtors’ and banks’ bottom lines.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%.”

 

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2 Comments
  • Tanya Nouwens 2018-04-18 11:15:16 AM
    "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." Really, George? Well then I guess you don't know me at all. I work regularly with a mortgage broker who doesn't give me a dime. I refer to her because she's great at what she does and I know she will take great care of my clients. If a client wants to work with their bank instead, I will suggest a mortgage specialist with their bank -- someone who deals in mortgages all day long -- because I've seen too many of my clients get the run-around from their local branch causing delays in their mortgage approval process which could jeopardize their getting the home they want. I act in my client's best interest at all times, not my own. Way to throw us all under the bus and paint us all with the same brush, George.
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  • Blair Anderson 2018-04-19 11:57:14 AM
    Tanya, you are a great example of how a realtor should operate in these conditions. George should have qualified his statement by referring to those realtors who participate in this practice, the wrong way. Unfortunately, my suspicion is your approach is with the minority of realtors.

    The bigger picture, which I believe this article was trying to communicate, is that our industry would be better served if the practice of banks paying referrals fees to agents was dropped altogether. As Jason Zukerman aptly pointed out, the ill-conceived practice is preventing a much better relationship from reaching its full potential, between the mortgage agent and the realtor.

    And who believes this practice is exclusive to Quebec? This kind of legislation (Bill 141) should be introduced on a federal level, affecting the whole country.

    Congratulations Quebec!
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