Brokers react to direct-to-consumer campaign

Brokers react to direct-to-consumer campaign

Brokers react to direct-to-consumer campaign Brokers may not be happy about the strategy, and one veteran argues it could lead to more pressure to buydown rates.

“Street's initiative should be of no surprise to the industry, since brokers are engaging in the online deep discounting buydown game by willfully eroding their margins, which ultimately affects the quality of service, and the professional sound advice brokers are typically known to provide,” John Bargis, principal of Mortgage Edge, told “If this works for Street, expect others to follow. Brokers once used to see banks as their biggest competitor.

“They are slowly graduating to cannibalizing one another, which can only lead to a significantly diminished customer service experience and value for borrowers.”

Street Capital is the latest broker channel lender to offer direct-to-consumer mortgage campaigns. In onesuch initiative, the lender is offering rates as low as 2.25% and up to $1500 cash for users of the website. And a similar offering was first reported by Canadian Mortgage Trends.

Other such campaigns by big bank partners and credit unions have drawn broker criticism in the past. Street is certainly not the first channel lender to pursue various distribution channels and the lender says it is “channel neutral.”

“This is very important because there are very different value propositions out there … some of them are more rate-focused, others are more service and advice-focused … what we want to do is (be) channel neutral,” Ed Gettings, chief executive officer at Street Capital, told “We give the same pricing and the same pricing tools, flexibility, to all of our channels that we deal with.”

Brokers have access to similar rates “should they buy down,” Chris Reid, senior vice president of business development at Street Capital, told 

For its part, Street Capital has already received broker feedback about the programs.

“Some have concerns. Others say it’s an open competition and we have to adapt. You have to adapt to the competition in your marketplace,” Gettings said. “We’re giving (brokers) the tools to support the value proposition you want to go to market with.”

Whether or not the marketing initiative will deter brokers from sending business to Street Capital remains to be seen. However, broker Dustan Woodhouse thinks it might.

“I am pretty sure that most brokers could go through their career never really needing to send Street a single file, and I am equally sure that with this announcement many brokers will choose to do just that,” he said.
  • Julie Stamp 2016-03-24 8:45:32 AM
    We are used to the big banks not giving a thought to all the hard work it takes to build your client base and maintain those relationships, we saw it happen with First Line through CIBC, it is very disappointing to see a Broker Channel lender choosing to do the same, even with a bought down lowest rate they are offering rates we cannot match unless a cash rebate is offered on top of the buy-down, similar to Mr. Butler's operation. I think it's disrespectful of the relationships built over the last years and the loyalty shown by Brokers to their brand which helped put them where they are now, it's mowing our grass so to speak. Not only are they offering direct better rates to new business, they are sending out pamphlets to your existing clients at the 3 year mark trying to get their refinance or sale/upgrade business as well, this is not renewal fishing this is directly trying to take our meat and potatoes from our existing clients. It's something Brokers and Agents that have like me sent a lot of my business to Street Capital need to address with their clients, you need to aggressively be in contact with your database to make sure you are not losing that refinance or sale and up purchase opportunity, directly contacting my clients for additional direct business is not Channel Neutral in my opinion.
    It's an unfortunate part of this business, loyalty in this industry is like trying to find that elusive Unicorn or needle in the haystack.

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  • nick 2016-03-24 10:25:02 AM
    the so called broker advocate is prostituting itself to now compete with the brokers. This is a strong message to the broker community and i hope that brokers take note. Street relied totally on the broker community to get the company off the ground. Now they slap the same brokers in the face by competing with them. Those who still send broker business to street are actually helping with the demise of their industry. We provide the cashflow for them and then they use that to backdoor the broker community. .
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  • Ron Butler 2016-03-24 10:28:01 AM
    If mortgage brokers want to cut off every lender who ever offers mortgages direct to the public, I guess we will all be out of lenders very soon.

    Mortgage Brokers: just compete for the client's business. Just do the very best you can: best rate, best advice, best service, pay for the appraisal, assist with any legal fees. Just be as competitive as you can possibly be and quit complaining about what others offer, quit defending max commission, max profit.

    If your advise is so good, and some brokers do actually do bring brilliant advice and planning to the table: charge more! But mainly compete, compete and then compete some more.
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