Lenders need to be held accountable for trailer fee commissions, and CAAMP is the body that should do it, says one B.C. broker.
“I think trailer fees are fantastic, but we need to bring clarity to the different elements of trailer fee agreements,” says Layth Matthews, CEO RateMiser Mortgage Advisors. “What protection does the broker have when the fine print states that the lender is no longer obliged to pay in certain circumstances?”
Matthews suggests a regulatory body or association, like CAAMP, step up and set guidelines, a standardized frame of reference, that would highlight key terms in trailer agreements to protect the flat fee all the way – and be a body of recourse when lenders stop paying fee commissions.
“I’m giving up 30 per cent of my revenue for trailer fee commissions. I would like an organization like CAAMP to ensure that I can count on that money,” he says.
Although Matthews deals almost exclusively in trailer fee mortgages, he goes into them with eyes wide open.
“There are naïve notions out there that we can count on this for our retirement. I have diversification in my portfolio,” Matthews told MortgageBrokerNews.ca, explaining that he understands how some smaller lenders can become absorbed or disappear from the channel altogether, necessitating the need to spread his “eggs” out in many baskets.
“I don’t want to be a salesman for a particular lender. For brokers, trailer fees should be based on a relationship with the lender – affording for the broker and the lender with a sense of stability.”
The aspect of income stability is what attracts Matthews to trailer fees, pointing to the Australian model as one that works.
“It is more widely embraced in Australia. It is a saner way for people to get compensated in a seasonal business.”