Mortgage Broker

Fall 2014

Mortgage Broker is the magazine of the Canadian Mortgage Brokers Association and showcases the multi-billion dollar mortgage-broking industry to all levels of government, associated organizations and other interested individuals.

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Page 37 of 47

Let me preface this articLe by acknowledging there are many degrees of uncertainty in any profession. I am not suggesting residential mortgage brokers are a special case with an extra rough go of it. All professions have concerns about their livelihood being negatively impacted by a new competitor, a new product, government regulations, technological advances, the list goes on . . . and on. As we know, if it were simple then everybody would be doing it. Mortgage brokers in British Columbia may not charge advance fees. Not an unreasonable limitation, but it is a bit more difficult to accept that this limitation includes charging fees for work that has arguably been 99.9% completed, instructed, and ready to fund. Yes, 99.9% completed is still considered 'in advance.' A complete mortgage approval has been produced, underwritten, approved, documented, all conditions met, client instructed to a lawyer's office for signing . . . but until the mortgage is registered and funded, we cannot collect any compensation from the client. Do clients walk away from fully committed mortgage approvals that brokers, lenders, realtors, appraisers, and lawyers have all put time into? Yes they do. But consider this: of these five professions, all but the residential mortgage broker has recourse to collect compensation for their time and expenses. Mortgage brokers are expected to complete their entire task – oen investing hundreds of dollars and sometimes dozens of hours over a period of weeks or months into a complicated file – with no ability to form a binding contractual guarantee of compensation. ere is an element of risk throughout the entire process for mortgage brokers. Admittedly, there are good reasons why residential mortgage brokers are limited from charging for what would amount to advance fees. One need look no further than the recent film American Hustle to see a demonstration of the predatory potential for fraud and misrepresentation. And yes, the case against mortgage brokers collecting advance fees is a strong one, as it would open up a Pandora's box of regulatory red tape that would require policing. ere would be grey areas, rather than the current clear-cut black and white regulations. But while every industry has its own equally frustrating challenges, the difficulties we face as mortgage brokers are somewhat unique. It takes a special individual to deal with clients that walk away from mortgage deals. What can at times feel like tremendous waves of rejection inevitably takes some degree of emotional toll on all but the coldest of us. Simply put, a broker must have tremendous resiliency in the face of deals that are abandoned or fall through at the eleventh hour. As important as official brokering skills is that very special ability to put on a happy face every moment of every 12-, 14-, or even 16-hour-long day. Why yes, everything is always awesome! anks for asking. Compounding the income challenge arising from the inability to collect advance fees is the fact that there is little offered in the way of annual trailer fees or renewal fees, at least not when placing clients with credit unions, chartered banks or the majority of non-bank lenders. Unfortunately, this risks creating an "eat what you kill" approach to our business, rather than a situation where you have a farmer nurturing a crop of contented clients. Retention statistics demonstrate that the typical broker's harvest from those initial seeds is statistically quite poor. Seventy per cent of clients renew with their current lender, and in many cases do so with the pro-bono assistance of the original broker. is assistance oen generates a referral, and is time well spent. e best brokers oen have a contradictory nature – an aggressive "go-get-'em" business attitude combined with refined, good-natured and unflappable personality traits. is is neither a simple combination to find, nor to cultivate. e pressure to perform with a client begins with the first phone call, and extends at least until the completion date – unlike a realtor, for instance, whose compensation is more or less guaranteed once the subjects 38 | fall 2014 MortgageBroker Everything is Always Awesome! (thanks for asking) By Dustan WooDhouse "What you do matters, but why you do it matters so much more." Author Unknown

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