Mortgage Broker

IT WAS ANNOUNCED recently through an MBRCC newsletter that "FICOM is preparing to require brokers to provide more detail regarding compensation. e additional information is intended to shed light on the incentives and compensation structures for mortgage brokers." Hundreds of industry members responded by providing comments on the issue to the MBABC. Members had a lot to say and presented an array of perspectives on this issue. A handful had no objections to disclosing fees, but the vast majority expressed concern. is is an important industry discussion which we want to share with you. Here is a sample of the comments provided to MBABC. 1. I've heard this change is coming. I think this is going to have a huge negative impact on broker business and push more business back to the banks. ere is no cost to the client ... why should we have to disclose what we get paid. If we go see a doctor, do they have to disclose their income? No. If you buy a car, does the salesperson disclose their commission? No. Insurance sales? No. 2. Providing for a homogenous industry is a problem. Clearly, most times we shop rates and compare lenders' products and services for the client's best interest. ey are our main concern. e lenders provide products and services that we are allowed to present to our clients and promise to give clear and honest assessments of the client's assets and conditions. In these transactions, the broker is the lubricant and intermediary. e broker adds value to both parties. To the clients they offer an assessment and recommendation based on products available. To the lender they provide an expanded market presence and client source to complement their existing platforms. What would be great to see is if mortgage brokers were free to provide their expertise and services to the client on a fiduciary bases. is would mean collecting fees from clients for this service and engaging with market lenders as an agent of the clients to negotiate the best rates and services. Currently, lenders shut mortgage brokers out of their best capacity. FICOM plays into the hands of lenders by requiring broker fees to be part of disbursing mortgage funds rather than a fee for service. For instance, RBC doesn't deal with independent mortgage brokers and therefore we can't negotiate with them for our clients unless we are prepared to get paid from the mortgage proceeds later. is is entirely unrealistic and, in my opinion, robs the people of a huge advocate base that they should be able to use. e other option is to make a federal case to make it a level playing field. Since banks and lenders are considered controlled and regulated by government for the good of the people, it should be a law that all lenders open their products and services to the broker base. 3. Given the nature of our compensation, the differences between lenders, upfront or trailer fees, volume bonuses, etc., I see no way we can accurately report compensation on each deal, thereby putting us at risk of providing inaccurate info and subject to potential issues down the road. 4. My fee from an institutional lender has absolutely no bearing on the client's financial interest in the mortgage, so I see no reason to discuss the fee with them in that case. In the case of a private mortgage, whereby the borrower is paying my fee, the broker fee is always disclosed to the borrower in the fixed credit disclosure form, so I see no benefit in including the fee when it's not paid by the borrower. is will only serve to confuse the borrower, as they may believe the broker could offer them some form of reimbursement of the fee, or that they could get a better deal if the broker wasn't paid that fee. It's pointless in my estimation. 5. It is not the client's business what a lender pays for finder fees. is just gives the client the opportunity to hammer us on those fees. I already give up fees to be competitive when banks offer posted rates; the client then consults me and I get a better deal for them; then the bank matches or undercuts my deal. In order to compete I have to improve the deal so the client goes with me. Client wins. Will mobile bank reps have to disclose what they get paid? If not, then we are once again on an unlevel playing field. MORTGAGEBROKER mbabc.ca fall 2015 | 27 brokercomments What You're Saying B.C. mortgage brokers weigh in on compensation disclosure FORM 10

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