Mortgage Broker

28 | fall 2015 mbabc.ca MORTGAGEBROKER brokercomments 6. If FICOM make rules such as these for brokers you should only do so if the Bank Act mandates that mortgage specialists who are employed by the bank require their commission staff to do the same. Otherwise you create a sense that brokers are paid and bank reps are not, which is not the case. I wish FICOM would spend more time removing unlicensed brokers and brokers who commit fraud from the market to truly protect consumers rather than [implementing] rules that only cause uncertainty to the general public and in the end lower the competition necessary between the lenders to provide options to borrowers. 7. Disclosure of finder's fees, commissions and bonuses does not actually benefit the client. As well, there is no change to the APR when we are paid from the lender, so technically there's nothing that we are withholding from the client. None of my borrowers have ever asked what I have been paid, but if I have to disclose it, they would be more likely to ask for some of their closing costs to be covered if they know how much I receive without having an understanding of my cost to operate my business. 8. I have no problem disclosing anything required. I think people may value our services when they see the lender pays us for a very important function and the work is professional and takes a lot of time. 9. We provide an end product to the borrower for free or at a certain price. How much the lender pays us is confidential. No different from purchasing flooring for your house – the carpet company does not have to disclose the cost of the carpet and the installation costs. In fact I have found that when the borrower knows your gross revenue (which does not include your costs) they invariably want a kickback on those funds (i.e., "I could have gone anywhere for this mortgage but I gave it you so you should pay me part of the fee."). is is wrong. e only thing that should be disclosed is if you are paying a referral fee to someone that has a relationship with the client so that there are no secret commissions. 10. Disclosing a numerical value such as the expected lender compensation would add confusion to the borrower; it creates confusion for the clients. Clients can quantify how our advice will benefit their needs. ey do not fully understand nor need to make their decision based on how the mortgage broker is compensated. It seems to be more of an issue of ethics with the acting broker themselves when they decide which lender they choose to educate the clients on, not a matter where disclosure will have any appropriate knowledgeable impact on the client's decision that they make. It's not like the clients would advise us which lender we submit their application based on the level of compensation that the broker receives. Clients do advise us of their preferences and situational needs, then we find and recommend viable solutions to those needs for them. Lender compensation to the broker is irrelevant to the client's mortgage needs and benefit. is seems similar to the situation when a doctor prescribes a particular brand of medication or when they provide sample medication to patients at their clinics. Do they force upon their clients their financial compensation, if any? 11. A mortgage broker's ultimate job is to help the client understand all the terms and types of mortgages available to them so they can make their own decision. A good broker should not be telling the client what to do. 12. I agree, that in the context of acting as a fiduciary (and its definition) the mortgage broker has, and is expected to apply, a greater level of care. In fact, I would like to suggest that mortgage brokers in general should be required to exhibit this duty through ongoing training, education and professional development. e temptation to place commission before client advice will always be an issue, however I believe that it would be in the regulator's (FICOM) interest to focus its energies on those sub-brokers who are not willing to abide to a higher standard of professionalism. 13. Disclosing conflicts of interest is important. A lender (not a client) choosing to pay a broker does not constitute a conflict of interest. 14. Many borrowers double- and triple- shop the broker and oentimes even request that the broker pay them to arrange their financing. It saddens me that this occurs and I believe if the amount of the exact referral were disclosed that even more borrowers would request some of it be paid to them. I have no issue confirming /disclosing to the borrower that the lender pays me a referral fee, which is why I am not billing them, but I do believe that disclosing the actual amount could cause more expense to the broker. Brokers deserve to be compensated for their time and expertise, and disclosing the exact remuneration should not be required. 15. Borrowers are interested in their rate and terms. ey know we are paid by the lender and have always seemed comfortable with that knowledge. Clients do not inquire how much I get paid. FORM 10

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