Brokers Gaining Consumers’ Trust
July 20, 2010 § 1 Comment
”Mortgage Brokers are gaining Consumer trust with a range of flexible products”
By Terrence Belford, For Canwest News Service March 30, 2010
At one time, the services of mortgage brokers seemed reserved for those who could not get a property loan from their bank, credit union or trust company. And while a broker might find them a loan, he or she usually charged a hefty fee.
Today, thanks to a dramatic change in lending practices, a growing sophistication among borrowers and mortgage brokers significantly upgrading their professional standards and image, arranging that home loan through a broker is increasingly the way to go.
“Mortgage brokers arrange 25 per cent of all residential mortgages in Canada last year and 40 per cent of mortgages sought by first-time buyers,” says Jim Murphy, president of the Canadian Association of Accredited Mortgage Professionals, the industry’s national trade group. Why the upswing in popularity?
“I think it comes down to three things,” says Murphy.
“The first is choice. Brokers have access to scores of lenders and can help people create a mortgage suited specifically to their needs.
“The second is service. Brokers do all the hunting, assemble all the paperwork and can often obtain a mortgage commitment within hours, not weeks.”
And, as for trust, CAAMP awards the Accredited Mortgage Professional designation to brokers who have at least two years’ experience, pass a course on ethics, responsibilities and the technical aspects of mortgage arranging, and maintain at least 12 hours of continuing education a year.
“While we have 12,000 members, about 3,600 of them now have that AMP designation,” Murphy says. “People know that if a broker can claim AMP status, he is a trained accredited professional.”
But there’s more: Brokers no longer charge fees for arranging residential first mortgages; the fees are paid by the lender. And in most jurisdictions, they cannot charge upfront fees for arranging second mortgages or non-traditional forms of lending. In fact, when it comes to finding the perfect mortgage, using a broker has become much like having your own free personal shopper.
“What we are really is advocates for borrowers,” says Ajay Soni, senior broker at Invis in Vancouver.
“We may be paid by lenders but we represent the best interests of the borrower. Because we deal with so many lenders — I regularly deal with between 20 and 30 — we are not committed to any one bank or institution or to any one product.”
That element of choice can be crucial, says Garth Ellis, president of Verico Ellis Mortgages Canada Inc. in Vancouver.
“Banks and other big institutions tend to regard mortgages as commodities,” he says.
“They each have a fixed set of products and standardized rules.”
John Panagakos, a broker with The Mortgage Centre in Toronto, notes that he works with many lenders, “each with half a dozen different products to choose from.”
He adds: “I also like to work with clients to provide things they might not think about, like building an exit strategy into their loan so they don’t face big fees to pay early or get into another loan when interest rates change.”
While borrowers may enjoy a banquet of options when it comes to mortgages, two factors still determine who gets the best deals: the borrowers’ credit score and their ability to make payments. Again, mortgage brokers can help, says Ellis.
“Self-employed people may run into challenges dealing directly with lenders,” he says.
“They often take advantage of all the perks and tax breaks self-employment can create, and as a result may not have the tax returns to justify the size of the loan they need. We understand that lenders often ask individual applicants for material that may not truly be needed.”
To find the right broker to meet your needs, start by seeking a referral from a family member or friend, suggests Murphy.
Brokers say the bulk of their new business comes from referrals from past customers.
“It is like choosing any other professional,” says Soni.
“Remember if you are a first-time homebuyer you may be dealing again and again with this person through the years. Great brokers always look for lifelong relationships.”