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Exclusive: Open letter to the industry

By Gary Mauris
There has been much discussion recently about the proposed changes to the form 10 by FICOM, British Columbia’s regulator. Many of the industry leaders including Lenders, Originators and Associations have come together to discuss the consequences of these potential changes.

 First off, this is not a Commission disclosure issue. We all universally agree that transparency, regulating meaningful disclosure and enforcement are critically important for our Industry and for the public at large.

 
 

Exclusive: Open letter to the industry

 
By Gary Mauris

There has been much discussion recently about the proposed changes to the form 10 by FICOM, British Columbia’s regulator. Many of the industry leaders including Lenders, Originators and Associations have come together to discuss the consequences of these potential changes.

 First off, this is not a Commission disclosure issue. We all universally agree that transparency, regulating meaningful disclosure and enforcement are critically important for our Industry and for the public at large.

We believe that FICOM proposed changes to the Form 10 are with their best intentions in mind and these intentions are for consumer protection.

Having said that, we believe that the unintended consequences of their proposed changes could have very negative consequences to all Canadians.

Let me explain. Ottawa has worked hard to support business/industry and is very concerned about monopolies. Our political leaders work very hard to regulate and manage industry so that monopolies cannot dictate and strong arm Canadians, robbing them of competitive pricing, freedom of choice in products and unbiased advice.

Unfortunately we lack unification and conformity in regulations throughout Canada. What that means in this situation is that FICOM does not regulate the banks but does regulate the credit unions and mortgage broker channel, making the playing field uneven.

Imagine this: FICOM continues with this mandate and regulates that all mortgages originated via the mortgage broker channel have to disclose their exact compensation, where the bank staff and their MMSF (and other lenders) do not.

Instantly there becomes a significant advantage to the banks in Canada as their staff and mobile mortgage sales force start advertising and start saying “why would you use a mortgage professional and pay a fee when you can get your mortgage through us and its free?”

Now although the bank’s mobile mortgage sales forces are compensated similarly, and are compensated from the lender as we are, they do not have to disclose their compensation, creating confusion for Canadians and a significant advantage to the banks.

Instantly the Canadian mortgage channel starts shrinking. Our market-share starts constricting and Canadians unaware of the facts have less choice, less competitiveness in pricing and less freedom in their decisions around the most important investment many of them are ever going to make.

Issue recap

Continued...


read more > 1 2

  • Daryl on 2015-11-24 10:28:44 AM

    Very good points and hopefully a strong call to action for our industry

  • Victor Simone on 2015-11-24 11:43:09 AM

    I will stand shoulder to shoulder with Mr. Mauris, and I invite anyone in the independent channel to do their level best to have your voices heard. Tell the lender partners, tell your BDM, tell your association. This change by FICOM is a threat to the Independent channel, and I am seriously disappointed in FICOM, since they moved this disclosure issue without any real input or consultation from it's stakeholders.

  • Steve on 2015-11-24 12:02:52 PM

    I think it is alarming to find out how little control we have in driving reform, best practices etc. when it comes to regulation. If you did a broker survey, I am guessing you will find little broker confidence in FICOM to enforce the regulations they already have and the GAP between broker thoughts and ficom thoughts is getting larger. Self regulation is the only way to solve this. I do not see FICOM suddenly becoming aware of the broker perspective or FICOM caring about creating an unfair or uncompetative landscape. That really only leaves self regulation. You have to be prepared to step up.

  • Len T on 2015-11-24 12:10:02 PM

    MBABC has gone the extra mile. Alerted us to the issue. Is taking the lead and risks. Involved BC politicians who have power on this issue, it's a provincial issue even it can domino to the rest of the country. Explained the problem with the change in detail to the Registrar. Asked us what we thought by a Petition for government. Kept the rest of us in the know. CAAMP has been a sideline observer. This is a BC issue in BC's yard. MBABC is the BC association. It is obviously concerned doing something about it. They obviously understand the technical side of things and not just broad ideas of what might be good ... and you think CAAMP is the answer. A subtle slap is still a slap, even if the "rhetoric, rude commentary, indifference and anger" is not said openly. We need to show some polite appreciation for what MBABC has been doing. Let's call a spade a spade. Thank you Gary for adding more light to the issue. Thank you MBABC for everything.

  • Kevin on 2015-11-24 12:56:55 PM

    Is it just me or does this letter sound very much like the comments that were posted by Paul Therien from Centum some time ago?

    http://www.mortgagebrokernews.ca/news/disclosure-rule-could-lead-to-undercutting-199582.aspx

    Just saying.

  • Rayanne Soderberg on 2015-11-24 1:11:30 PM

    Well said!

  • JD on 2015-11-24 2:57:39 PM

    I agree with Len T. There is a right and a wrong way to address this. MBABC has approached this in a professional and informative manner, asked questions, shared insight and meeting with the appropriate parties in government. They brought this issue to the attention of BC brokers, conducted a survey which garnered over 1600 supporters, and continue to communicate and work on our behalf.

    Though implementation of such a requirement would have a negative impact on our industry, these scare tactics and speculation by Mr. Mauris are an example of how not to proceed.

    I too say "Thank you MBABC."

  • Gary Mauris on 2015-11-24 8:00:50 PM

    Dear Len,
    Great kudo's to MBABC. Samantha has been very proactive and has worked hard thus far. We are not trying to diminish their role, we are merely trying to enhance it. CAAMP (MPC) has a much wider platform,a larger membership base and a larger influence with all Canadian lenders and suppliers. We have asked all the Associations to work together and issue a Industry-wide response inclusive of every Province, not just BC. This is not a "in my backyard argument", this is a Industry wide discussion that has far reaching consequences. JD,The lenders, the suppliers, the network houses, and the Associations are all, for maybe the first time ever, on the same page and we are trying to become unified to solve this challenge. We have hosted large stakeholder meetings and have come up with some solid plans and a clear direction on how to collectively work through these proposed changes. Please understand, these are not scare tactics. This is a plea to get everyone on the same page and to use our collective influence to work thru and solve any issues that may come our way, now or in the future.

  • Brokers United on 2015-11-24 11:26:13 PM

    Once again, each every broker contributes to the slush fund, retain the best lawyer. Establish that we're not simply an organization that will simply roll over. Go try and mandate a huge change down at the waterfront. Good luck...

  • Jerry Quigley on 2015-11-25 8:49:00 AM

    Very well stated, Gary Mauris.
    The more voices, especially well reasoned voices, the better for our industry.

  • Len T on 2015-11-25 12:45:02 PM

    Gary, your response to my comment about the subtle slap delivers a back handed compliment. It did make me chuckle. You compliment MBABC and say that you are not trying to diminish their role but are merely trying to enhance it. I think you meant to talk about appreciating efforts rather than enhancing roles. I don't think they look to others to determine their role. In the very next sentence you attempt to minimize their ability to be effective.

    You really need to step back, read your comments, inform yourself, review who has done what with who to deliver the message polled from all brokers to the right people, and be sincere in what you say. Choice of language is a killer.

    Forgetting that for the moment, you are right that everyone needs to be on the same page. How should we figure out the right page? I say that it get done inclusively by getting input from all brokers, not just from those who get invited to secret, closed meetings. You see, a host can pre-decide the outcome of the meeting by inviting only people who support the host's view. How about a Petition asking for input from all brokers - big and small, urban and rural, old boys and gals, young people, ...? Oh yeah, that been done ... by MBABC. Let's get on the same page but lets all of us figure out the page rather than a few dictate to everyone else what is right and then trying to sell it to us.

    We know who MBABC represents? We know who CAAMP represents? We can get membership lists. Are you able to say who was invited to your meeting and who attended? We can then assess whether the views of your select group could possibly represent all mortgage brokers.

  • Alberta Broker on 2015-11-25 1:21:09 PM

    I received a joint email from AMBA and CAAMP November 9, which says that "FICOM is considering making changes to compensation disclosure standards. Based on our review of the issue here in Alberta, it appears that this is a BC-specific issue at this time". So what gives. Can CAAMP/MPC make up its mind if this is a BC issue or not.

  • Bob on 2015-11-26 9:58:50 AM

    Like it or not mortgage broker commission is a cost to the lender, which in turn is rolled into the mortgage rate. As a consumer I want to know the "FULL" cost of borrowing of my mortgage including broker commission. Brokers are always talking about banks not clearly communicating about collateral mortgages or payout penalties & ten hide behind whats best for the customer. I believe that Financial Advisors should be fee only & that mortgage brokers should also go that way, then we will see which broker survives based solely on the quality of their service/advice

  • Dave on 2015-11-27 10:26:53 AM

    @Bob

    Have you asked your local bank to disclose their profits on a mortgage? Will be an eye opener if they actually do that one day. And yes, banks do not properly disclose or explain collateral charges or IRD penalties. Just ask any of my clients who I refinanced from an existing bank.

    By the way, do you work for a bank ? LOL

  • Paul Therien - CENTUM on 2015-11-27 12:34:11 PM

    Dear Len,

    I would not feel excluded Len, I did not get invited to the closed door meetings either – Which, as a national brand leader, I thought was strange. I do get that CENTUM is not the biggest company in the industry, but we do have a network of 2400 agents across Canada and over 200 locations – and growing with over a dozen new locations opened in the last 6 months. Apparently however our input was not considered valid and as such we were not invited to any of the meetings.

    What I can tell you is that MBABC and CMBA contacted me the day the ball dropped on this legislation and we have been working with them. As an organization CENTUM has sent letters, and engaged with, the appropriate people at the regulator and the government to discuss this change and the impact it will have on our industry. We continue to lobby against this change and actively engage with MBABC.

    We are working with the regulator to better understand the thought process behind this change. It would appear that there is concern that mortgages are being placed inappropriately. Namely due to the amount a broker earns on the deal, as opposed to doing what is best for the client. There is also some concern with regards to additional fees being charged, and that brokers make the public claim “we work for you, not the banks” (which by definition is technically not true as legally we work for the party that pays us – A grey area in my opinion given the nature of the client-broker relationship).

    That being said however, CENTUM feels – and has communicated to the regulator – that these concerns are valid, but that this change will not resolve these issues. By disclosing the amount earned on a mortgage we are not giving the consumer comparative information, and therefore they cannot appropriately make an assessment. Furthermore, many deep discount mortgages pay less to the broker true, but they are also highly restrictive and outside of low rate offer very little benefit to the consumer. Sometimes cheap is not always better, and we believe that the vast majority of brokers work diligently to assist the consumer make an informed decision about the product that they are choosing.

    We have, after a careful review of the situation, also proposed that there may be other options available to address these concerns and have offered to work with MBABC and the regulator to explore them. We are committed to always protecting our industry while insuring that we also protect the consumer and balance both with the interests of our lender partners.

Broker news forum is the place for positive industry interaction and welcomes your professional and informed opinion.

 

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