Published: September 18, 2011 • Last updated: June 17, 2020 at 17:45 pm
What is the real value and role of a mortgage broker?
Recently there has been a flurry of controversial writing in the blogosphere about the role and value of mortgage brokers in Canada. It was initially sparked by Robb Engen – who wrote “Four reasons why I do not use a mortgage broker.”
This turned out to be a popular (and somewhat controversial) post, as it has fostered 52 comments so far, and counting.
On September 4, 2011 Rob McLister of Canadian Mortgage Trends wrote a well thought out rebuttal entitled “A few misconceptions.”
SheBloggs weighed in on September 16, 2011 with “You will need a mortgage broker if you are self employed”. I was not able to locate this blog post as I updated this article, but even the title rings true.
And then that week the always irreverant but often relevant Nelson Smith of Financial Uproar weighed in with his two cents worth – entitled “Why do mortgage brokers take themselves so seriously.” (this website also appears to not be active at this time).
Comments attached to these various posts are fairly representative of the pros and cons of using a mortgage broker, so I don’t intend to reinvent the wheel here. I did place a comment below Nelson’s article, which I will recreate here.
“Among other things, I have a mortgage broker license. The unspoken truth is we brokers have a hard time competing for and winning business from clients who are AAA deals – since there is no such thing as a stupid consumer anymore. In general, AAA deals are rate shoppers with little loyalty; mortgage brokers get stung by these people all the time.
However, there are more people out there whose file is flawed in some way to render it either marginally attractive or even down right unattractive to an ‘A’ lender. In fact, ‘A’ lenders, accountants, lawyers, and trustees often refer such files to we mortgage brokers. While I would love to do more simple, no brainer AAA deals (and then try to sound self important as Nelson describes) the fact is the vast majority of the mortgages I arrange are ones that are hard to do (often “impossible”) – and that’s my value proposition.”
Further to this, I will say the following:
Whenever you have people offering products or services to the public, where these individuals are compensated by commissions, or to state it differently, where their compensation is directly a function of their ability to deliver their product or service to their clients, there is always the potential for controversy or discontent.
This could be your waiter in a restaurant (he’s being really nice and efficient to get a better tip); it could be your insurance agent; your stockbroker; your lawyer; your realtor; your banker (don’t think they don’t have incentives in the banks); your mutual fund salesperson; your car salesperson; your contractor; your house painter; your car mechanic – the list is endless.
In each of these fields, there are professionals, there are the hopeless and helpless; and yes there are occasionally individuals who are self oriented and not really client driven. This does not mean their industry is bad or not necessary for a functional economy.
In all walks of life, the dictum of Buyer Beware should always ring true. That is why so often the wisest way to engage a service individual is to ask your friends and colleagues for referrals, and at the same time ask why they think highly of the referred individual.
Most of us are trying to maximize our income – to secure a better quality of life, and security in our later years. I don’t think we can be faulted for that. Sales professionals in all industries are only trying to do the same thing, as are mortgage brokers specifically.
It’s up to the individual sales professional to decide how s/he wants to go about this.
Some of us passionately believe that if we put our clients’ interests first and foremost at all times, couple this with a strong work ethic, then our income will take care of itself.
Others focus only on the money – and client needs are almost secondary to their own. And you know, this does not mean you would be misrepresented or their service provided poorly. It is just a descriptive for the type of person you are dealing with.
Some of the best sales people I know are highly egocentric, but their clients love them nonetheless.
So whether you are considering using a mortgage broker, or any other service/product professional, choose according to your comfort level – and don’t prejudge; it may be hypocritical to do so, when you reflect on the bigger picture.