One leading mortgage broker has weighed in on the issue of investment referrals, and for him transparency is key.
One leading mortgage broker has weighed in on the issue of investment referrals, and for him transparency is key.
“What mortgage brokering should be about is (this): I have a borrower who wants a private mortgage and I go to a separate brokerage who has a good deal on the private funds and then we both share in an agreed upon brokerage fee,” Ron Butler of Butler Mortgage wrote on MortgageBrokerNews.ca. “That's a very transparent transaction.”
The comment was in response to a story about an increased need for clarity in syndicated mortgage referrals, following a FSCO warning about these types of deals.
“From what I can see it doesn’t look like there is any prohibition on a brokerage (accepting referrals from an unlicensed broker); there is a prohibition on the brokerage paying a referral fee to a company that should be licensed as a brokerage,” Joe White, president of the Association of Mortgage Investment Professionals (AMIPROS) told MortgageBrokerNews.ca. “That would be a contravention of the legislation. In that sense it would defeat the whole purpose of the company offering a referral. I wouldn’t call it a grey area; I would call it an area that needs more interpretation.”
While brokers are still waiting for more transparency on the issue, Butler believes the referring brokerage should have a more intimate hand in brokering the deal, and not to simply hand it off to the investment broker.
“If I simply deliver investors to a separate brokerage who then stick-handles the whole interaction between the borrower and the investor that I brought to that totally separate brokerage then what is going on is that the agent or broker is being paid a very large fee to be a "roper": a finder of investors with little or no intimate knowledge of the whole transaction,” Butler wrote. “That is not mortgage brokering as I understand it.”
“What mortgage brokering should be about is (this): I have a borrower who wants a private mortgage and I go to a separate brokerage who has a good deal on the private funds and then we both share in an agreed upon brokerage fee,” Ron Butler of Butler Mortgage wrote on MortgageBrokerNews.ca. “That's a very transparent transaction.”
The comment was in response to a story about an increased need for clarity in syndicated mortgage referrals, following a FSCO warning about these types of deals.
“From what I can see it doesn’t look like there is any prohibition on a brokerage (accepting referrals from an unlicensed broker); there is a prohibition on the brokerage paying a referral fee to a company that should be licensed as a brokerage,” Joe White, president of the Association of Mortgage Investment Professionals (AMIPROS) told MortgageBrokerNews.ca. “That would be a contravention of the legislation. In that sense it would defeat the whole purpose of the company offering a referral. I wouldn’t call it a grey area; I would call it an area that needs more interpretation.”
While brokers are still waiting for more transparency on the issue, Butler believes the referring brokerage should have a more intimate hand in brokering the deal, and not to simply hand it off to the investment broker.
“If I simply deliver investors to a separate brokerage who then stick-handles the whole interaction between the borrower and the investor that I brought to that totally separate brokerage then what is going on is that the agent or broker is being paid a very large fee to be a "roper": a finder of investors with little or no intimate knowledge of the whole transaction,” Butler wrote. “That is not mortgage brokering as I understand it.”
