The industry could see a major change next year when it comes to disclosing income to clients, and one broker is arguing the ramifications could be dire.
“There will be no protection from under cutters, and you will see flat rate brokers who offer cash back to steal broker business,” Dustan Woodhouse, a broker with Dominion Lending Centres Canadian Mortgage Experts, told MortgageBrokerNews.ca. “Clients will bring in approvals to these companies, let the brokers do the planning, and they will take any approved deal.”
According to Woodhouse, FICOM’s proposed disclosure rule implementation – which will clearly indicate on mortgage applications what brokers make – will result in a number of companies popping up that will offer commissions back to the client.
He uses the example of a fictional company called 999Mortgage.com, which would hypothetically charge a flat fee of $999 and offer the rest of the broker commission back to clients. After the client has worked with a Mortgage Broker – who has done the work — and received an approval, of course.
And one lender verified the model would work.
“The lender will go with the client the broker wants,” the anonymous professional, who works with a large channel lender, told MortgageBrokerNews.ca.
The channel is keeping a keen eye on the proposed rule implementation, which could go into effect in British Columbia next year. However, industry players say the change could have far-reaching implications for the industry as a whole.