So we have been hearing a lot of chatter recently on a couple of different fronts. Rate buy-downs have been a big topic as well as the potential sale of Firstline Mortgages leading to the possibility of CIBC cutting ties with the broker channel. I have written about my thoughts on fighting the rate war in the past and I will repost in the future, but today I wanted to focus once again on the possibility of a major bank leaving our channel.
This is NOT a good thing on any level. The supply of money out there is finite and if we lose another funding source this puts pressure on the entire channel. We cannot grow marketshare if we do not have the supply of funds to do that. Now I don’t profess to be a treasury expert in any capacity but I do know that if we continue to lose funding sources this will negatively impact our market share as a channel. We have been talking about this for years yet we continue to put our heads in the sand and do things the same way we have always done them.
WE NEED TO BECOME A MORE EFFICIENT DISTRIBUTION SOURCE for our lending partners. If we don’t they will find another way. Think about any other product or service. If the cost of shipping goods by air becomes substantially more expensive, or product gets damaged, then suppliers will start looking at trucks, or rail or some other alternative. We are simply a distribution channel for investors to put money out. As long as we are efficient and profitable they will continue to use us. If we are not then they will find other avenues.
We have seen numerous examples over the years. BMO left our channel some time ago. We have seen the subprime mess take out a number of lenders (granted that was beyond our control). We have seen Macquarrie leave our channel. We have seen Concentra leave our channel. None of these lenders stopped distributing their product, they just stopped using us to do it. This should tell us something shouldn’t it?
We cannot control what others do but we can control how we react and how we behave. We need to get better as a whole; as a channel brokers need to get better at what we do. We need to focus on raising the level of professionalism as a collective. We need to care about what our peers are doing. We need to provide our lending partners quality mortgage applications that fund. We need to take responsibility for the applications we submit. We need to do at least some level of due diligence to ensure, to the best of our ability, fraud free files.
Simply dumping the Banks in favor of the monolines isn’t the answer. We need to be an efficient distribution channel for all of our lending partners. Bank and monoline alike. Let’s all do our part. Discuss with your lenders what they need to see from you to be more efficient. Do some due diligence. Watch for the red flags on files and discuss them with your lender underwriter. Work as a team with your lender and learn what works for them and what doesn’t.
In my opinion one of the biggest things to being ‘professional’ is knowing when to walk away from a deal. I know that can be tough but sometimes you need to let them go.
If we can get better as a collective and continue to deliver high quality, fraud free mortgage files that consistently fund I can guarantee you our channel will thrive and grow. If we don’t, we run the very real risk of further reducing our pool of lenders and that is certainly not something I think any of us want to see.