Why do lenders deal with mortgage brokers?

You might think that since the mortgage broker finds the borrower, the lender doesn’t have to pay the costs associated with obtaining that borrower, such as advertising and marketing, having branch offices, etc., and therefore dealing with mortgage brokers is more profitable for a lender.  While that is certainly the case, it is only true when mortgage brokers meet the following set of basic expectations.

If a broker fails to meet these expectations, then the lender will most likely stop dealing with that broker since the brokered transactions will become unprofitable.


Mortgage brokering in Ontario is regulated by the Financial Services Commission of Ontario (FSCO) and requires a license.  To obtain a license you must first pass an accredited course.  The Real Estate and Mortgage Institute of Canada Inc. (REMIC) is accredited by FSCO to provide the course.  For more information please visit us at www.remic.ca/getlicensed or call us at 877-447-3642.


These expectations can be summarized as:

  1. Provide borrowers who are suitable for the lender
  2. Provide appropriate protection against fraud
  3. Facilitate the transaction to its successful completion (funding).

These three expectations form the cornerstone of the relationship between the lender and the brokerage community. The best way to ensure that these expectations are consistently met is to adopt them as core values or philosophies that are applied to every transaction. To meet these expectations they must first be explained.

1. Providing borrowers that are suitable for the lender

The lender’s first expectation is that the mortgage agent will only send an application on behalf of a borrower that fits the lender’s lending criteria.  Lending criteria include such things as income and employment requirements, property requirements, credit requirements and so on.  This means that the mortgage agent must know and understand the lender’s lending criteria and be able to accurately assess the borrower to determine if they meet those criteria.

Unfortunately, a typical lender complaint is that some mortgage agents send them applications for products that they do not have.  This type of error can erode the confidence that lenders have in the brokerage community.

2. Providing appropriate protection against fraud

Lenders have been suffering from an increase in mortgage fraud over the past several years.  Although not technically a mortgage agent’s legal responsibility, it is a mortgage agent’s ethical and moral responsibility to make reasonable attempts to protect the lender from fraud.

In many brokerages’ set of Best Practices it is deemed necessary for the mortgage agent to review all documentation received from the borrower for accuracy and consistency.  This means identifying any signs of potential fraud, such as poorly written or typed income verification as well as verifying income and identity.

3. Facilitating the transaction to its successful completion

A lender expects that a mortgage agent has submitted an application to that lender because he or she has determined that lender to be the most appropriate for the borrower.  In addition, the lender expects that, if approved, the mortgage transaction will close.  That requires the mortgage agent to ensure that the borrower is committed to completing the transaction and understands what is required of him or her to conclude it.

A lender also expects that a mortgage agent will be available to assist in ensuring the transaction closes if there is anything that the mortgage agent is required to accomplish such as meeting outstanding conditions.

A Lenders

Alterna Savings is a local credit union and a member of the Deposit Insurance Corporation of Ontario.

Website: alterna.ca

Consumers / Brokers

Website: bmo.com

Consumers

B2B Bank is a leading provider of banking products and services to financial advisors and mortgage brokers across Canada.

Website: b2bbank.com

Consumers / Brokers

Website: cibc.com

Consumers / Brokers

CMLS Financial is one of Canada's largest, independently owned mortgage services companies. Founded in 1974, we are proud to be Canada's Mortgage Company™ for over 40 years. With offices across the country, we provide a wide range of commercial lending services, residential real estate mortgages and institutional services.

Website: cmls.ca

Brokers only

Whether you’re a home buyer, an investor, or someone looking for a safe place for your savings, Community Trust and its team members can offer a solution. We pride ourselves on a creative and optimistic approach to finding you the best options, executed by experienced and capable experts in the financial services field.

Website: communitytrust.com

Consumers / Brokers

Helping you live more fully. That’s how we approach our mortgages at DUCA. To do this, we offer exceptional rates, personal service, advice and a range of ways to use mortgage products that fit your needs today and the goals you have for the future.

Website: duca.com

Consumers / Brokers

Looking for a mortgage? Equitable Bank has a great line of products that can be customized to fit your circumstances.

Website: equitablebank.ca

Brokers only

First National is Canada's largest non bank lender of single family residential mortgages, commercial mortgages and multi family mortgages.

Website: firstnational.ca

Brokers only

You’ve got a few different options when it comes to borrowing money at FirstOntario. We offer competitive loans, lines of credit and mortgages and we’re happy to sit down with you to talk about the details.

Website: firstontario.com

Consumers / Brokers

We believe the best place to retire is in your own home. If you are a Canadian homeowner 55 or over, you can turn up to 55% of the value of your home into tax-free cash.

Website: homeequitybank.ca

Consumers / Brokers

Home Trust Company: Canada's One Stop Mortgage Lender offering Mortgage, Visa card, and Deposit products.

Website: hometrust.ca

Consumers / Brokers

ICICI Bank Limited is a leading private sector bank in India.  Established in December 2003, ICICI Bank Canada is a full-service direct bank with an asset base of about C$6.5 billion as at December 31, 2019, and it is a member of the Canada Deposit Insurance Corporation. The Bank offers a wide range of financial solutions to cater to personal, commercial, corporate, investment, treasury and trade requirements.

Website: icicibank.ca

Consumers / Brokers

At IC Savings we take a more personal approach to granting mortgages, considering your individual circumstances, rather than applying automated scoring models that treat everybody the same. We use a thoughtful process to guide our lending decisions. Know that we will take the time to listen to you and build a mortgage that’s in your best interest.

Website: icsavings.ca

Consumers / Brokers

Service excellence is one of our core values. We believe that our members deserve great advice and personalized service.  Providing you with the best possible experience is our #1 priority.

Website: kawarthacu.com

Website: manulifebank.ca

Consumers / Brokers

MCAP is one of Canada's largest independent Mortgage Finance Companies, with over $100 billion in assets under management.

Website: mcap.com

Brokers only

Get a mortgage that fits you perfectly. With great rates, flexible payments, tons of options, and personalized advice from Meridian, it’s easy to feel good about your mortgage and your home.

Website: meridiancu.ca

Consumers / Brokers

MERIX Financial operates 3 distinct industry-leading options: MERIX Financial, Lendwise, and NPX. Since founding in 2005, MERIX Financial has provided residential mortgages to over 200,000 Canadians from coast-to-coast.

Website: merixfinancial.com

Brokers only

CWB Optimum Mortgage helps non-traditional borrowers achieve their financial goals with a range of personalized alternative lending solutions.

Website: optimummortgage.ca

Brokers only

Founded by a group of top mortgage industry professionals, Canadian-owned and operated radius Financial (formerly myNext Mortgage Company) is a next-generation mortgage lender that combines the best of experience and innovation

Website: radiusfinancial.ca

Brokers only

At Peoples Bank, we’re with you every step of the way. From pre-approval to helping you set your budget and finalizing all the little details. We strive to optimize your experience through a quick and easy process to achieve your financial goals.

Website: peoplesbank.ca

Consumers / Brokers

We are a Canadian-owned mortgage finance company with over 25 years of Canadian real estate experience.  RFA Capital Holdings Inc. (RFA) has officially acquired Street Capital Bank of Canada.

Website: rfa.ca

Brokers only

Whether you’re buying your first home, upgrading, investing, or renewing your mortgage, we can walk you through your options and help you find the solutions that best fit your needs.

Website: https://www.rbcroyalbank.com/mortgages/index.html

Consumers only

Our mortgage advisors show you mortgage solutions customized to your needs, so you can enjoy your home knowing you made the right decision.

Website: scotiabank.ca

Consumers / Brokers

Shinhan Bank Canada is a Federally Regulated Financial Institution which is wholly-owned subsidiary of Shinhan Bank Korea. Our doors opened in March 2009 and since that day we have been privileged to serve our communities

Website: shinhan.ca

Consumers / Brokers

Visit TD Mortgages, a great resource for finding the right mortgage solution for you and learn more about how to become a successful homeowner.

Website: tdcanadatrust.ca

Consumers / Brokers

Teachers Plus offers high ratio mortgages, conventional mortgages, and collateral and pre-approved mortgages with amortizations of up to 25 years.

Website: teeachersplus.ca

Consumers / Brokers

We’re a straight-talking financial partner who understands the real trials and financial realities of our members' lives today.

Website: yncu.com

Consumers / Brokers

We’re an agile mortgage lender with the experience, the character and the commitment to excellence required in Canada’s evolving real estate market.

Website: xmcmortgage.com

Consumers / Brokers

B Lenders

We understand your mortgage is one of the most exciting, important financial decisions you’ll make. That’s why we offer mortgage solutions that help you meet your goals and suit your lifestyle. Bridgewater Bank is one of the top alternative mortgage companies Canada has to offer.

Website: bridgewaterbank.ca

Brokers only

CMLS Financial is one of Canada's largest, independently owned mortgage services companies. Founded in 1974, we are proud to be Canada's Mortgage Company™ for over 40 years. With offices across the country, we provide a wide range of commercial lending services, residential real estate mortgages and institutional services.

Website: cmls.ca

Brokers only

The Effort Trust Company specializes in Financial Services, Real Estate and Asset Management. Established in 1978, Effort Trust is entrepreneurially driven and continuously strives for excellence and quality service for all of our clients.

Website: efforttrust.com

Brokers only

Fisgard Asset Management works with one of the largest private alternative lenders in Western Canada, Fisgard Capital Corporation. We are dedicated to supporting mortgage brokers and their clients. We provide competitive products, flexible lending guidelines and dedicated customer service.

Website: fisgard.com

Brokers only

We are a leading institutional lender offering a competitive line of mortgage products to help consumers achieve their dreams of home ownership and financial freedom.

Website: firstswissmortgage.ca

Brokers only

Welcome to Haventree Bank. We see the potential in hard-working Canadians like you. We help brokers and borrowers find flexible mortgage solutions. Our goal is to be the first choice in the non-/near-prime mortgage market.

Website: haventreebank.com

Brokers only

Our friendly, knowledgeable service representatives and experienced mortgage professionals are ready to respond to any inquiry with true customer focus. We uphold strong underwriting standards paired with a common sense approach providing timely, efficient and flexible servicing to our mortgage brokers and agent partners.

Website: marathonmortgage.ca

Brokers only

MCAP is one of Canada's largest independent Mortgage Finance Companies, with over $100 billion in assets under management

Website: mcap.com

Brokers only

If you've needed to rely on co-brokering for your private deals with other brokers, your problems are over now.  By dealing with us, you will be dealing directly with the lender and decision maker. This mean you will no longer need to split your fee with another broker

Website: kotharigroup.com/mercury_mortgages

Brokers only

At New Haven Mortgage we work with you to get you approved regardless of your income or credit challenges.

Website: newhavenmortgage.com

Consumers / Brokers

CWB Optimum Mortgage helps non-traditional borrowers achieve their financial goals with a range of personalized alternative

Website: optimummortgage.ca

Brokers only

We deal exclusively with mortgage brokers and agents to provide excellent financing solutions for clients who do not qualify for loans through traditional lenders. As private mortgage lenders across most of Canada, Secure Capital specializes in residential and small commercial mortgages.

Website: securecapitalmic.com

Brokers only

We’re an agile mortgage lender with the experience, the character and the commitment to excellence required in Canada’s evolving real estate market.

Website: xmcmortgage.com

Brokers only

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1 Comment

  • kristine j. fisher Reply

    Hi, Cain Daniel

    Thanks for your valuable information about “Why do lenders deal with mortgage brokers?

    You told that Lenders have been suffering from an increase in mortgage fraud over the past several years. But i want to know that how to get relief from it .
    I thing a good mortgage broker should know about Mortgage Laws also.

    Also, i want to mention that , I see your blog regularly. Your blog is very useful to us.
    Thanks

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