Last week, an RBC Mortgage Specialist decided she needed to degrade Mortgage Brokers in order to get more business… Her marketing piece caught the attention of Mortgage Broker around the country… Her attempts to discredit Brokers backfired… BIG TIME! The broker community was in an uproar and an apology had to be issued by RBC.
This apology was issued by RBC’s Public Affairs Advisor…. Let’s give some credit to RBC for issuing a public apology ….. (pausing for 2 seconds….) Ok, that’s about all the credit I want to give…. It falls short of hitting mark. The wording is weak and I do not find the content to be sincere. Why hasn’t that RBC Mortgage Rep apologized? (I won’t call her a ‘Mortgage Specialist’ anymore as it’s not an accurate description of her duties) Where is she? Did they fire her?
RBC has been paying their Mortgage reps a commission for years.. and it’s based on the mortgage volume, the term and the RATE.. yes, RATE… if the Mortgage Rep sells you a higher rate, they get paid more…
HOW TO BE A MORTGAGE BROKER WITHOUT BEING A BROKER
But here’s another little known secret.. Back in the early 2000’s, RBC created the Alternative Mortgage Solutions (AMS). This department would take declined mortgage applications and broker them to secondary Lenders like Home Trust, Equitable Trust and other institutional Lenders or Private Lenders… The intention was to retain as much client business as possible while also generating a new source of revenue.
The AMS is paid a referral fee from the secondary Lending institution and or charges a fee. That’s right.. they charge a fee!! And you guessed it, the Mortgage Rep is compensated at the end of the day based on the fees earned on the mortgage…. Effectively, RBC is brokering mortgages without being a broker…. Let’s give credit where it’s due.. they have become a mortgage brokerage without having to follow the strict regulations and guidelines of becoming a broker.
Can you say ” double standard”?
If you are an ‘AAA’ borrower, RBC can only offer you their own products, and if you don’t qualify they will broker out your application to their list of secondary Lenders… So who has the better product selection? … A mortgage broker that deals with dozens of ‘AAA’ Lenders and ‘B’ Lenders and ‘C’ Lenders, or with one Bank that can only offer you a limited product selection?
Maybe some good has come out of this mess after all…. Disclosure and knowledge.