training in the canadian mortgage industry
In Canada, the generally accepted method of training new mortgage agents and brokers is to throw them in the deep end and see if they swim; sad for the new mortgage agent who wanted to help people, and a disaster for unsuspecting consumers, about to take on the most significant financial obligation of their life, assuming that they are getting expert advice.
Provincial licensing courses contain lots of valuable information, but they do not prepare a person for the day-to-day job of being a mortgage agent or broker, and without a foundation of basic mortgage lending knowledge, how can a new mortgage agent effectively advise a client on mortgage options?
Some brokerages simply rely on presentations by lenders and other industry service providers. Some rely on the lenders’ underwriters and business development managers to teach new agents and brokers.
Most commonly, brokerages place new agents with an active, experienced broker as a mentor, and the new broker is expected to watch and learn. In return, mentors are paid a portion of the commission of the new broker’s completed files. But both the mentoring system and compensation for mentoring aren’t perfect.
1) The mentor may not be interested in training new mortgage brokers; mentoring may have been "thrust" upon them simply because they are experienced. An unwilling mentor may develop a disinterest or even resentment toward the new agent or broker for taking up time they would prefer to spend on their own clients and dealing with their own files.
2) The mentor may be very knowledgeable and experienced, and likes the idea of being a mentor, but is simply not able to explain things in an easy to understand way. Teaching and explaining does not come naturally to everyone.
3) Mentors who are motivated only by the additional income promised may simply want to “get deals done” rather than help shape the career of new mortgage agents or brokers and contribute to improving the industry as a whole.
4) A mentor might inadvertently pass on bad habits to new mortgage agents or brokers, unaware that certain practices are outdated or possibly considered unethical by current regulatory standards.
5) Mentors who are active, busy mortgage brokers must focus on their own clients, and can’t always be available at the moment the new mortgage broker needs assistance.
6) Being compensated only by receiving a portion of the commission on a new agent’s completed files implies that there is no value in learning why a particular file CANNOT be done. For new mortgage agents and brokers, there is great value in learning why a deal cannot be done, and a mentor should be compensated for teaching it. Knowing they won’t be is not especially motivating.
The industry today is focused on increasing volumes, and on improving technology to make the process faster and more efficient for brokers. The technology is changing and developing at a rapid pace, and it seems that mortgage agents and brokers want to be more like the big banks. But mortgage agents and brokers are the alternative to the big banks. They offer a specialized service, and their clients are more than just numbers to them.
Having unprepared, inexperienced agents and brokers in the market may be one of the reasons the broker market share has barely changed over the last 25+ years, despite the rise of the national brokerages and the resulting increase in the number of active mortgage agents and brokers. If consumers are having negative experiences with mortgage brokers, and spreading the word of those experiences, it affects all mortgage brokers and the industry as a whole.
The mortgage industry is changing and the development of new technology is very important. But first, new mortgage brokers and agents need a solid foundation of basic mortgage lending knowledge. The knowledge to recognize and understand the client’s financial situation, and based on that understanding, advise the client on what's possible, what's not, and what is best for their individual needs.
And aren't foundations always built first?
