training in the canadian mortgage industry

In Canada, the generally accepted method of training new mortgage agents/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/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 offer presentations by lenders and other industry service providers, and some rely on the lenders’ underwriters and business development managers to teach new agents/brokers. Some brokerages simply do not hire brand new mortgage 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 have asked for the task of training new mortgage brokers; mentoring may have been "thrust" upon them simply because they are an experienced mortgage broker.  An unwilling mentor may develop a disinterest or even resentment toward the new agent/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/brokers and improve the industry in general.

4) A mentor might inadvertently pass on bad habits to new mortgage agents/brokers, the mentor being unaware that certain practices are outdated or possibly unethical by current regulatory standards.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 says that there is no value in learning why a particular file CANNOT be done.  But for a new mortgage agent/broker, it is equally important to learn why and how a deal CANNOT be done, as it is to learn how a deal CAN be done.  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 making the mortgage process faster and more efficient for brokers. The technology needed to accomplish this is changing and growing at a rapid pace.  It almost seems that mortgage agents/brokers want to be more like the big banks, but mortgage agents/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/brokers in the market may be one of the reasons the broker market share has barely changed over the last 20+ years, despite the rise of the national brokerages and the resulting increase in the number of active mortgage agents/brokers. If consumers are having bad experiences with mortgage brokers, and spreading the word of those experiences, it affects all mortgage brokers.

The world of mortgage brokering is changing, and the development of new technology is very important.  But first,  a solid foundation of basic mortgage lending knowledge is needed.  The knowledge to recognize and understand the client’s financial situation, and based on that understanding, advise the client on what is available, and what is best for their individual needs.  And aren't foundations always built first?