What Did It Take to Get Here?

So you are thinking of becoming a mortgage broker?

Perhaps you saw an ad for a mortgage broker and thought- man, that sounds interesting. It's like all the glamour of being in real estate without having to do all that selling and meeting people a realtor has to do. Sign me up!

Big mistake.  

Like Michael Cera with a mustache mistake...

So why did I decide to do it? 

In my case I have 2 relatives that are mortgage brokers; a cousin in a city 500 kms away and a sister-in-law 150 kms away. This is very important because you will soon learn that you are going to be just another fish entering an already full pond that has a limited amount of earning potential before you appeared. It's much like the Cory Schneider and Roberto Luongo goalie conundrum. There is only so much net to go around...  

However, they helped me in answering a few questions i had about the industry and didn't yell at me to back the hell up on this career path. The only problem in hindsight is that they have over 20 years experience between the two while I had none.

It's not glamorous, it's not overly rewarding. It's a job. A lot of being a mortgage broker is based on earning commission, meaning I don't have a set wage, I earn a portion of what I bring in. Yet I'm not really selling a tangible; I have to convince people that I can save them thousands of dollars in the future if they are open to getting a mortgage not from their current bank (which 90% of homeowners do, citing convenience as their primary reason).  

My job is to help people see past their personal banks. Banks are making record profits for a reason; they make the best return they can on the people they serve, which is you and me. That won't change, however I can shop around for the best deal that makes sense to people in their own unique situation, at no cost to the person wishing to purchase or refinance their home. 

People can still be loyal to your bank but when it comes to hundreds of thousands of future dollars, it's best to get the best rate possible. That's what banks expect and they certainly don't want their valued (and profitable) customer to find out that some private lender with little name recognition may save them thousands of dollars in interest payments alone over the course of their mortgage.
I digress.

Being a mortgage broker has some perks, and in my case the perks stand to be better than my current job if I am successful at it. Although being a broker has a bit of a bad reputation, depending on who you talk to, it's not as bad in Canada. Mortgage brokers were part of the reason for the great US housing recession of the mid 2000's as American banks would pretty much agree to any mortgage application sent their way, to the detriment to most of the economy. Brokers still got paid and their houses didn't foreclose.  

You can watch a bit about why what happened happened here...

Q: What is the difference between Wall Street and Las Vegas?

A: You cannot get insurance to cover your losses in Las Vegas.

So, American banks could get insurance on mortgage loans in case of default. In most cases, records profits were made in the short term because this insurance banks had in case people couldn't pay their mortgages paid out more than the mortgage did itself. It was in the banks' FINANCIAL INTEREST for mortgages to go into default.  A good, accessible movie to watch is Michael Moore's Capitalism, A Love Story which also touches on the heartbreak and utterly shocking ripple effects of this relationship of Big Banks, the Bush era's federal government and home ownership in America.  

Of course, the American housing crash had a trickle effect in Canada's housing market although Canada's banking institutions are more tightly regulated than America but still, it's a slow climb back into long-term economic stability.  

So you've decided to be a mortgage broker, now what?

Prepare to spend money.  I inherited some money from my grandmother and spent it on the Mortgage Broker course offered at UBC Sauder School of Business.  It was a correspondence course that cost approximately $1000. Once you completed the assignments (very math heavy) there is a 100 question exam. The exam honestly is a varied mix of everything you learn in the book, without about 50-50 math to theory. The good thing is that you won't ever really need to do the math part again, the bad part is that you still have to learn it for the exam. I had 3 hours to do it and it took me 2h45m.

My Note Cards that earned me a solid C+

If you pass the exam, you still have to find a sponsor that will allow you to work for them, at which time they will earn a commission on what business/mortgages you bring in. You also have to register with FICOM to be a sub-mortage broker (basically stating you are a broker-in-training) which in British Columbia costs another $1000 and is good for two years.  My lending agency also has a training manual that I had to purchase at a cost of $300. They even gave me my own personal website which was very nice of them. I have to pay $150 a month for a Desk Fee, which isn't unusual for most brokers and goes into an advertising pool for the company to help familiarize their 'brand'.  This is before any business cards, promotional ads, gas getting to and from appts, rent, kids, food, etc.

there's also 20 other brokers in my office to consider...

Next, once you've found a sponsor/mentor and pulled out some semi-formal work attire prepare to hit the stalemate that is 'Now what?' When you begin your best source of leads is going to be your friends and family until you can build some relationships with some realtors who probably aren't going to be that interested in talking to you. You are quite literally trying to piggyback off their clients and really all you can add or pitch to them is your 'value-added' service.

If you don't like mixing business and friendship you are going to be in for a tough ride. Consider that most of your first clients will probably be those close to you - most mortgages go for a 5 year term; meaning that your services may not be required for the next 5 years after that initial sale. What to do then?

Go out, make new friends and acquaintances. Continually ask for referrals. Budget, budget budget. Repeat.  

Pay attention to stuff like this...

That's my first summary of the beginnings of my career as a mortgage broker. Hope it helps. If you have any questions, please ask them in the comments section below.

-j