Is Serving the Lending and House-buying Needs of Clients a Case of Duelling Duties?

In our hyper-competitive work-a-day world, the higher and more prestigious your degree, the more courses and designations you’ve mastered, the better references you’ve acquired all works toward spinning your resume into an effective and sought-after calling card.

Realtors, too, are increasingly expanding their skill set so it’s not surprising that many are looking to offer mortgages to their clients as well.

Check out this article

The Results Are In! The PropertyWire.Ca Survey “Successful Habits Of Canadian Realtors”

The results of the PropertyWire.Ca reader survey, Successful Habits Of Canadian Realtors are in!…

Read More

In the recent PropertyWire.ca survey, 10% of real estate agents said they also offered their clients their skills as a mortgage professional. In Canada, that adds up to about 10,000 of you who not only buy and sell real estate, but also arrange financing.

The survey also revealed that 3% of you are currently going through the provincial licensing exams in an effort to add mortgage broker to your business card.

Not surprisingly, there are conflicting schools of thought on this trend toward cross-qualifications or dual-related careers.

Michael Tepper, a real estate broker and principal mortgage broker with Nadlan Realty Ltd. in Toronto, thinks it’s a good idea for realtors to also have their mortgage broker designation. Tepper has been offering clients both services since 2008.

“It’s good because you can offer a turnkey solution for clients,” he says. “There’s no conflict of interest as l long as you put everything on the table and the clients know what you’re doing.”

But Dartmouth mortgage broker Joe Devison thinks the potential for a conflict of interest is far too great when money is the motivation. The former realtor believes that an arm’s length division should exist between the two professions.

As for the argument for full disclosure, Devison says that’s highly subjective and full disclosure to one person can be quite something different to another.

He points to the recent case that occurred in Yarmouth, NS when 11 persons were arrested earlier this year in connection with a mortgage fraud scheme that totalled more than $6-million. Often, says Devison, with mortgage fraud there’s evidence of collusion among realtors, mortgage brokers, appraisers and lawyers. When one person is acting as both realtor and mortgage professional there’s less separation within the process and more potential for corruption.

Devison doesn’t see the point in realtors getting into the lending practice as most real estate firms already have in-house financing available.

“When you really look at it, they just want more money in their pocket,” he says. “It’s one step further and it gives them a lot of control and too much power. What do most people do with too much power? They abuse it.”

As a veteran in the mortgage industry since 2001 and a former banker for several years, Mississauga’s Angela Wong-Liao is fairly clear about where she wants to put up her boundaries.

“I don’t think a realtor should be a mortgage broker,” says Wong-Liao who also operates www.moneylady.ca. “The problem is it encourages the realtor to do something that’s not ethical.”

But over and above the conflict-of-interest concern, Wong-Liao questions how one individual can successfully become skilled at, execute and stay on top of two different professions.

“You can’t really service your clients properly by doing two things,” she says. “I only do mortgages and I have a hard time keeping up with one thing. What kind of service level can a client expect from someone practicing two professions? It’s too diversified. And you know what they say about that – You’re a jack of trades and you’re good at none.”

Devison agrees. In today’s vigilant world, where a real estate transaction can be fairly complicated and mortgage financing equally complex it’s difficult to keep up with changes in both industries, he says.

“To be a real estate agent or mortgage broker is full time and trying to marry the two and keep up with both is nearly impossible,” Devison says. “Let’s say you decide to get into the legal side of the transaction but that’s for a lawyer to do. You try to do both and you end up burning the candle at both ends and at end of the day someone gets burned.”

But David O’Gorman, a real estate instructor and a veteran mortgage broker with 30 years under his belt, calls the argument against operating dual practices “a crock.”

“There are eight people licensed as medical doctors and lawyers in the province of Ontario and tell me why they can’t be qualified as both?” he says. “If you comply with the laws in both jobs then why can’t you practice them?”

“I have no problem whatsoever as long as they disclose it. If you do both jobs and you do both well it’s all good. There are opportunities for lots of conflicts of interest as long as you disclose, then boogie on.”

The implication is that mortgage brokerage is a difficult business, he says, adding that if you have a strong foundation of understanding real property, real estate law, appraisal and marketing, as taught to real estate agents and brokers, there isn’t much of a stretch to be competent in mortgage brokerage. It’s just a separate licensing process.

Generally, people want to protect their turf, he says, but it is a fact that real estate brokers have been mortgage brokers since 1960 when the mortgage brokerage industry was first regulated by the province.

“Neither real estate nor mortgage brokers require the lengthy educational process of medical doctors or lawyers,” he says. “If a medical doctor can also be licensed as a lawyer once they meet the requirements of the Law Society, why can’t a real estate broker also be licensed as mortgage broker?”

Tell us about your experience. Do you work in both areas or are you considering doing so? Why? And if not, why not?