Xceed issued a press release Friday about its new RRSP mortgage (link). More interesting, however, was the line at the end of the release, which read: “This marks the return of XCEED to the mortgage broker channel.”
Xceed has been selling mortgages through its “internal mortgage sales team” since January, when it abruptly pulled out of the broker market.
Now, a “select group” of brokers (which it calls “Friends of XCEED”) will again have the opportunity to do business with it.
It’s always nice to see lenders return to the channel. We’re conflicted, however, as to how newsworthy Xceed’s return really is.
Perhaps it intends to deal only with an exclusively small group of brokers.
If Xceed plans to win back brokers on a larger scale, it needs to address three questions:
How long does it intend to stay in the channel this time? (Nine months ago Xceed essentially said the broker market was too competitive)
Is it financially stable? (Xceed lost $1.7 million last quarter on a one-time charge. Quarterly revenue dove 61.5% Y/Y.)
What real edge will it afford brokers compared to the dozens of other lenders that have faithfully supported brokers for years without interruption?
Sidebar: In 2009, Xceed had applied to become a bank. According to a recent financial statement: “During the fourth quarter of 2010, the Company requested Office of the Superintendent of Financial Institutions [OSFI] to put its application to become a federally regulated deposit taking institution on hold, and decided to write down these costs due to the uncertainty surrounding the approval process.”