Outsourcing Deals to NEXSYS

NEXSYS-FinancialIndustrial Alliance (IA) consistently leads the mortgage rate market. At the moment, it has the lowest (or near lowest) rates on 2-, 3-, 4- and 5-year fixed terms.

Its mortgages are more restrictive than most, but if you’re the type of person who will sell a kidney to save 10 basis points, you’ll certainly find its rates enticing.

Here’s the thing. IA mortgages are primarily available through brokers and, unfortunately, IA doesn’t deal with all brokers.

For those who are not on its list, NEXSYS Financial offers an extremely valuable service that lets brokers submit through it.

(NEXSYS processes applications for a number of other lenders as well, including Home Trust, ResMor, ICICI, MCAP, and First National.)

NEXSYS’s raison d’être is to free up brokers’ time. Its low-variable-cost back office handles the closing process so brokers can spend their efforts servicing clients and prospecting for new business.

In turn, the company charges brokers a fee. It ranges from 15 bps (worst case), to free, depending on unit volumes and funding ratios. Apart from that, brokers receive each lender’s full finder’s fees.

In addition to deal submission, NEXSYS has a service called “Advantage Plus” where it collects and processes documentation from the end-client on behalf of the agent. It then follows the deal to completion to ensure all lender conditions are met and that it closes on time. This service ranges from $100 to free depending on volume.

All in all, NEXSYS provides a useful service. Its main drawback is lender availability. Its lender list is limited because it chooses to deal only with lenders in which it has “top-tier status.”

Moreover, NEXSYS says its existing core lenders are diverse enough to meet virtually any client need. (We’d differ on that, but it doesn’t matter because you don’t need to send NEXSYS every deal anyway.) That said, NEXSYS plans to add new lenders in the future. It’s in talks with a few right now. It says lenders are attracted by its 80% funding ratio and “virtually non-existent” derogatory clients.

Service quality is another broker concern. How does a mortgage agent know that NEXSYS will treat clients with the same care as the agent herself?

NEXSYS realizes this is a legitimate broker concern, so it created what it calls a highly efficient system for document tracking and collection. It then staffed itself with a team of client-service-oriented fulfillment professionals.

Roland Mechler, Director of Operations, says “Hands down, our team does a better job than (most) agents themselves in treating the customers in a professional, friendly manner.”

He adds, “There is an added bonus for agents not to be the ‘bad guy’ in having to collect docs.” In other words, brokers can outsource what clients consider to be the least pleasurable part of a mortgage.

Another consideration for brokers is lender volume bonus (VB). Lower volume brokers may find slightly higher VB elsewhere—like through their own brokerage network’s deal submission desk. Then again, most of NEXSYS’s lenders (like IA) roll VB into the finder’s fee anyway so this is partly a moot point.

There is one last tip we’d offer if you’re going to use NEXSYS:

Send them good straightforward deals.

In our experience, you don’t get to deal with the underwriter directly. Therefore, when exceptions are required you can’t fight for your own deals and things sometimes get lost in translation. This happened on one application we sent in.

That aside, our overall experience with NEXSYS has been positive thus far. They’re certainly worth a try if you need access to a lender on their list.

Rob McLister, CMT

  1. NEXSYS has been offering Underwriting & Fulfillment Services in the Canadian Marketplace since 2009 and have a customized, Head Office-endorsed, Underwriting Administration Service (UAS) with the CENTUM Financial Group. In addition, NEXSYS services are available to individual brokerages whether independent or individual franchises from other SuperBrokers.

  2. I think it is good to point out that NEXSYS Finacial is a licensed mortgage broker in the province of Ontario (albeit with a non-compliant website).
    I think everyone should know they would be sending clients to an entity that is licensed to solicit further business directly from the clients you send them if they wanted to; although there a strong chance that would never happen. I have no reason to think that NEXSYS’ intentions are anything but good.
    Full disclosure is important in these situations and mortgage agents and brokers should clearly understand that NEXSYS operates legally as a mortgage brokerage in Ontario

  3. I would like to amend my comment in that I used incorrect verbage. The correct statement is that CENTUM has an exclusive UAS service with NEXYS – namely the CENTUM branded UAS. We are the only super broker who has corporately endorsed NEXYS and the services that they offer to the industry. CENTUM sees the high value that NEXYS offers the industry and supports their program. We encourage the industry to accept the standards of adjudication which NEXYS displays.

  4. Thanks Ron:
    You are correct. While we do no deals ourselves, in order to represent a deal from a mortgage broker/agent to a lender, we are required to be a licensed brokerage. In fact in addition to Ontario (#11895), we are licensed in BC (#145398) and in Nova Scotia (#101603542) . We agree full disclosure is a very healthy thing.

  5. Ron, you raise an interesting point about disclosure. There is also the issue of client privacy. Many borrowers wrongly assume that when dealing with a independant broker, their personal information is only being shared with the lender to which they are borrowing from.

  6. Banker, most brokerages have the applicant sign a release that indicates private information may be shared with third parties. FNF and FCT are both parties other than the lender and the broker and those companies see private client info passed through from then lender and they are used by virtually every FI. I would say in 99% of cases the applicant signs off for third party release of personal info. They may not realize they signed it but they did.

  7. I would love to outsource our back office. For brokers who submit all of their own deals, does Nexsys offer just the deal fulfillment service by itself?

  8. your comments , especially “Everyone who broker’s should be using this service” sounds weird …
    and ” I send all my clients through Nexsys, the good the bad and the ugly.”
    really tells how your clients are categorized in your eyes :)

  9. That is an ignorant assumption Observer. All lenders and brokers have this sort of clause. You constantly leave uninformed comments and I wish there were a way to block you from this site.

  10. Question. What if you are a broker who has been restricted by almost every lender and you use Nexsys. Does the lender know who the original broker is? Does Nexsys do a check on those brokers that use them?

  11. Excellent Question. NEXSYS is definitely not “back door” access to a lender – neither for brokerage registration or deal submission. NEXSYS has a comprehensive registration process (in fact, some lenders have approved our registration process and do not require a brokerage using NEXSYS to complete their own registration if registered with NEXSYS). When NEXSYS submits a deal to a lender, the lender is notified on every deal who the “originating agent” is and to which brokerage they belong. NEXSYS is a strategic partner with EQUIFAX and we have access to their products in our due diligence process. In our first year of existence we uncovered an inordinate amount of “suspicious documentation and applications” (prior to submitting to the lender) as I am certain, some brokers/agents were hoping NEXSYS would allow them “back door” access to a lender. Our process does not allow for this and not surprisingly, the quality of broker/agents supporting NEXSYS today is quite different from those who tried our services in the beginning. It is fair to say: “for those hoping to use NEXSYS as an alternate entry point to a lender once cut off – don’t waste your time”.

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