FirstLine Points Still Up in the Air

firstlineAs the wind-down nears for former #1 broker lender FirstLine, brokers are still without an answer on the fate of their POINTS and basisPOINTS accounts.

POINTS and basisPOINTS are incentives that FirstLine pays brokers for sending business. The former can be cashed in for travel, merchandise or gift cards while the latter are typically used to buy down interest rates, offer cash back or extending rate holds.

The clock is ticking for FirstLine brokers. FirstLine’s last day in the industry is just 26 days away—July 31, 2012. (See: FirstLine to Shut Down) Brokers must decide to either use their points or face the uncertainty of whether they’ll receive a payout for them

Some brokers have been accumulating these incentives for years. Prior to CIBC’s FirstLine sale announcement, some top brokers reportedly had over a million basisPOINTS.

CIBC, which owns FirstLine, has not yet said how, or even if, it will compensate brokers who have outstanding points. Roughly $10 to $20 million worth of POINTS/basisPOINTS are still outstanding, according to a source at the company.

That source tells us an announcement was expected more than 10 days ago.

We asked CIBC for an update today, and this is what a spokesperson told us:

As we announced, FirstLine Mortgages will no longer be accepting new mortgage applications as of July 31, 2012. The team is now working on the various activities related to this decision, including the POINTS and basisPOINTS programs. More information will be provided later this month.

The fear among brokers is that CIBC, which has burned bridges with them, will have no goodwill incentive to honour points. Nor are they required to by contract, based on our understanding.

CIBC values its reputation, however. So we’d be surprised if it risked that reputation and left POINTS-holders completely in the lurch. (That’s not to say that any payout offer would be attractive.)

FirstLine-mortgagesGiven the uncertainty, many brokers have decided not to take chances. They’ve been redeeming POINTS as fast as they can.

It’s the basisPOINTS where some brokers still have large balances. CIBC has intentionally set FirstLine’s interest rates well above the market (e.g.  3.64% for a 5-year fixed). That makes it extremely unattractive to use up basisPOINTS for rate buydowns.

The best solution for those with big basisPOINTs balances may be to convert them into marketing dollars. These can be spent on newspaper ads, radio ads, online ads, brochures, signage and so on.

To do that, you need to be a Gold status broker or higher and submit a third-party marketing related invoice to FirstLine (with the vendor’s HST number on it). Brokers should talk to their regional business manager for more details, but hurry. We hear many or all FirstLine RBMs are being let go as of July 24.


Rob McLister, CMT

  1. Also of note as of June 25th they are no longer honoring the client consents that allow us to call servicing for our clients. You also get the feeling when you are talking to them that brokers are now the scum of the earth. Thinking the new CIBC attitude will piss off our loyal clients who value us as professionals very quickly and the the flood gates will open with our clients wanting to get out. Reminds me of when Scotia transfered the Maple clients to the branches and the branches called up bad mouthing brokers. Best year ever!!! Thinking 2013 should be stellar!! Get the Porsche dealer on the line. Will they let us use the Basis Points for advertising to tell our clients about CIBC’s new attitude?

  2. My guess is that CIBC is delaying any announcement so brokers don’t cash out their points now. I bet we’ll get a fraction of a dollar for them after July 31.

  3. We’ve redeemed basisPoints as recently as last month by faxing in the Form w/ invoice – no hassles, they paid it out promptly the following week!
    It should be noted that there are limits to these marketing redemptions and also that you will get paid at a discount off full value (1 or 2 cents a basisPoint) unless you have Diamond Status.
    Due to annual limits on marketing redemptions, another way we’ve burned off basisPoints in the past is Cash Back on a “friendly” mortgage. There’s no discount here so the borrower will be paid the full 8 cents a basisPoint regardless of Broker Status.
    A “friendly borrower” is key here as the cash is paid directly to them. A while ago we burned a couple of hundred thousand basisPoints on Cash Back to my sister – have you ever tried to collect $15K off a family member? Lol

  4. If it werent for firstline i probably wouldnt own my house…they were a great company who gave me a great rate back in the day when banks were charging outrageous rates ….and its painful to read the above and how cibc is dicking around the brokers on these points…cibc keeps calling me to switch to them and my feeling right now towards cibc is unprintable…

  5. I hope the brokers are claiming the “prizes” on their income tax as a benefit of employment. These types of incentives are verboten in the investment industry… I don’t understand why these type of incentives weren’t picked up by the media in the first place. I think it definitely puts the broker in a conflict of interest.

  6. I happen to agree. aren’t lucrative incentives also bribes?
    “BRIBE – Money or other valuable consideration bestowed to influence the recipient’s conduct”
    How can any independant broker proclaim to act in good faith when such undisclosed varied and valuable incentives are the norm in the mortgage broker industry?

  7. I’ve got something shocking to tell you Bo and banker. Get ready. This is big.
    Every sales profession in the world has incentives!! For real guys! From real estate to pharmaceuticals to advertising to clothing to financial advice to insurance.
    I know. I could barely believe it myself! I mean, who could have imagined that companies would incentivise agents for performance. What a jaw dropper!

  8. Bo/banker, you guys aren’t breaking any news here. Firstline points have been around for over 20 years. Incentives like this are disclosed to borrowers by law in most provinces.
    I’d also add that honest brokers don’t let compensation influence their recommendations. As for the less scrupulous brokers, well, I’d love to weed them out of our industry but the fact is, there are bad apples in every barrel. The banks are no exception.
    Speaking of which “banker”, it’s funny that you don’t mention the incentives banks offer to their mortgage specialists. You should investigate the quotas and bonuses that bank mortgage reps receive to push mortgage life insurance. Now THAT is a story. I’m not sure if any of that is disclosed.

  9. interesting debate…fact is firstline was still one of the best houses to deal with.i mourn their passing….

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