TD Canada Trust captured 8.7% of the mortgage broker channel in the third quarter, based on the latest market share data we have from D+H. That number is going to jump thanks to one of the most anticipated system changes in broker market history.
As of yesterday, TD began outsourcing its broker underwriting to First National, a leader in mortgage processing (more on that). It’s a decision TD made to address past service issues in the broker channel, and one that could be highly positive for brokers, broker customers and the bank itself.
TD characterized its move like this:
“TD continues to be only one of two leading banks committed to serving customers in the channel of their choice, leveraging Branch, Mobile Mortgage Specialist, and Broker channels,” said Alicia Johnston, Corporate & Public Affairs, TD Bank Group. “TD Mortgage Solutions is our new dedicated underwriting and fulfilment model and online portal that will provide quicker turnaround times and improved communications, allowing brokers to more efficiently offer TD mortgages to their customers…The changes we are making show our commitment to delivering legendary service and convenience to our customers regardless of the channel that they choose to do business with us.”
Whereas standard setters like First National and MCAP deliver approvals in just hours, turnarounds on TD’s old system were more often measured in days. And communication with underwriters and fulfillment personnel was inefficient at best, to put it politely. All of that is expected to be a thing of the past under the First National-based platform. And the new system has much to like besides just streamlined underwriting, including
TD has never had an online portal. Its new system helps brokers track the status and conditions on a file in seconds.
No branch fulfillment
Forcing clients to visit a branch to complete their mortgage was both inefficient for time-pressed consumers and aggravating to brokers. That has now been eliminated, except where a bridge is required.
TD can now instruct a solicitor before all conditions are satisfied, meaning fewer hurried closings.
Buydowns from commission
TD is one of few lenders that deducts rate buydowns from the mortgage advance. That requires brokers to cut a cheque to the client’s lawyer on closing, when buying down a rate—a tedious step that’s confusing for clients. On the new platform, buydowns can simply come off the broker’s commission.
TD’s new platform is live for most Ontario brokers as we speak. It rolls out in Western Canada on April 13 and in Quebec on July 13.
Some of the country’s top brokers shared their reactions to this news and, as you can see from below, there was a loud cry for change:
“I have for a very long time been impressed with the efficiency of the underwriting and the effectiveness of First National’s [escalation] policy when a deal necessitated it. TD, I believe, has always had the best of intentions…in the wholesale channel, but the lack of quick responsiveness and personal contact during the process has been a major deterrent for them growing market share…The combination of First National’s industry-leading systems, innovation and customer-focused management team, along with TD’s highly respected brand, should allow for a massive win for both parties…in 2015.” –Calum Ross, Calum Ross Mortgage
“Being a long-time broker with TD, I have asked the question over and over…why [did TD] have to outsource the underwriting? The answer is that, seemingly, they can’t fix it that easily or quickly enough…The service has deteriorated over the last three years. It seemed like the moment TD Bank moved underwriting back to [Toronto] the service started to go downhill. It’s like they created this huge monster-like elephant that turned on them and almost devoured them. So it seems that whomever made this decision some time ago to centralize underwriting had to find an easy out…I do still believe that TD Bank had the resources but perhaps not the depth to fix the problem themselves, but seemingly not the appetite to try.” –Gord Pipkey, Verico Real Mortgage Services (Gord has been a huge TD supporter over the years, closing hundreds of millions with the bank.)
“The old system included emailed tick sheets for conditions, and a complete dependence on receiving updates by the same method—on TD time. I think the transparency of the new online system will help in firming up approvals much quicker. A commitment to an improved system will likely translate to a good attitude towards brokers. I think the former staff felt so beat up that it was challenging to look at new business in a positive light.” –Geoff Willis, Origin Mortgage Services Inc.
“I have always been a fan of the new TD Canada Trust operation. It will take a few months to start tracking, but I firmly believe that by having a functioning origination system—which they did not have previously—TDCT will grow 50% this year. They have decent programs and they are a bank, so they are not hardwired to same old, same old Genworth-based underwriting. Heck, one of my sons will write $15 million just on the rental side. He wrote $9 million with them last year and it was like sending deals to an asylum. I think there are many who will try it and like it. Nothing but upside.” –Ron Butler, Butler Mortgage
TD has acknowledged its service issues and made a major investment to correct them, which deserves applause. Brokers’ experience with the bank had often entailed resentment about the service levels, which was anything but healthy.
The new TD Mortgage Solutions (TD 2.0 as we call it) should engender far more positive experiences. In the next 12-18 months, that could very possibly vault TD from #5 in the broker channel to #3 (behind Scotiabank and First National itself). But hopefully, for competition’s sake, TD is aiming for #1.
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