Mortgage brokers just want a little respect
The Canadian mortgage market has changed substantially in the past 20 years. Trust companies have been taken over by banks; small virtual banks have introduced new mortgage products; and brokers now play an important and much larger role in matching borrowers and lenders.
In other words, things are a lot more competitive that they once were.
Mortgage brokers, many of whom start out as lenders with larger financial institutions, fight against platoons of mortgage specialists deployed by the banks to retain or snatch business away from them.
It's a tough business so it's no wonder that the constant slagging we view daily during the current federal election campaign seems to becoming contagious.
At issue is a flyer a maverick RBC mortgage specialist has been circulating that "grossly mischaracterizes mortgage brokers in relation to bank specialists," says Rob McLister on his CanadianMortgageTrends blog. "It’s a document that demonstrates a stunning lack of knowledge, professionalism and discretion," he adds, taking it apart point by point.
Essentially, the document (from which RBC has been quick to distance itself) maintains that brokers will drop you like a hot coal once you get your mortgage and that the rate they'll stick you with will be driven by their needs, not yours.
"Fiduciaries that mislead the public for personal gain are hazards and liabilities to their employers," McLister goes on to say about the RBC ad. "Anyone who would author this sort of content should be sent packing because Lord only knows what she's telling clients in private."
What do you think? Does the original document have a ring of truth? Or is it just an example of shabby 'damn the competition' marketing?
By Gordon Powers, MSN Money
* Follow Gordon on Twitter here.
Posted by: Chip | Apr 25, 2021 7:05:40 AM
When I bought my house 16 years ago... I approached a mortage "specialist" from my RBC branch and was quoted a rate of 9.6% (yes it was that high back then). Since I had been a client for over 20 years, since they were already nickel and diming me with their multiple bank charges and since had paid off at least 3 car loans with them, I thought I would possibly be in line for a loyal customer discount, maybe a 1/4 or 1/2 point off the posted rate. Hell No !! When I inquired if that was the best they could offer me... the RBC specialist (after speaking with her manager) said 9.6%... that's the absolute best we can do. Then I went to a mortage broker and 3 days later I had a mortgage at 8.4% with TD Bank. Didn't cost me a cent (broker got his % from the bank) Needless to say, I cancelled ALL my financial affairs with the RBC, transferred everything to TD and haven't looked back. RBC = Royal Bank Crooks !!
Posted by: frank | Apr 25, 2021 9:31:00 AM
Why does anyone that just has routine banking needs (cheque and savings accounts) banks at RBC? They have to be the most expensive, impersonal, and inflexible institutions around. Yes, I said institution because only crazy people bank there and insane, out of touch people work there
Posted by: Mike | Apr 25, 2021 9:36:10 AM
Since RBC don't deal with mortgage brokers this is certainly an attempt to discredit this industry.
Mortgage brokers are actually held to a higher level of scrutinity than the bank's mortgage specialists. A mortgage broker has to complete 2 years of work towards licensing and must maintain a level of continuing education credit to keep their license; a mortgage specialist in a bank could have been a teller or a walk off from the street yesterday since they don't have to meet the educational requirement that independent have to. For the record, I am not involved in this business but I used to be.
Posted by: binder dundat | Apr 25, 2021 11:45:14 AM
Brokers are all crooks, I love how the industry claims that we are different then the US when it comes to lending, I have a friend making $40k a year who was offered a $414k mortgage by a broker. How they expected him to pay for that is beyond me, of course he didn’t take it as it was ridiculous.
Posted by: William Dunham | Apr 25, 2021 11:48:22 AM
RBC would be well advised to distance them selves from a person who represents them to the public when their knowledge of mortgages is extremely limited. RBC would be smart to let this agent go as it can only do harm to their credibility to continue her/his employment.
Posted by: Lone Wolf | Apr 25, 2021 11:56:41 AM
Why complain about things you already know about? Think RBC is bad, try Scotiabank, or BMO or any other bank or trust company. But each has their own strenghts. I get free banking from RBC because I have a 3 products with them (not including mortgage). And there is no minimum deposit like the ridiculous $2,000 other banks require for free banking. Have TFSA at ING because of highest interest. Have mortgage at Scotiabank but had no choice at the time but it is a variable and was as low as 1.75% from the original 5.25%. Once over, will never go back to Scotiabank, most useless and unknowing about their own products have you ever and hope to never meet again.
But that is my point!!! Knowledge is power and in this day and age, how can anyone not have basic knowledge of banking products before going in? How about all those suckers who believed the banks 2 years ago when they said mortgage rates would skyrocket and they should get out of their great variable rate before it was too late. I heard this, researched it and realiazed how much crap it "advice" was.
Why would you trust anyone to give you advice when they have a vested interested doing what is best for their company, not you? How much of a bonus for each mortgage they got switched from variable to fixed did these so called specialist get? But like I said, know your stuff before going in.
Brokers are great and I will use one to get the best rate possible where I want to do business. Use them like a tool to get a job done. Would you use a hammer when a saw is needed. If you want to do the job badly and are in too much of a hurry, yes. Would you regret it for years to come with the finished result? Same thing when applying for a mortgage. It is crazy that most people spend more time trying to save on a pair of jeans than putting in the proper research for a mortgage.
One finale story, at RBC, I love only one of their Mutual Funds, Canadian Equity Income Fund, remember the Income part, because the Canadian Equiity Fund sucks. One of their best and only good Funds to speak of, fee is a little too high for my liking but they actually earn it and that is rare and worth paying if you are getting results. Anyways, I go in to start an RESP for my little baby girl and to start my wife's fund (what was left after Investors Group mismanaged and highway robbery fees). First, the so-called investment specialist tried to put the RESP into the Target Education Fund which is one of RBCs biggest frauds going. I really feel bad for people who got shafted by this scam (please sue!!!) High fee for products that fell off a cliff in 2008 and have barely just made back what was lost even though the market has recovered. I told the specialists what I thought of this product. He proclaimed it was very popular in the USA. I laughed and thanked him for proving my point!
After the RESP, I said for him to put my wife in the same product, which he then tried to sell us on the Canadian Dividend Fuud. I said I used to like this fund until I did my research. He said my fund was very volitile. I replied if by that you mean losing less in the recession and skyrocketing out of it, then I guess I want the "volitility". So he pulled up Globe Investor charts and I said good, because that is what I use to research, and the comparison leaves his fund in the dust yet he still tried to put my wife in the other one. I wonder why? Maybe his commission or bonus is higher if he puts people in certain funds? I told him to pull up the Target Education Fund and said to him how could you honestly put the RESP into that trash (and I said trash) as a professional and a 'specialist'? He just starred at me.
Moral of the story DO YOUR OWN RESEARCH AND DON'T TRUST EMPLOYEES WHO SERVE THE BEST INTERESTS OF THE COMPANY THEY WORK FOR, NOT YOU!!!
RBC has free banking with the right products, 90% of their investments suck the big one but the other 10% are fantastic. Staff are no better or worse than other places. I hear TD staff are the worst, Scotiabank just sucks at everything. ING has great mortgage rates and better interest rates, mortgage brokers can get you the best rate possible at the place you want to do business.It is a world of choices out there, just make the best choice for you and your family because in the end, who else is going to look out for you? Good luck to all!!!
Posted by: annie | Apr 25, 2021 12:29:40 PM
My experience with a mortgage broker has not been a positive one. For the life of me could not get any service unless I was actually renewing my mortgage. He also did not provide me with the best mortgage for me. I own 50% of my house and he put me in a 40-year mortgage at a locked in rate for 5 years. Paid tons in interest. Unfortunately for me, I was not very knowledgeable at the time, but I remedied this by changing my mortgage and paying the penalty. My experience supports the idea that mortgage brokers are only out to make a buck and care not about their clients. I also know many people with similar experiences.
Posted by: Jeff | Apr 25, 2021 1:08:47 PM
Mortgages and mortgage lenders are like underwear, you need to change it often or it can get really nasty.
I have almost exclusively used brokers to find mortgages for me. While the deals varied by the issuer, I was able to find a great rate for the term I wanted. When it came time to renew, I tried three places: my current mortgager, a broker and my current bank. In the end, I chose the bank as they were including most of the appraisal & 'extra fees'. However, the best moment occurred when I started to scratch out conditions on the contract offer they presented to me. The girl was in shock and stated that I might not get the mortgage if I didn't accept the offer as stated. In return, I replied that I really didn't need them to renew my mortgage, I was only giving them the chance to steal it away from my current mortgagee AND if THEY didn't accept MY conditions, then I only needed to go to one of the 3 banks on the other corner of the street and they would accept it. It was a privilage for them to have my business and not vice versa. Needless to say, I got what I wanted from the bank.
Posted by: Lone Wolf | Apr 25, 2021 1:26:40 PM
Jeff, you are my mortgage hero!
Annie, everyone makes mistakes but you, unlike most people, actually learned from your mistake and more importantly, didn't just sit there and take it, you did something about it.
Posted by: maria | Apr 25, 2021 2:31:59 PM
I am a mortgage broker. I worked for a financial institution for many years and I have always looked out for the interest of my clients. There are three types of individuals that represent mortgage products. You have the employee that works at the bank and paid a salary. Their job is to make sales and they have sales objectives to make. They have a certain goal and they are paid revenue which means which they must try and make the best deal but whatever is in the best interest of the bank. If a client comes in a tries to negociate they will play the game of the I am not sure if we can do that and all it is, is a sales tactic. Their salaries are not determined in any way if the client takes the mortgage or not however their bonus is based on their performance throughout the year and their annual reviews. They at the end of the day really don't care. The banks don't really provide any real training it is basically learn as you go. The second type of mortgage person is the financial institutions mortgage specialist. They either get a base salary or solely commissioned and their job is to really try and not really discount very much however they are already given a target rate of what they are allowed to discount. Meaning if they discount on the rate they get less commission if they add a bit higher then they get a higher commission from the financial institution that they work for. Their income is based on volumes and what they charge the client in terms rate and how much they increase or decrease the rate. At the same time they also try and make the client take the mortgage insurance because they also get paid for that as well. Even though the worse thing to do is take the mortgage life insurance since as the mortgage amount decreases the monthly premiums are always constant. That being said as a mortgage broker I have always counselled my clients in taking the mortage insurance for a few months until they get life insurance with an insurance agent. The reason being is that the insurance amount will always be the same but the amount of the mortgage will decrease. That being said if a clients mortgage has only $50K left and he has a policy worth $300K then he does not necessary have to repay the mortgage but can continue paying the mortgage and keep the money from the insurance or can pay a lump sum it is up to the individual to do what they want at that time. The third type of mortgage individual is a mortgage broker. They really have the client's best interest. They have several financial institutions to choose from and therefore if one is not willing to give the best rate then there is always someone else. We are at the client's disposal since the living from a mortgage broker comes from referals. Therefore if a client is not happy with the mortgage broker then they will not refer you clients. I would also like to mention many times the mortgage broker does everything within their capabilities but at the end of the day they always deal with the same financial institutions that the clients deal with. In fact many of the employees that work in the department of approving files are either there to just do their time meaning 9-5 and they really don't care if a file is approved on time or not. Also mortgage brokers are paid by the financial institutions so there is no fees for the clients unless it is from a private lender in that case it is a completely differenct scenario. At the end of the day it is not the financial institutions that clients are dealing with but really the individual. If the employee, mortgage specialist or mortgage broker knows and has the experience then they will do whatever they must in order to insure that the mortgage is approved. I would like to mention I myself am a mortgage broker and I had a client that called me in order to get a better rate for a variable closed. The RBC quoted her 2.85% and she called me and I quoted her a rate of 2.15%. She was thrilled. That being said not even 30 mins later the client called me to tell me that the RBC was matching the rate. All this to say that I was willing to give an individual the best rate possible right off the bat and I had no banking relationship with the person but the RBC has all of the client's banking and was willing to take advantage of her not by a small rate difference but from quite a large rate difference in which over the term of the mortgage it would have costed her quite a bit of money in which she could have used towards putting her mortgage or purchasing life insurance. I always say the banks are in business to make money and they are not a charity case. Their bottom line is profitablity and if they don't make that much off one individual they will certainly make off of the next person that is less knowledgeable or that does not shop around. One of the important thing with any person that is that is working for you when shopping for your mortgage is knowledge and most importantly is trust.
Posted by: Fern Gelinas | Apr 25, 2021 5:40:19 PM
All Banks are the same. They are after your money, nothing else!......
You tell them that you own several properties and they ask you why you don't have a mortgage with them.
I deal with CIBC and they are useless. Their staff very incompetent, their managers the same. The most knowledgeable are their CSP taking calls on their 800 line......
I told them that they suck, would never reach the level of professionnalism a broker has, nor come any closer to the best rates you can get. A Broker works for you as a trusted client and they won't quit until they get you the best possible deal for you, not the banks.
No wonder the banks do not like them!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Also none of the major banks train their staff to a level of competency that would meet my own standards... Shame on all of you. I sold all of my canadian banks stock, that pay so terrible dividends and move most of my funds to american institutions. At least you get a good return on investment (from 10 to 20% dividends) compare to 2 to 5 or 6% for our canadian banks....
Posted by: Steve | Apr 26, 2021 9:37:22 AM
Isn't there a saying akin to "respect is earned"? So if Mortgage brokers (or Bankers or Lawyers or Politicians or Corporate executives) want respect they just need to earn it.
Sadly one is known by the company they keep, so the above mentioned group stand very little chance of ever getting respect in their present company.
Posted by: John | Apr 26, 2021 10:24:23 AM
90% of all advertisements are filled with lies and 90% of businesses are rippimg you off.
If consumers knew how much business lies to you just to get money from you they would be shocked to find that they are the only species that lies more naturally and more effectly then politicians.
They call it "creative advertising" the rest of us call it lying to make a buck.
Posted by: Dr. J. S. | Apr 29, 2021 11:25:54 PM
I have never used a mortgage broker, I just buy houses. Nevertheless, if they demand respect, then they must give respect.
Posted by: Tom S. | May 6, 2021 9:32:21 AM
Some mortgage brokers may deserve respect but having unfortunately been taken to the cleaners by one I can only say never again.
When in dire straits a mortgage broker is the worst choice as they are poised to force a power of sale at the first opportunity.
Arrogant, ignorant and greedy and to make matters worse they are in bed with some rather questionable legal firms.
My house and properties secured a private mortgage through one such broker and as soon as the chance came they did the deed, is spite of the fact that I had already had a firm buyer for the house they pushed it into power of sale they and the lawyers did very well I lost it all, further they started the process on my other properties.
Brokers are todays modern Shylocks taking their pound of flesh one way or another.