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August 30, 2021

Is your mortgage broker being upfront with you?

It’s amazing what you can learn from industry publications where participants talk candidly about issues that most consumers never really hear about.

Aa Here’s one from the mortgage lending side of the street, an incredibly competitive business if there ever was one.

Clients are entitled to know when they’re being charged a higher interest rate so brokers can bank the difference to pass it on to other customers, argues Paul Mangion, a veteran broker with The Mortgage Centre in Mississauga.

“When we hear ‘Disclosure! Disclosure! Disclosure!’ we don’t hear about the points that some lenders give brokers for specifically and intentionally offering one client a ceiling rate in order to hold onto to the basis points and then buy down the rate for a subsequent client – without having to give up any commission on that subsequent deal,” he told MortgageBrokerNews.

“That amounts to charging the first client a fee because it saves the broker thousands of dollars in lost commission in buying down the rate for that subsequent deal.”  

While not universal, some brokers have stepped up their use of this strategy to retain clients threatening to go elsewhere.

They’re competing with online referral agents – sites like RateHub and RateSupermarket – to hold on to clients and maintain the higher volume numbers that give them access top better rates, they argue. But that may not work for you personally.

Regardless, clients trusting brokers to win them the lowest possible rate must be told when their mortgage professionals have offered them a ceiling rate instead of the floor rate – in other words, the higher end of the rate range available to them, Mangion says.

Who knew?

Do you think you’ve been treated fairly when mortgage shopping? Does your experience reflect Mangion’s concerns? Or would you even know?

By Gordon Powers, MSN Money






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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...