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.
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.
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
Posted by: Former Mortgage Agent | Aug 31, 2021 9:20:51 AM
Mortgage Brokers also choose lenders based on the rewards they will get for submitting certain volume levels...this is not always fair to the consumer but gives the broker the chance to gain higher commissions and perks from different lenders. Just remember...as a consumer you can choose which lender you want to go to through a mortgage broker...don't always settle if they tell you this is the best I could get...shop around...use a different broker...see what they come up with...you are in the drivers seat...
Posted by: Blair MacDonald | Aug 31, 2021 9:25:07 AM
In my busines,s I have to be the most competitive right out of the gate and always offer the lowest rate to the clients, so long as the product suits their needs and goals. Many low rate products dont have features the client assumes is included in their mortgage.
Although technically this can happen with the use of some lenders, I dont personally see it happening with my associates.
Posted by: binder dundat | Aug 31, 2021 9:28:18 AM
'mortgage broker tip'
get the biggest mortgage possible so I can get the biggest commission.
Posted by: K.C. Scherpenberg | Aug 31, 2021 11:38:14 AM
The author might want to do some research and get his facts straight before publishing articles that negatively reflect on mortgage agents and brokers. If the author knows what disclosure entails in the mortgage world under the MORTGAGE BROKERAGES, LENDERS AND ADMINISTRATORS ACT, 2006 he will note that rate discretion exercised by a broker must be disclosed.
Posted by: Mortgage Professional | Aug 31, 2021 3:04:36 PM
Well noticing that ( A bank ) is the main advertising for this page here are a couple things that should be taken into consideration that usually a good broker protects you from
Banks offering there best rate at 5.1 but for some reason if your a new client you could get 4.4
Rate special ??
I saved $335 the above advertisement says. Wait the bank put me into a collateral mortgage without explaining all the negatives effects this may have, now I spent thousands in legal fees to get this discharged, talk about being locked in.
The bank offered me their best rate at 4.99 I went to the broker and got 4.49 Now my bank says they just talked to the supervisor and they can do 4.49 wow thank you bank I new 4.99 wasn't your best rate. Talk about Disclosure
Sorry but I would find this article way less unbiased if you didn't have bank advertisements all over the place.
Rates quoted above are for example purposes only and may be changed without notice. Today's actual low rate for a 5 year fixed full prepayment option mortgage at 3.44% Bring that to your bank and smoke it.
Posted by: binder dundat | Aug 31, 2021 4:08:49 PM
K.C. Scherpenberg - the acts and laws in this country are so weak and very seldom enforced that speaking about them is a pointless endeavor. The point is that its a business, and there are many shady brokers out there who are looking out for number one.
Posted by: Daniel McKay | Aug 31, 2021 6:13:15 PM
First and foremost, the banks are out to take advantage of Canadian Consumers as much as possible. Secondly, there are definately some mortgage brokers out there doing the same with tactics mentioned in the article, however for the most part, most good mortgage brokers are out to best serve the needs of their clients. The reason being, is referrals from happy, well served clients will typically add up to 80% or more of a good mortgage broker's business. If you want to find a bad mortgage broker, find one that advertises a lot, particularly on sites like "ratesupermarket", "ratehub" etc. Most reputable brokers will work virtually exclusively by referral, and will take excellent care of their clients in order to keep the referrals coming. So when you are in need of a mortgage, or merely some good advice, ask your friends, family, or someone you trust for the name of a mortgage broker that did a great job for them.
Posted by: randy | Sep 1, 2021 7:49:16 AM
i agree with daniel mckay... after having delt with banks and brokers i would stick to the broker every time... and we have referred our broker to many friends and family... everyone walks away much happier than when they go with a bank.. happier and richer...
Posted by: rosa | Sep 1, 2021 2:39:23 PM
all you have to do is look at what happened in the US, and take heed that the same thing is going on here. It is on a different level only because there are many more people in the US, and they started borrowing from brokers before Canada allowed this very seedy business practise to flurish here as well. Take a good look at why this has happened and believe me no one would get a morgage from these brokers...
Posted by: bankbuster | Sep 1, 2021 3:11:58 PM
This article forgot to mention the bank ( TD ) that offers points to realtors for referrals. I am sure that is not disclosed to the client!
Lets face it most mortgage brokers are looking to maintain their client base and build their business with referrals and the best way to do that is to come forward with the best product and lowest rate. Banks are for people who want to save less and pay more.
Posted by: Shop around! | Sep 1, 2021 6:06:26 PM
There is no perfect answer. Brokers are no more worse or better then the banks, they are all in it for profits!
BUT banks rarely pay there branch staff a comission! But yeah you may get a lower rate at a broker, but then what is the service like after that! Till you want more money or a renewal who are you to the broker.
So shop! Its cheaper for banks to have brokers sell there mortgages, less overhead. So Talk to your Banker or your broker about what YOU want and take control of your finances, The broker gets rewards comissions etc, so there will be shady dealings, But there will be soem amazing brokers who do care about the client long term.
Posted by: Richard davison | Sep 1, 2021 11:40:43 PM
A secure line of credit on your house beats all.