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Posted 2 Comments on Why did these lenders stop dealing with Mortgage Brokers? Mortgage News

Why did these lenders stop dealing with Mortgage Brokers?

Great article today in The Globe and Mail… Ok, so why am I promoting an article that talks about NOT dealing with Brokers?   The article says, RBC, BMO and now HSBC are not dealing with Mortgage Brokers (RBC never dealt directly but they do put money out through RBC Securities…BMO stopped a few years ago and HSBC just stopped).

The article quoted Marcia Moffat, VP Home Equity Financing, RBC.  I have my opinion but what do you think about what she said?…. “The mortgage market is extremely competitive, so the reality is that there is little to no difference between bank rates and broker rates.”

Well, that statement sparked a flurry of comments… read the comments section of the article.. including some words from CanadaMortgageNews.ca.  As recent as a few weeks ago, I had client asked if I could give them a letter stating what my rate was so they could take it to their RBC branch and the branch could match my rate… and  this happens all the time…

The Banks are a business and want to make a profit…. you heard me say this before?  I must repeat it again…far too many don’t believe it…  The Banks want you to take the 5 year fixed rate mortgage… it’s the most profitable product for them…

Remember, a few months ago, I wrote about the government introducing new mortgage rules that make it harder to qualify for variable rate and shorter term mortgages (1 to 4 years)….  you must now qualify using the Bank Posted 5 year fixed rate…  that’s 6.10% today!!   Or you can qualify at the contract rate (fully discounted rate) of the 5 year fixed rate mortgage product….. today, that’s around 4.49%… . Which product do you think borrowers will need to take if they are on a tight budget? yes, the 5 year fixed rate mortgage.

So, why do these lenders not want to deal with Mortgage Brokers? For me the answer is very clear…they want to put you into their most profitable product…. Mortgage Brokers have a duty to recommend and advise the MOST APPROPRIATE PRODUCT.

I’ll be speaking more about Bank mortgage products soon… in particular, the split mortgage products… please don’t get into these products without knowing all the details and reading the fine print….speak with a qualified Mortgage Broker.

Posted Mortgage News

Bank horror stories might explain their $Billion profits..

I’ve debated whether I should share some of these incredible nightmares with you….but there are just so many of these coming up that I had to report them….If you have a similar story, please send me a note so that I might review and share and maybe even try to help.

Bank Horror Story 1

Last year, I had the pleasure of helping out a young family….. They have 5 kids and were in the wrong mortgage product with a short amortization and the bank had recently given them a consolidation loan to help out…  The banker did not do this family any favours…

Their monthly payments were still totaling around $2900/mth….A simple review would have revealed that this family had plenty of equity in their home to leverage…. After all, the cheapest money is mortgage money.

I recommended they roll that loan into the mortgage, break the current mortgage, extend the amortization and the end result would be a much lower and manageable payment with a lower overall interest rate….3.75% vs 4.94% and their monthly payment would be $1600/mth...saving them over $1300/mth.

The bank quoted a $5k penalty.. that’s ok… it was still well worth it… the interest savings would be around $13k over 5 years… but then they charged him over $10k in penalties at closing...  well, with the help of Ellen Roseman of the The Star newspaper, he got his $5k back…..

Bank Horror Story 2

Here’s another story with a happy ending that just occurred this year… A single mother with disabled son needed to get their payments lower and pull out some money for a new roof….Her mortgage was coming up for renewal so no concerns with penalties, right?  WRONG!!

This Bank ( a Big Six bank) decided to renew the mortgage into a closed 6 month term…even though they had been informed by the client that she was paying them out… and informed by her lawyer that they were paying them out….   WHY?  I have no idea….but they ended up charging and collecting a penalty for $1600…

Once again, with the help of Ellen Roseman from The Star, the bank refunded the entire $1600 to that client some 3 months later….   The worst part about this story is that the Branch Manager refused to return any calls to the client or her lawyer…..  Quite Pathetic.

The Big Banks are reporting $Billion quarterly profits

Have you read some of the financial reports from the Big Banks?  Do you know where they are making most of their money?  From Domestic Banking…  The above stories are just 2 examples where clients are being gouged and ripped off….how many more of these situations exist?

Posted Uncategorized

RBC first quarter profits $1.5billion…where is the crisis?

RBC posted a $1.5billion dollar profit in quarter one this year….WOW!  It’s good to see Canada’s banking system so strong.. but profits this high during what some called, the worst recession in history, might leave a bad taste in your  mouth…

Last November, a secret meeting between the Big Six Banks executives and Bank of Canada Governor, Mark Carney, took place.. the Banks called for tighter mortgage rules…. The Banks were concerned about rising debt levels…

Three months later, we have the new rules… but why all the concern when all the banks are reporting healthy profits?  Arrears and defaults don’t seem to be an issue…

There must be a concern about loan defaults in the future… and yet the Minister of Finance repeatedly keeps saying he sees no evidence of a housing bubble…. Makes you wonder?

…..we’ll be discussing this further in future postings…