I’m a huge hockey fan. I love watching Olympic hockey. It’s fast paced and every game counts. If you’re like me, then you’ll probably be glued to the TV set watching and cheering on Team Canada. GO CANADA GO!
Unfortunately, that means you’ll also have to put up with those dumb bank ads. These ads drive me nuts. They deliver a terrible message to consumers. Here’s one from RBC from the 2010 Olympics about a young couple buying a home, probably their first, and the RBC mortgage specialist recommends they ‘split their mortgage to save money…. part fixed and part variable’. Anyone get that? Sounds like some sort of magic solution. Confused? You should be.
Splitting your mortgage is probably the worst thing you can do. Here’s why the BANKS like it. There are certain BANKS that will allow you to split your mortgage into 2 or more parts. This product was introduced in the mid ’90s. Now ask anyone that took this type of mortgage it they’d ever take it again. NO WAY! Continue reading “Olympics are coming.. and so are the dumb bank ads.”
Last week, an RBC Mortgage Specialist decided she needed to degrade Mortgage Brokers in order to get more business… Her marketing piece caught the attention of Mortgage Broker around the country… Her attempts to discredit Brokers backfired… BIG TIME! The broker community was in an uproar and an apology had to be issued by RBC.
This apology was issued by RBC’s Public Affairs Advisor…. Let’s give some credit to RBC for issuing a public apology ….. (pausing for 2 seconds….) Ok, that’s about all the credit I want to give…. It falls short of hitting mark. The wording is weak and I do not find the content to be sincere. Why hasn’t that RBC Mortgage Rep apologized? (I won’t call her a ‘Mortgage Specialist’ anymore as it’s not an accurate description of her duties) Where is she? Did they fire her?
RBC has been paying their Mortgage reps a commission for years.. and it’s based on the mortgage volume, the term and the RATE.. yes, RATE… if the Mortgage Rep sells you a higher rate, they get paid more…
HOW TO BE A MORTGAGE BROKER WITHOUT BEING A BROKER
But here’s another little known secret.. Back in the early 2000’s, RBC created the Alternative Mortgage Solutions (AMS). This department would take declined mortgage applications and broker them to secondary Lenders like Home Trust, Equitable Trust and other institutional Lenders or Private Lenders… The intention was to retain as much client business as possible while also generating a new source of revenue.
The AMS is paid a referral fee from the secondary Lending institution and or charges a fee. That’s right.. they charge a fee!! And you guessed it, the Mortgage Rep is compensated at the end of the day based on the fees earned on the mortgage…. Effectively, RBC is brokering mortgages without being a broker…. Let’s give credit where it’s due.. they have become a mortgage brokerage without having to follow the strict regulations and guidelines of becoming a broker.
Can you say ” double standard”?
If you are an ‘AAA’ borrower, RBC can only offer you their own products, and if you don’t qualify they will broker out your application to their list of secondary Lenders… So who has the better product selection? … A mortgage broker that deals with dozens of ‘AAA’ Lenders and ‘B’ Lenders and ‘C’ Lenders, or with one Bank that can only offer you a limited product selection?
Maybe some good has come out of this mess after all…. Disclosure and knowledge.
They say competition is good for the consumer. And I must agree.. this is part of what a Mortgage Broker does…A Broker determines a borrower’s needs, goals and objectives…..and then go to the market to seek out the most competitive mortgage product for that client…
Last week, I received what must be the most inaccurate piece of marketing propaganda I have ever seen in my 21 years in the Financial Services industry. click here to view… At first, I was offended, angry and upset that RBC would put out something like this… but then I realized just how ignorant some Bank employees must be…..
Clearly, this RBC Mortgage Specialist thinks it’s okay to spread lies in an attempt to win over more mortgage business and discredit Mortgage Brokers . .. It’s just too bad she didn’t take the time to do some research before publishing her propaganda.
I thought I’d take the time to clarify some of her misinformation…..I’m making some comments below so that other RBC Bankers can get their facts straight…..and maybe answer or address any concerns or questions the average borrower would have…
- Brokers will charge set up fees and have other hidden costs you should be aware of. A mortgage broker does not usually charge a set up fee... A broker fee MAY apply for harder to place mortgages and for commercial mortgages…. BUT all fees MUST be disclosed BEFORE a borrower signs any document.… there are NO hidden fees…all Mortgage Brokers are licensed provincially and must disclose all fees through a disclosure statement… (most provinces have these regulations including BC, Alberta and Ontario)… By the way, Mortgage Specialists are NOT licensed by the government...
- Ask the broker what their compensation will be. Nothing wrong with that question… A broker’s compensation is based on the mortgage amount and product type…longer term products tend to pay brokers more. But let’s ask the Bank Mortgage Specialists this question…. What compensation does she receive? Did you know that the Bank Mortgage Specialists are paid more for selling a higher rate?
- Brokers will set you up with a financial institution based only on the lowest rate, no other factors. Another completely false statement. If you are a regular visitor of CanadaMortgageNews.ca then you know that interest rate is just one part of a mortgage…There are many other factors to consider such as a client’s personal needs, the terms of the mortgage, privileges and options….
- When selling your mortgage, the broker and the financial institutions reviewing your file may pull numerous credit bureau requests. This one makes me laugh…”numerous credit bureau requests” are NOT pulled when dealing with a broker.. In fact, the credit report that a broker pulls is considered a ‘soft hit’ by the credit reporting companies, just like the Banks… and the broker’s report is shared by the lender or lenders that underwrite and review the mortgage application… it’s actually better to deal with a broker where there will only be ONE inquiry, rather than go to 5 or 6 banks and have them pull multiple inquiries….Numerous inquiries can affect your credit score in a negative way.
- Brokers will not be there in a few months when you need to ask questions about your mortgage. Any good mortgage broker will tell you they must stay in contact with their client…keep them informed….otherwise, how can they expect a borrower to come back to them for their future needs? Brokers depend on repeat and referral business…. hmmm… let’s turn the tables… ask the RBC Mortgage Specialist how long they have been in their current position and how long they intend to stay in that position? Ask yourself, how many times has your local branch changed account managers, branch manager?
- Mortgage Brokers can most often find you the lowest rate on the market (well, that part is true and I’m glad to see this acknowledged… here’s a good link that proves this) by taking advantage of this one time, one term rate offer the client has a price to pay. No need to comment too much here…All mortgages have terms that expire… typical terms are 5 years… at the end of 5 years, borrowers can stay with their current Lender or go elsewhere… A good broker will contact their clients at maturity and compare what their current Lender is offering and what the Mortgage Market is offering.
This post is a bit lengthy, but I thought it was important to be as thorough as possible…. I’m not sure how long this marketing piece will be in circulation but I know that the Canadian Association of Accredited Mortgage Professionals is aware of this and are in the process of contacting RBC to get them to take some sort of action with this RBC Mortgage Specialist… We’ll update you as more news on this becomes available…
I do agree with one thing in this RBC piece…you really do need to check the credentials and credibility of your advisors…Hope you found this informative…