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Mortgage Broker News | 13 Oct 2010, 09:31 AM Agree 0
TD bank is redesigning its mortgage program to make it easier for homeowners to tap into their equity.
  • Clayton | 14 Oct 2010, 05:44 AM Agree 0
    This will more reason to converse with your clients. This is denying the client the right to switch to a better mortgage without paying a penalty.
    This has been done already with some clients and was not properly explained to them at the time of registration.
  • Douglas Dane | 14 Oct 2010, 05:45 AM Agree 0
    Certainly this is good for borrower's in some respects but another obstacle to brokers. Is this shift also motivated by trying to move away from a reliance on brokers? We'll certainly be telling customers about the pros and cons of a collateral charge. If they are not happy with TD after their initial term, it is more difficult and costly to switch.
  • Craig | 14 Oct 2010, 05:49 AM Agree 0
    Just another push to try and remove the brokers from the picture. There sre so many better lending institutions to deal with. They hired a bunch of in house brokers and now this. I won't deal them.
  • Carol | 14 Oct 2010, 05:53 AM Agree 0
    I agree. this is really no different than doing a STEP with Scotia or a HELOC with an FI either. once they are there in most cases, they are there to stay. this keeps their back door closed. Maybe this will open up the HELOC product with TD to the brokers??
  • Justin | 14 Oct 2010, 05:54 AM Agree 0
    I never used TD before and i will for sure never start.
    This is a sneaky way to trap the client and make TD the only option for the clients future mortgage renewals. No concern for whats best for the client. Shameful.
  • AB Mortgage Broker | 14 Oct 2010, 05:59 AM Agree 0
    It's a retention program pitched to save clients money on registration. I have been told that in a situation where the mortgage limit is registered 80% LTV or greater, not even TD can place a HELOC in second position.

  • Ingrid | 14 Oct 2010, 06:06 AM Agree 0
    TD has been registerig the mortgages as a running account for quite some time. It is not possible to do a "switch" of a running account mortgage. So the fact that they now do it as a collateral mortgage will not really affect that side of things.
  • Elaine | 14 Oct 2010, 06:06 AM Agree 0
    It's a shame, as I gave them so much business and had a very good relationship with the Underwriters. I do not foresee having access to a HELOC, as I believe only the TD Brokers will have this product. Unfortunately, they will lose a lot of my business as well. Let's hope to God the TD Brokers are honest to explain this to their clients, doubt they will fully, as they would certainly lose the business if they disclose all!
  • Prem.C | 14 Oct 2010, 06:10 AM Agree 0
    Not a great feature to benefit the client than TD itself. TD should also explain the cost of switching this as compared to saving the Solicitor's fees. They used several examples to explain/promote this but not one example to explain the cost of switching/breaking the term.
  • Ray | 14 Oct 2010, 06:13 AM Agree 0
    It is an attempt to gain the renewal business with an add on capability based on the expected increase value in the home over time, without the client having the benefit of placing the mortgage renewal back into the market place at the best rate possible.
  • Gregg | 14 Oct 2010, 06:28 AM Agree 0
    What did they do, hire the unemployed exec's from the defunct US lenders that where regestering 125% LTV mortgages against properties, advancing at the market change and going bust when the market declined, taking home owners with them.
    I am totally against this absolutely. Bad deal for the customer, especially when the people offering this are motivated by sales with that bank not necesarily what it right for the client
  • Rob S. | 14 Oct 2010, 06:31 AM Agree 0
    There is no advantage to a client in having a collateral mortgage, a collateral mortagge a registration and discharge is more costly. It is just another way the banks pull the wool over their clients eyes while all the while locking the client up for life. Between branch signings and collateral mortgages, any broker that deals with the banks is not looking at the big picture. This is no different than Scotia's program.
  • Kathryn | 14 Oct 2010, 06:31 AM Agree 0
    Here is another way for clients to "eat up all of their equity", 125% financing, on one hand we have the Government implemeting "stricter guild lines" for people to qualify for homeownership, and now we have TD Bank "attacking the existing homeowner's", bypassing CMHC regulations on re-finances, which the Government cut back to 90% LTV from the 95% LTV, to "help protect homeowners", and hey look at TD Bank and their collateral loan at 125%. So it is not just cutting off renewals it is cutting off the insurers and their re-finance premiums and cutting out the Government. Wonder what they think of this move.

    Also love the clause at prime plus 10%, as one with a secured line of credit that out of the blue the bank's last year went from prime to prime plus 1%, "because they could", would you sign a document where they can "out of the blue" add up to 10%, I do not care what they say, this product is not benefiting any client at all.
  • Ravi | 14 Oct 2010, 06:40 AM Agree 0
    Crazy to think that TD is implementing this collateral charge on all thier products. The big banks are really trying to push the broker out of the game altogether, and monopolize the industry. Do you think they really care about the client? Not by strangling them to the mortgage.
  • Christopher | 14 Oct 2010, 06:47 AM Agree 0
    Once upon a time (it really is a fairy tale), banks offered superior customer service to retain their clients. Now they just pry every nickel they can out of them.

    Good luck with getting a good renewal rate.
  • Kevin/Calgary | 14 Oct 2010, 06:48 AM Agree 0
    Justin spoke my mind as good as anyone. Never have dealt with them, never will. They have always been predatory to the Broker, aggressive in paying realtors & now this. Brokers should be writing these guys off if they want to stick around for awhile.
  • Rob M | 14 Oct 2010, 06:48 AM Agree 0
    I find it interesting that several posts are flying off the handle with respect to 125% financing. Simply put, it's another example of the media misleading the clients, most likely unintentionally.

    The mortgage will be registered for 125%, but most likley will only be advance to 75% or 80% of the property. This just gives the homeowner the option to refinance in the future, increase the mortgage based on a new appraisal and then avoid the new legal cost.

    Actually, it's not a bad thing for the client. Gives them the ability to a superior mortgage product than a standard mortgage. Unfortunately, as a mortgage broker it's hard to recommend this type of product. But, it you actually try to do what's best for the client, then the STEP at Scotia and All in One type products are better options.

    The major fact is how often do you actually switch a mortgage anyways?
  • Steve | 14 Oct 2010, 06:48 AM Agree 0
    TD will improve mortgage retention and will have more leverage NOT to offer the best price at renewal....it's really that simple.. TD Bank 1, the Client 0. Do you still want to send your mortgage business to TD?
  • Jack | 14 Oct 2010, 06:49 AM Agree 0
    TD add obstacles to borrowers to switch mortgages to other lenders due to borrowers need to pay costly legal & appraisal fee for "switch". The policy is like to close door for brokers who like to help clients to find better rates to switch out from TD in the future... It's really stupid
    policy which hurt brokers & borrowers interests...So many quality lenders in the market. I won't deal with TD From now on....
  • Vic | 14 Oct 2010, 06:58 AM Agree 0
    There you go Elaine and anyone else who deals with the banks alot.
    Unless they have a special program that fits best for your client why would you want to deal with the banks? There are plenty of non bank lenders to work with. It is plain as day that they want to hold onto the client any way they can and of course cut out the broker who would be able to offer some choices on renewal. Once they have the client they don't have to offer them the lowest rate anymore.
  • M | 14 Oct 2010, 07:32 AM Agree 0
    Just a thought. But when the TD mortgage comes up for renewal now TD can be less competitive in their rate. They've got the client with this collateral charge mortgage. The client may be less likely to move if they have new legal to pay. TD will probably offer them only a good upfront rate and that will be it. Posted all the way after that. I don't send much to them any more. With the new underwriting centre in the East only their service now sucks.
  • Don. Madill -The Mortgage People | 14 Oct 2010, 07:32 AM Agree 0
    A client is going to think he will be able to raise his mortgage to 125% of value ; the same as our American cousins have been doing south of the boarder. This will give them a false since of security. I for one would not like to answer there questions when they get into trouble.
  • Andrea | 14 Oct 2010, 07:57 AM Agree 0
    Simply say TD want to use brokers one time then just kick out brokers forever. TD want to keep our clients in TD forever no matter Switch, Refinance, Second mortgages in the future. So only idiots will submit their priceless clients
    to TD from today.
  • Jane | 14 Oct 2010, 08:00 AM Agree 0
    that is the marketing promo but the real target is obvious with all the comments above. Come on, not hard to realize you are a bank rep. Bad product for client period. Its obvious that brokers are starting to gain market share and the big banks need to get preditory to retain business.
  • Peter | 14 Oct 2010, 08:48 AM Agree 0
    I am surprised by my fellow colleagues lack options to your clients. TD Product is just an option. Just like we as a broker is supposed to be offering options to our clients. I have read your comments and find them to be positive on the surface, but just selfishness/greed underneath. Like you said it is up to the client. Maybe mortgage transferring is not a feature your client is looking for?
  • Bruce | 14 Oct 2010, 10:56 AM Agree 0
    It doesn't surprise me. I haven't submitted any deal to TD for several years b/c their underwriting/supporting team are real real SUCKS. Now changing to " Collateral Charge Mortgage" " 125% LTV register"... Who care !! I think TD doesn't care the brokers' contribution to her business as well. I Guss TD will follow BMO's steps to close door to all brokers soon !!!
  • muky | 14 Oct 2010, 03:47 PM Agree 0
    Peter,

    Are you serious? It is not selfishness or greed, it is good business practice.

    Good brokers rely on client retention and look forward to servicing clients again come renewal time. It is the easiest part of this business period....repeat business.

    Even if the client doesn't care, you as a good broker and business should. Unless of course, you're a road rep for TD.

  • TD Product (muky) | 14 Oct 2010, 05:56 PM Agree 0
    Exactly my point. Repeat business should not necessarily come from the existing business booked today. Repeat may also mean new business down the road via the client buying a second property, referring friends and families. What is with this TD road rep b.s. again. You must have a phobia with road reps and competition in general.... I am not so nervous on my end. Do not assume that we as brokers may all think alike.
  • Ronald | 14 Oct 2010, 06:20 PM Agree 0
    I hope we all do not think alike. I do not sell myself as the lowest rate broker. I offer options, expertise through experience to my clients. I am a a mortgage professional AMP who offers more than just the lowest rates. Keep in mind. Lets professionalize our industry.
  • Marjorie | 15 Oct 2010, 12:12 AM Agree 0
    TD is doing this to ensure they 'own' their customers and to prevent 2nd. mortgages against the property. Once they 'own' the customer they can get away with almost anything with terms and rates.
    Isn't it time the Govt. cracked down on the big banks who dictate to any and all? The first thing they should attack are penalties. Someone please explain to me why they are allowed daylight robbery when it comes to penalties?
  • Mike From Marmora | 15 Oct 2010, 01:00 AM Agree 0
    I would like to bring to your attention, & hopefully to the attention of the consuming public and bank regulators, a practice by three of the “Big 5” charted banks of registering collateral mortgages for 100% to 125% of a property’s value at the time of mortgage registration. Furthermore, some of the lenders are registering the mortgages with an interest a rate of “Prime + 10.0%”, yet initially only charging the consumer Prime or Prime +1.

    A “normal” conventional mortgage is similar to a car loan. You bargain for a set amount, rate & amortization, say $200,000. at 3.5%, 5 year term/25 year amortization, payments of $998.54/month, a lien against the property is registered for $200,000.00 & if all the payments are made on time & no prepayments are made, the balance is zero after 25 years. Should another lender decide to advance funds as a second mortgage, conventional or collateral, there is nothing stopping a lender from doing so, subject to the lender’s guidelines. Under normal circumstances the principal balance on a conventional mortgage goes only one way, down. Furthermore major chartered banks will accept “transfers” of conventional mortgages from other chartered banks, at little or no cost.

    A collateral mortgage has its primary security a promissory note and as “back-up” or collateral security, it can have a first or second lien on the property for the total amount registered, say 125% of property value, even though that amount may not have been advanced to the borrower. A collateral mortgage allows for the “re-advancing” of principal, like a revolving line of credit. In essence a collateral mortgage takes a lien for a specific amount, which can be more than the current value of your equity &/or your home. It can be referred to as a “revolving line of credit” or it may be set up with regular payments reducing the principal. The issue is the terms and conditions in the loan agreement or standard charge terms, that few people take the time to read & usually without the legal advice of their lawyer (the bank offers an “in home” or “in branch” closing service at a “cheaper” rate than the lawyer’s fees.). Most chartered banks will not accept “transfers” of collateral mortgages from other chartered banks, so the consumer is forced to pay additional fees to register a new conventional or collateral mortgage if they move to a new lender.

    What the banks are attempting to do is:


    1) Tie a borrower to the bank & lessening the possibility of the client moving to another FI, thereby diminishing a consumer’s options. In an
    economy where fewer new mortgages are made, and lenders are under pressure to keep their market share of the total mortgage business,
    lenders have few options but to steal business from the “other guy”, i.e. another financial institution. Because a collateral mortgage is not usually
    “transferable” without paying new fees to the new lender, the borrower & is less likely to move.

    2) Increase interest rates to uninformed consumers. If a borrower starts paying, say Prime + 1% on the mortgage loan, and at some future date has
    difficulties and goes into default, there is nothing stopping the bank from “juicing” the rate to prime +10%, because that is what it says on the
    mortgage documents the borrower signed. This action is similar to credit card companies doubling or tripling the interest rate on a credit card
    when a client is late making payments twice in one year.

    3) Secretly grabbing more security than the borrower intended to give. Lenders may be able to use the right to offset other unpaid debts. Offset
    is a right under Canadian law that says a lender may be able to seize equity you have in your home, over and above the mortgage balance, up to
    the amount registered on the property to pay, for example, a credit card balance, a car loan, or any loan you may have cosigned, that is in default
    with the same lender. Any loans you may have with that lender are in essence secured by the collateral mortgage as well.

    4) Increase prepayment penalty fees. If you have a collateral mortgage as a first mortgage, no other lender is likely to give you a second mortgage
    of any type.
    Example: House value is $200,000.00, Collateral first mortgage registered on the property is $250,000.00, principal amount owing on the mortgage
    is $150,0000.00. You need an additional $20,000.00, your credit is good, income is good, but the lender says that the $20,000.00 would not leave
    enough equity in the property & they decline to lend the $20,000.00. Because the collateral loan is registered for $250,000.00, any second
    mortgage would be registered behind it. So a second mortgagee would have a $20,000 second mortgage registered behind a $250,000.00
    collateral first mortgage on a house valued at $200,000. Not going to happen.

    The consumers only way out would be to pay any prepayment penalty to get out of the first mortgage & get a new conventional first mortgage
    or conventional first & second mortgage.

    5) Not adequately advising the consumer. Some lenders are offering mortgages in a “negative billing” manner. Unless you are informed enough
    to say you want a conventional mortgage, you will unknowingly be asked to sign documents for a collateral mortgage. Others,
    are not offering any option, as of October 18 all new mortgages offered by one bank will be collateral mortgages, unless a stop is put to this
    action by either the regulator or public opinion.

    As the Principal Broker of an Ontario Mortgage Brokerage I am regulated under the Mortgage Brokers, Lenders and Administrators Act of 2008. One part of that Act requires me to ensure the “suitability” of any mortgage we arrange for a consumer. I would be hard pressed to justify the recommendation of this type of collateral first mortgage to any consumer without having, at the bare minimum, an acknowledgement from the consumer that our firm had explained the issues with this type of mortgage, and a certificate of independent legal advice. Preferably I would have the acknowledgement and have the borrower’s lawyer close the transaction.

    Lending money to people, with “different to the norm” conditions and increasing the borrower’s exposure to significant loss, all the while flogging a cheap closing service enticing the borrower to go without the opportunity of having an independent legal opinion of the documents they are signing, just plain stinks. We will have to wait awhile for a decision by a judge crushing the “one-sidedness” of these contracts. In the meantime a significant number of consumers will be make ill-informed decisions, unless consumers &/or bank regulators take action.
  • Jeremy From Calgary | 15 Oct 2010, 03:42 AM Agree 0
    Well said!
  • Pete | 15 Oct 2010, 05:38 AM Agree 0
    Extremely well written. Would suggest to any broker or agent that if they are up against the TD in a competitive situation they inform their customer of these 5 points. An informed customer is your best customer.
  • Harry | 15 Oct 2010, 05:59 AM Agree 0
    I received TD e-mail about "collateral charge mortgage" & "125%LTV register" & Starting Oct 18,2010, all new borrowers will automatic register "Collater Charge Mortgages" & no other options. TD only stated advantages of Collater Charge Mortgages. As responsible brokers we should disclose all advantages/disadvantages of "collateral charge mortgages to all borrowers!! Well writing _Mike from Marmora@@@
  • Rose | 15 Oct 2010, 06:05 AM Agree 0
    I'm about to sign up with TD for my new mortgage. They cap me with 3.54% for 5-year term till Feb 2011. All of a sudden the fact that they know I’m closing in a week time (Oct 19 '10) they retracted the rate with their reason that I am directly purchasing from the builder and the only discount they could give is 1%? From 3.54% they're giving me 4.39%?? Blessing for me not to deal with them!
  • James in Whitby | 15 Oct 2010, 10:17 AM Agree 0
    Being in the mortgage industry for nearly 30 years, few things surprise me other than how the big banks continue to create new ways to take advantage of their customers - and get way with it.
  • John | 17 Oct 2010, 10:00 PM Agree 0
    Your in good company, the banks do this all too often. A decent, not good, but a decent independant broker can still get you a better rate in time to close on time. But expect TD to come back with the old rate once they know you have an option. They think we are all whores to the banks, unfortunately a lot of us are.

    John
  • Watching in Ontario... | 19 Oct 2010, 05:17 AM Agree 0
    If you dislike the policy change..make a statement... don't send business to TD (if you did in the first place)... Don't visit their booth at Caamp (if you attend)... and tell the public, advertise.. go on the radio or tv and talk to the public about how TD, one of Canada's top lenders...is limiting their choice.
    Sure they save $700 down the road in a refi cost... but does that outweigh the potential costs or loss of options? So quit whining online.... and get out in the public. You should all be tweeting, blogging and advertising about this... perhaps your business will go up because of it!
  • Howie | 23 Oct 2010, 06:37 AM Agree 0
    Woww.. this is why banks rule most of the world isint it? Creatively putting things into contracts that screw the innocent people over. It's exactly what they do with Creditor Life Insurance.. I had a client who lost their spouse and lost everything and thought they were insured properly for the last 30 years with TD. Guess what? They didnt pay the claim.. and now I hear about this.. Forget it.. We're all done with TD.
  • Dan Thompson | 29 Oct 2010, 09:12 AM Agree 0
    What advantage does a this have over a conventional morgare? None. Except the bank of course. Wait no ... you can now borrow more than you need, how many ignorant homebuyers are going to get a huge shock when it comes time to renegotiate and they can't. Bet the other banks will soon follow.
  • Jack | 11 Nov 2010, 04:33 AM Agree 0
    I know this is a mortgage broker string, but I can tell you that any customer that figures out that he/she is now giving security for unsecured exsiting TD credit products(like unsecured LOCs) is going to be very very unhappy (and end the relationship - not just the mortgage application)
  • Car Hire Alicante | 31 Mar 2011, 08:58 AM Agree 0
    I think you may want to place a facebook button to your website. I just marked down this article, although I must make this manually. Just my $.02 :)
  • Jennifer | 02 Apr 2011, 02:25 AM Agree 0
    You have to be very careful when applying mortgage with TD, the branch staffs are so commision driven, they don't give you enough information when you sign the contract.
    I am as TD staff, have very bad experience with my own bank, and decided to never have mortgage with TD again when my currrent mortgage matures next year.
  • Lynn | 07 Mar 2015, 06:24 AM Agree 0
    **************
    QUOTE:
    Ingrid on 14/10/2010 6:06:50 AM
    TD has been registering the mortgages as a running account for quite some time. It is not possible to do a "switch" of a running account mortgage. So the fact that they now do it as a collateral mortgage will not really affect that side of things.
    **************

    How did TD register non-collateral mortgages as running accounts? I wanted to transfer my mortgage from TD to another lender this year, BUT I just found out that the mortgage was registered as a running account in early 2010. Our mortgage agreement says that it is a Conventional Mortgage. How is it possible for them to register that as a collateral charge?
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