Banks need to be held accountable on penalties, says expert

Banks need to be held accountable on penalties, says expert

Banks need to be held accountable on penalties, says expert
Getting a straight answer from a bank on a client’s loan is like pulling teeth, says one investment player expert in reducing mortgage penalties.
 
“There is a lack of consistency among the people answering the phones, those 1-800 numbers at the bank call centres,” says Bruce Schoenne, a partner at PaylessPenalty.com. “We find we are calling the same bank after a client has phoned and given up in frustration. It is like pulling teeth to get a straight answer.”
 
Schoenne says it is more important than ever for brokers to advise clients that they should pin the banks down on exactly what their penalties will be, and to definitely get it in writing.
 
“We had one client where he and we called the same bank five times, and we got five different answers on an outstanding loan,” Schoenne tells MortgageBrokerNews.ca. “When we spoke to the manager we asked, ‘You record all phone calls, right?’ and the manager listened back to the previous calls and admitted that the bank had made a mistake, and we saved the client $2,600 in a penalty.”
 
Then there was the client who was scheduled for a meeting at his local branch the day before he was scheduled to pay off his mortgage.
 
“We saved that clientabout $3,600 in penalties – and of course we contacted the bank long before that meeting!”
 
Schoenne says about 85 per cent of his business comes from brokers at PayLessPenalty.com, and “well over 50 per cent – perhaps closer to 75 per cent” are clients who have already attempted to deal with their bank.
 
“They (brokers) are educated; we are educated – we both won’t take for granted that banks are going to do the same thing the next time around,” he says. “And I don’t believe it is intentional – it may be that they just do not understand the intricacies of the loan and the penalties involved. And in fact, it isn’t the call centre people being inconsistent – it is almost worse at the branch level.”
 
Although Schoenne cites several examples from just about every major bank, he does point to one policy by CIBC that may throw some clients – and perhaps some brokers – for a loop.
 
“I discovered that if you ask for a statement from CIBC on behalf of a client, they (the bank) deem the mortgage payments to have stopped,” he says. “I discovered you need to cancel the request just to resume the payments. So many different policies – I think they are put in place just to make life more difficult.”
 
7 Comments
  • Kiah Grant 2013-06-12 9:56:12 AM
    TD has a similar policy, if you get the penalty statement "locked in" they have to cancel it or payments will end, I had a client in bi-weekly and because rates were dropping we got a statement issued and during the time we were analyzing the situation she went into arrears because the biweekly payment was not collected.
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  • NMHamblin 2013-06-12 10:11:58 AM
    Not only should they be held accountable for the misinformation they provide clients but they should be investigated for the way they calculate and the penalty from posted rate and not actual rates as the mono lines do. Just another gouge by the banks and no one in government or media will try and hold them accountable or make them justify it!
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  • Paolo Di Petta | dipettamortgage.com 2013-06-13 5:27:42 AM
    More than anything, I think we need to make our current and future clients aware of these practices. We need to show them how malicious and opaque the big banks really are.
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