Banks need to be held accountable on penalties, says expert

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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 “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 “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, 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.”
  • Kiah Grant on 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.

  • NMHamblin on 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!

  • Paolo Di Petta | on 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.

  • Catherine Fogarty/ on 2013-06-13 9:45:25 AM

    I have stated this before...the bank reps all of the sudden have a mouth full of marbles when asked specific questions regarding the structure of a mortgage contract. Anyone for a Marble game of Ringer for Keepsies?

  • kac on 2013-06-13 10:38:23 AM

    the government has imposed lending rules to curb consumers from getting into debt trouble while banks continue to offer credit card limits and auto loans that are enough to sink the consumer while limiting them from the most secured debt which is a mortgage. They really try and justify it in preaching it is for the consumers protection. Why are they not protecting the consumer from unsecured debt. It is 100 times harder qualifying for a mortgage than a $60,000 auto loan with no money down. The banks continue to reap huge profits and their ceo's are paid 7 figure salaries. If a consumer runs into credit trouble they are no longer able to refinance their mortgage to get over the hurdle and could face sometimes a $30,000 penalty to sell their house which further goes into the banks pocket. When are the gate keepers that run the asylum going to really look into the consumers best interests?

  • John on 2013-06-15 11:40:02 AM

    While CAAMP is lobbying the government on Mortgage changes perhaps they could talk to them about having standardized maximum charges for penalties. The last change that required better disclosure of penalties didn't address the problem, THEY ARE CHARGING TOO MUCH!! Maybe a maximum rate on credit cards is in order too. Prime plus 18.9 on a visa and prime plus 27 on a debt store card seems a little high don't you think? Same issue, all they did was require credit card companies to disclose that it will take 27 years to pay off the card if you pay the minimum payment. Again not enough!

  • Paolo Di Petta | on 2013-06-17 6:01:58 AM

    Great point John! That would be a much better use of their member's resources.

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