Broker: CIBC giving brokers raw deal

Broker: CIBC giving brokers raw deal

Brokers are getting a poor deal in CIBC’s offer to buy back their accumulated FirstLine BasisPOINTS, according to some mortgage brokers pointing to possible tax implications.

“I don’t think CIBC is being overly generous in its settlement offer," said Kevin Power, president of Power Mortgages Inc."They are offering 5 cents per point as opposed to the original price of 8 cents per point and then they are making us responsible for the tax consequences.”

Power, who estimates his own BasisPOINTS have taken a $33,000 dive under the terms of the CIBC offer, argues the deal is a "raw one."

“They (CIBC) are getting away with paying about  40 per cent (less) of the real value of the points, which is 8 cents,” he said.

Last week CIBC put out a formal settlement to FirstLine brokers offering them “$0.05” for every BasisPOINTS or two Aeroplan Mile points for every point earned.

The redemption offer was made as CIBC winds down operations of FirstLine Mortgages which will no longer accept mortgage applications after July 31. POINTS held by brokers will not be redeemable after Dec 1, 2012.

Power said the BasisPOINTS program as it was originally conceived was an excellent “win-win” program designed to market FirstLine and to give brokers greater flexibility in working with mortgage rates.

Under FirstLine’s BasisPOINTS rules, a broker can cash in those points to facilitate buy downs for a client's refi and also secure a cash back for the client.

5 Comments
  • Concerned borrower 2012-07-25 5:40:53 AM
    Are you kidding me? As a broker, it is your responsibility to, among other things, get your client the best deal possible. This program does the contrary. It allows you to offer one client a higher rate so that the broker can ‘bank’ points and offer another client a lower rate. Those of you who have these points have screwed your clients to get them. Well guess what? Now you are being screwed by CIBC. What a complete joke. One final thought – those of you that used FLT are lucky that the media did not get a wind of this practice. Actually, maybe they will………
    Post a reply
  • Len Lane 2012-07-25 5:43:11 AM
    I'm glad I don't have this issue with FL but offering 62.5% on something that they could have easily said you get nothing and close the doors next week and have you chase them for it later doesn't seem like to bad a deal... the few points I had with them I was told along time ago that they belong to them.
    Post a reply
  • one dumb broker 2012-07-26 1:37:32 AM
    are you serious... Power has a million basispoints left... that makes me seriously question his ability to offer proper advice. If you didn't see the writing on the wall 18 months ago with FLM then you should take a hit... Smart brokers liquidated their points and basispoints to either win deals or help clients... or do cashback's. Stitting on a million basispoints is/was not very smart.
    To the concerned borrower... I will tell you that it is the minority of brokers that "screwed" clients in order to accumulate these credits... FLM granted many for status and in the early days you could accumulate by helping the BFS clients and bank a large quantity.
    Post a reply