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.