Broker: Extra fees giving lenders and brokers a ‘bad name’

Broker: Extra fees giving lenders and brokers a ‘bad name’

Broker: Extra fees giving lenders and brokers a ‘bad name’ A mortgagebrokerNews.ca investigation has identified at least one recent case where the client of a Toronto broker was charged an extra $100 “monoline surcharge” by their lawyer. The added expense was tabbed onto to a bill for closing costs and specifically meant to compensate the lawyer for a protracted and confused closing process.

That kind of extra billing isn’t just happening in Toronto.

Kent Farnsworth, an Atlantic-based broker with Mortgage Alliance Simply Mortgages has had to assemble a stable of lawyers he knows charge the same regardless of lender type, after numerous frustrating instances of extra fees.

“I try to take control of who the solicitor is; there are several lawyer that are fine with dealing with monolines but there are some that charge more, which gives brokers and lenders a bad name,” he told MortgageBrokerNew.ca. “It happens pretty frequently.”

It’s a trend MortgageBrokerNews.ca originally reported on last year, when an Alberta-based broker called for lenders to better streamline their documentation process.

“I’ve been hearing from lawyers’ offices that they are having difficulty with some of the instructions that are being sent by non-bank lenders in Edmonton and some other areas in Alberta,” Connie Graham of Axiom Mortgage said at the time. “Many of the lawyers are actually starting to charge clients an additional fee if the mortgage instructions are from a non-bank lender because it makes more work for them at closing.”

According to Graham, the length of the instructions are sometimes seven times as long as a bank’s instructions. They also often lack specific funder contact information, forcing lawyers, in some cases, to call a 1-800 number and wait on hold before reaching someone who may or may not have the answer.

And that process is increasingly bogged down by monolines who outsource the paperwork, which adds another step in the origination process, argue some brokers.
 
 
 
12 Comments
  • Jesse D 2015-08-20 9:47:48 AM
    For some reason their are lawyers who do not like non-bank lenders...I've been told due to instructions, pressure to close quick, not knowing the lender well enough and not only will they charge more, they also try to convince client to go elsewhere without knowing the file. I did an $80k heloc for a client, their downtown Whitby lawyer agreed to do the deal matching FCT at $619. WHen client signed, the legal bill was $2280. Client lost their &^%#, luckily that lawyer was their choice. I usually recommend certain lawyers due to cost, convenience, etc. but if clients insist, not much we can really do without risking conflict. Perhaps the mono-lines could try to work better with the lawyers so they do not take it upon themselves to influence clients to do what the lawyer wants. If only, we could bypass lawyers all together and just use firms like FCT or Anderson Sinclair's My Closing.
    Post a reply
  • Arbitrage 2015-08-20 9:55:22 AM
    This has become very frustrating in my city as well. There is one lawyer in town that immediately sends her clients over to a bank rep when she sees a monoline cross her desk. She trashes the lender (and indirectly the broker) and has a bank rep that can put the deal together quickly. Together they essentially snipe your deal in the 11th hour.

    Obviously we all avoid her like the plague but to be honest, part of me doesn't blame her. I see first hand the cartwheels that the lawyers have to do for some of our monolines. It seems FCT closings are smooth with some lenders and BRUTAL with others. It would be nice if together they realized just how damaging a stressful closing can be to both client and broker alike and took some steps to improve their process.

    I have definitely shifted my flow of business away from certain lenders for this reason and occasionally when I find myself doing a deal with them I color code it in red and am forced to babysit the closing from 4 days out right up until 5pm on the day of closing sometimes...ugh.
    Post a reply
  • Glen K 2015-08-20 10:20:26 AM
    In Vancouver there are a number of lawyers who will charge extra. However, I have found recently that Bell and Cobbett do not charge extra for mono line mortgages and I am not sending much business to Tony these days because his office charges exrta for monoline mortgages. FCT needs to have a broker portal so that we can check in and see if there are any outstanding conditions. Unfortunately there is some extra paper work for lawyers when it is an FCT managed process.
    Post a reply