The big banks have now moved to post information on their websites about how exactly they calculate prepayment penalties, with brokers concerned some monolines will ultimately fail to follow suit.
On Monday, the Financial Consumer Agency of Canada also went live with its own website focused on alerting consumers to their mortgage prepayment options and what exactly they can expect of federally regulated lenders.
As of Sept. 25, those expectations include being able to access key information about prepayment calculations as well as financial calculators on any mortgage website belonging to a Canadian Bankers Association member. The disclosure is all part of the new voluntary Code of Conduct on mortgage prepayments announced in March and meant to address longstanding concerns about a lack of transparency, especially regarding IRD calculations.
Brokers have been active in lobbying for greater bank disclosure as well as the industry-wide standardization of penalties.The banks themselves have attracted class-action lawsuits, most recently CIBC, alleging they unfairly charged some clients with penalties out of whack with their own poliices.
The shoe may now be on the other foot, charge some mortgage professionals pointing to their a few of their own lenders.
The concern now, said one speaking to MortgageBrokerNews.ca Monday, is that some monolines haven’t been as quick to match the new disclosure commitments of the big banks. The fear is that apparent failure may erode broker competitiveness, especially if homebuyers come to rely on the information to select lenders and, by extension, decide whether to use a broker or go directly to the bank.