Brokers: Good riddance to "unethical' points

Brokers: Good riddance to "unethical' points

While FirstLiine’s BasisPOINTS settlement is a hot topic, some brokers are saying the actual demise of the program is good for the industry’s integrity.

“I thought they were very unethical,”  Paul Mangion, with The Mortgage Centre in Mississauga, told MortgageBrokerNews.ca. “I am happy to see them go.”
Mangion is, in fact, voicing the concerns of many brokers, who objected to the FirstLine program, and to a less extent, others like it.

The beef centres of the idea that the program encouraged brokers to give higher rates to some clients in order to secure points for themselves or better deals for subsequent clients. Points were also once  awarded for BFS deals, outside of that controversial rate incentive.

“Brokers should be working to get all their clients the best deal or best rates,” said Mangion. “This system tended to subvert that.”

While other lenders offered reward points as well, they were structured differently from FirstLine’s, said the broker.

“Other lenders offer reward programs as well,” Mangion said. “But they are just points generally offered as an option and not offered the way CIBC does.”

In an earlier interview with MortgageBrokerNews.ca, he also said that clients need to be told when their broker is providing them a ceiling rate rather than a floor rate.

“When we, as brokers, receive an extra benefit in the form of points from a lender for offering the high end of our rate range to an unsuspecting client, that has to be disclosed,” he said.

This week other brokers expressed disappointment with CIBC for discounting the value of the BasisPOINTS they have accumulated in its settlement offer. Kevin Power, president of Power Mortgages Inc., complained that the bank is offering 5 cent per point as opposed to the original price of 8 cents per point.
 

15 Comments
  • J. Darren Ings 2012-07-27 4:10:49 AM
    The demise of FL is likely going to be my own as well. I lost the best brokerage product company available. If all you ever sold was rate, than you didn't need FL. But if you wanted to sell the best Home Owner Advantage Program, best pre-payment options, and what was once the best self-employed product, no-one touched Firstline. Always remember, if they come to you for rate, they'll leave you for rate. Firstline gave us an advantage over bankers and brokers that simply sell rate.
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  • Frank Petrin 2012-07-27 4:14:22 AM
    Unethical points program? Dont blame the program for a Broker's unethical use of it.
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  • Len Lane 2012-07-27 4:24:15 AM
    Good call Frank...it does seem to be leveling the playing field. Now its best rate or buy it down out of your end. I think it also shows that lenders can't give everything away any more.
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