Client uses Twitter to challenge TD mortgage

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Before social media, if your clients had a beef with the bank, you basically complained to the lender and they to their friends, and that is where it would end.

Social media has changed that with an increasing number of borrowers now forcing banks to take their complaints and to act on them.

Case in point, when Shaun Rickard went to refinance his home, he took umbrage with a $17,000 penalty TD Bank told him he would have to pay for ending a five-year mortgage three years early.

“I was a little angry to say the least when TD told me I would have to pay them a $17K penalty,” says Rickard. “So I let loose with somewhat of a rant on Twitter, FB (facebook) and LinkedIn.”

Airing those beefs resulted in a meeting with Rickard’s TD bank manager and a mortgage consultant, and the suggestion that there will be a new lower interest rate mortgage - without any penalties.

Rickard’s original post on Facebook detailed how he was refinancing his home and decided upon a 2.5 per cent interest rate with TD, allowing him to consolidate his business loans with a new lower interest rate. He then went ballistic upon learning that his original 5.5 per cent interest rate on the three remaining years of his mortgage would result in a $17,000 penalty, far exceeding the $3,000 or $6,000 he was expecting to pay.

“I also posted a link to my story on Twitter, and about 10 minutes after doing so I received notification that TD were now following me on Twitter,” says Rickard. “Five minutes after that I received a message from one of their reps asking me to contact them, which I did. After a few brief DM's on Twitter (direct messages) I provided them with my phone number, and in turn they instructed my branch to contact me to discuss the penalty amount and my concerns; very interesting.

“I would like to say that despite my rants and the frustration I am feeling right now toward TD, I must applaud them for their prompt reaction to my concerns,” he says. “It will be interesting to hear what they have to say. I will, of course post, the outcome on FB.”

Although pleased with the prompt action for the Wednesday meeting, Rickard was less than pleased with the results later that day.

“All I have to say is the meeting was very disappointing.”

Rickard was told that he could have the fees waived if he moved into a 5 per cent mortgage, along with paying the $6,850 penalty for the cashback portion of the mortgage and a $9,850 penalty for not completing on time.

“Needless to say I am in exactly the same position I was yesterday, and not very happy at all with the outcome of the meeting,” says Rickard.

When contacted by MortgageBrokerNews.ca for the results of the meeting and Rickard’s continued dissatisfaction, a TD representative said that his case will be sent through to an escalated customer care team for an expedited review.

Rickard is the owner/president of the Home Doctor, an eavestrough replacement company in the Greater Toronto area.

Doing battle with TD is nothing new to Rickard, who took a complaint about his current mortgage back in 2011 all the way to the TD ombudsman, when he refinanced his home for $60,000, but was only was approved for $40,000, and then was penalized $6,000 (which was later reduced to $3,000).

It was a fight Rickard called “long and painful” and one that he perhaps drew experience from to go immediately to social media for Round 2 with TD Bank.

 

  • Paul Mangion on 22/02/2013 7:07:32 AM

    I don't understand how this is news. Why is the penalty so out of line? He took a cash back and ignored the terms now he wants to change them in the middle and when it didn't go his way he gets pissed off. I agree there may be some room to reduce penalties but how much is realistic. If rates shot up to 10% and TD tried to re negotiate he would have been upset but when he tries to change the terms he is also upset. This is the worst type of customer where it is his way or else and doesn't really care about anyone else. All his problems are caused by someone else. If I was TD I would start Tweeting facts and would be glad to see him go!

  • That's What's Up on 22/02/2013 7:10:18 AM

    This is what banks do to generate billions in profit. Even when looking to 'rectify' the situation, the Bank basically offered to reset the taser from 'kill' down to 'stun'.

  • George Christopoulos on 22/02/2013 7:10:40 AM

    Maybe this gentleman should spend more time reading his contract than on social media. I'm sure he would not be to open to his client demanding a change to their mutual agreement half way through his work. Maybe his clients could post on Twitter

  • Mortgage Person on 22/02/2013 7:24:17 AM

    Why would you even print this CMP (or even write this Donald Horne). You must have nothing to do? Stop giving air time to client that do not have a case. Welcome to the world of cash back mortgages and IRD Mr Richard.

  • Grant Thomas on 22/02/2013 7:27:14 AM

    I can't believe CMP would print this story

  • Read What You Sign on 22/02/2013 7:28:08 AM

    I agree with Paul. This is the worst type of client to have. Surely he read the cash-back agreement and mortgage penalty clause when he originally signed. Because things don't lean drastically in his favour he rants. I'm sure he'd hate to have a customer like himself. If there's any mistake it's that he personally took the wrong product for his needs/situation without a proper consultation. A borrower is naive to think a bank would give thorough, proper advice.

  • Paolo Di Petta | dipettamortgage.com on 22/02/2013 7:29:14 AM

    While I agree that he should have read the terms of his mortgage more carefully, TD has been abusing their power as a primary player as of late (with collateral mortgages, for instance), and it's nice to see the customer leveling the playing field.

  • MortgageMan on 22/02/2013 7:36:35 AM

    Contrary to some of the above posts, I am very happy CMP posted this story. This is the kind of thing mainstream media does not print! However, I can forward this article to my clients, reminding them once again what the differences are between the mortgages I can offer them as a REAL mortgage broker versus what they get at the Big Banks with their enormous penalties!!

  • Be aware of TD fine print so clients don't get ups on 22/02/2013 7:40:37 AM

    It is true that TD has what I would consider an insane way of calculating penalties. It involves the ratio between the posted and actual rate from the time of funding... not simply IRD... same horrible formula applies if you try to obtain an early renewal. Unfortunately I speak from experience as I personally tried and their quote was really high because of this policy. Existing Mtg 3.99% with less than 2 yrs to go. Want to early renewal to new 5 yr... they quoted over 4.25% (if you blend 3.99% with even 3.09% it certainly would not work out to anywhere near 4.25%) I'm very disappointed in TD. I miss ING's mtg products... a blended rate was just that.

  • christa devers-williams on 22/02/2013 7:46:15 AM

    Maybe this client should read his terms and not sign a 5 year term if he is refinancing every 2 years. This is exploiting the social media platform and although it is a high penalty, he can't expect the bank to just let him out of his mortgage with paying. He should have been quoted this penalty or approximate amount from the beginning so he can't blame the bank if he is SURPRISED. I am shocked that this article is written to imply he had any justification in his claim.

  • Nicholas LaRamée on 22/02/2013 7:47:51 AM

    What I don't understand is why someone who feels they have already been treated unfairly is going back for another round. Although TD has a legitimate claim to the penalty they are quoting, MANY other lenders will offer better terms with lower penalties than TD and then he won't be putting himself in this situation again. If he does choose to continue with TD he should get in writing the discount they are using for the rate and how this could affect any future penalty.

    In response to Paul's comment about how the client would feel if rates went up and TD wanted to increase the rate they are charging, he may want to read his contract with TD on that item as well because they can do just that.

  • Nicholas LaRamée on 22/02/2013 7:52:05 AM

    The client should have known how cash back works but it often is not explained. I have been doing mortgages for 12 years and have cash back for a client 3 times. It is rarely the right thing to do and once people understand how it works they usually don't want it. It usually makes more sense and will often cost less for the client to use an unsecured credit line.

  • Sharon on 22/02/2013 7:59:00 AM

    You take a cash back and want out early and your rate is higher then current then you pay the piper. Nothing new about that, it is business!!

  • Sharon Fauchon on 22/02/2013 8:00:33 AM

    I believe cash back is great for people who need it to get into a home but it also needs to be explained correctly on how it works. If a lender does their job then there are no surprises.

  • Mortgage Professional on 22/02/2013 8:02:56 AM

    So let me get this straight...the client takes a cashback mortgage, is only two years in to a five year term and expects his penalty to be only $3,000 - $6,000??? Then when he finds out the actual penalty including the clawback of cashback (which the lender in entitled to) and IRD charged (which is in the mortgage terms and conditions)...he throws a hissy fit and starts making irrational demands??? If I were TD Bank, I would say the penalty is the penalty and if he doesn't like it to stick it in his ear. This man is clearly an idiot.

  • Omer Quenneville on 22/02/2013 8:03:18 AM

    Part of a mortgage agreement should include the estimated cost to discharge for every anniversary date and the client should initial for each year acknowledging this. As well for “collateral” mortgages should be explained and understood.
    I also believe that if mortgage brokers did their job, clients wouldn’t bother with banks, most mortgages would be variable vs fixed, and if clients opted for fixed, they wouldn’t take more than a 3 year fixed.

  • Lee Perry on 22/02/2013 8:17:08 AM

    As much as I feel sorry for anyone that gets hit with a lofty penalty it is part of the contract, as is paying back the portion of the cashback amount. There are a couple of lessons that come to mind right away in this scenario. First lesson is a client should ask right up front at a bank or be coached by their broker on what the penalty calculation is. If you are dealing with a lender that will not share their penalty calculation with you then run, dont walk away. Banks have a typically higher penalty calculation than a monoline because they use it as a retention tool also whereby they can negotiate a lower penalty which may actually equal or be close to the penalty the client would have paid if they had chosen a different lender. The second lesson to learn is sometimes those rates that look so attractive at 10 or 15 bps lower that will save a client maybe $20 a month in payments can bite them and end up costing them more down the road. Don't forget on top of a penalty there is a reinvestment fee at a lot of financial institutions and some lenders will also charge a flat fee percentage to break a mortgage. Now that I write this there is a third lesson to clients that may be reading this, always ask a mortgage broker first for professional advice, especially if you have any intention to possibly end the mortgage term prior to maturity. Maybe paying $1,000 more over 60 payments is a good insurance policy to not pay maybe $10,000 more in a penalty based on the specific lender.

  • Ontario Broker on 22/02/2013 8:18:17 AM

    You are all missing the point about TD monitoring Twitter. Big brother is watching. Speak ill of them, & they will try to calm down you & the media buzz,then do what they want.

  • Russ Cameron on 22/02/2013 8:34:08 AM

    Most of the mature professionals above recognize that this customer just didn't read what he was signing..twitter had nothing to do with the bank responding he could have went to his branch mgr up front and the mgr isn't going to ignore him as if the mgr did nothing it will come back to him and he has to deal with it. The penalty hurts so it's got to be someone else's fault.

  • Mortgage Guy on 22/02/2013 8:53:00 AM

    Be nice if Mortgage BrokerNews knew something about the basic terms of the financial instruments that its readership sells. Or, maybe just change its name to BankComplainer News.

  • MP on 22/02/2013 9:25:19 AM

    Twitter is a powerful tool to get a message across very quickly. That is the point of this story. As mortgage brokers we should keep that in mind when dealing with our customers. Treat the customer right. Tell them the facts upfront. Show them the ins and outs of penalties. Copy the big banks penalty calculators onto your desk top so that when your customers come in to see you, you can educate them so that they never get in this situation.

  • Paul Therien - CENTUM on 22/02/2013 12:54:22 PM

    I think that the point of this story is incredibly valid, namely that social media is a very powerful tool. As more and more mortgage brokers use the medium themselves it is important that we also remember it is about more than just marketing. If brokers, like any other business, don't provide a customer the expected service - we run the risk of a very public complaint which could damage reputation.

    As for the customer not understanding the terms, how well were they explained to him? Did the bank rep, or the broker, make sure that he understood the terms of the mortgage before he signed?

    Food for thought.

  • neilmacc on 22/02/2013 2:26:39 PM

    WOW - I can not belive what I have been reading from "most" of you so far. I have had many occations where NONE of the negative connatations of a mortgage have ever been explained to a client - whether by a bank representative OR a broker. Clients only learn later of the consiquences. Shame on "everyone" in the businees for not doing a proper job of explaining the "down the road" issues that would crop up. Seems (almost) everyone just wants to get the deal done and "get their cut" A mortgage document is a detailed piece of language and is not in the biggest print size. Let's all concentrate on "explaining to and educating the clients" NOT on berating them. I believe that is the purpose of the MortgageBrokerNews site.

  • James on 22/02/2013 4:32:17 PM

    I can't believe the comments on here... Every mortgage broker calls themselves a mortgage advisor, a specialist, a professional, etc. etc. - yet so many people's comments on here are disgraceful. Blaming the customer for not understanding and reading all the fine print, painting the customer as the one solely at fault... Who do you people think you are? When someone consults with a professional it's because they want and need sound advice, it doesn't matter who from, a bank rep or a mortgage broker. TD may very well be wrong here, but at least they made an effort to make the customer happy which, based on comments on here, is more than 90% of brokers would do.

    Brokers wonder why they can't get more Canadians to do business with them, here's why. It's obvious all you really care about is making a commission. I for one will think twice before using a mortgage broker, it's obvious your not the advisors you profess to be.

  • Tina on 22/02/2013 4:35:24 PM

    Is this what I can expect when dealing with a broker? You call yourselves professionals? On what planet?

  • Mike on 22/02/2013 4:44:36 PM

    Of the first 23 comments only the last two don't automatically lay the blame at the customers feet. To the first 21, it's obvious that Paul Therien and neilmacc are the professionals here. Maybe the rest of you should just hang up your hats, it's so obvious your in the industry just for your commissions. I feel sorry for your clients it is pretty clear you don't give them good advice.

  • Mark on 22/02/2013 11:07:20 PM

    This is simply a lack of proper mortgage planning on behalf of the consumer and the mortgage representative.

  • Ozwald on 23/02/2013 1:55:34 AM

    Interesting. Why didn't TD just blend his mortgage rate? When you blend and keep the remainder of the term (which typically is lower) you can avoid any penalty at all. Kudos to this guy for doing what he felt he needed to do and kudos to TD for their quick response and doing what they felt they needed to.

  • Tony D'Avino on 23/02/2013 2:10:54 AM

    Good job in reporting this CMP....the one case where an interest penalty is appropriate (regardless of the dollar amount) and you choose to fuel this borrower's fire. The cost should have been disclosed up front (when the client applied) and an appropriate course of action could have been put forth (perhaps a blended rate or a detailed cost analysis???). In fairness to the client, if he had been quoted a smaller interest penalty, TD should stand behind their mistake. Better education, more upfront disclosure, a little more diligence and possibly the use of an independent mortgage professional could have alleviated the aggravation for both the borrower and the lender....

  • Lee Perry on 23/02/2013 2:15:19 AM

    For those last 3 comments from Mike, Tina and James who believe that everyone that posted on here is actually on commission......your assumption was wrong. Assumptions can lead to errors and can also cost you money. I actually work for a lender and previously worked for TD. You will note that any post I ever make on this site includes my full legal name and I stand behind what I say. In fact I will go one step further for the 3 of you and give you my number to call and discuss the merits of broker vs bank. Here you go 416 434 2571

  • Bruce Schoenne on 23/02/2013 2:29:10 AM

    Clients can get some relief from the high mortgage penalty by using the prepayment option on their mortgage. If they don't have the funds to do it, PaylessPenalty.com can help. They use their money and basically split the savings with the client 50/50. Just a thought if they don't have a choice.

  • James on 23/02/2013 3:01:02 AM

    Sorry Lee, but whether you are an independent mortgage broker, or you work for a bank, a consumer comes to you for advice, period. I'm not in the industry or mortgages, but I am a financial advisor, and it would appear that the laws of consumer disclosure obviously don't apply as thickly in the mortgage industry. Comments like yours are further justification that your industry needs the same stringent federal regulation that planner and investment advisors have to go through.

  • John Dearin, AMP, RPA on 23/02/2013 3:16:41 AM

    Most borrowers never get the chance to review the documents put in front of them. My last bank mortgage prior to becoming a broker, I went to the branch and when I started to read the 15 legal size pages of the contract the bank rep asked me what I as doing. I told him I was reviwing the contract and he said he didn't have time for this, I could do this at the lawyers. At the lawyers, I was told I would be charged $100.00 an hour to sit in his office and make notes, plus $135.00 an hour for him to review my questions. On top of what I was already billed. It has not changed, our followup with our clients indicate the lawyers do the same now. So the client signes to get his money.

    At our brokerage we take pains to explain the consequences of getting out early. Bluntly the lender has you by the gonads and will squeeze hard.

    I challenge anyone here to admit that they were given the time to review the contracts clause by clause by either the lender or the lawyer. If we don't do this at the brokerage, the borrower is blind.

  • Paul Therien - CENTUM on 23/02/2013 4:37:29 AM

    The point of this article was not that the customer did not understand what he signed, but to demonstrate the sheer power of social media. The customer may very well be wrong, but there is an old adage: A Happy customer will maybe tell one person, an unhappy person will tell ten. We all know that an unhappy customer is going to vent; it is no longer a 1 to 10 ratio, it is now a potential limitless audience / and the unhappy customers will still talk about their experience far more than a happy one, and bad news sells. It is not just potential customers, but also our referral partners that pay attention. In an industry where we rely heavily on referrals, this should be a huge red flag and be taken very, very seriously. There are lots of examples of people, companies, and governments who have been ruined because of the power of social media. Ignore this, and we could be next.

  • Cory on 23/02/2013 5:08:57 AM

    James, I think you need to be careful with what crowd you are preaching to when your industry is chalk full of mis-representation. I make a very healthy living moving clients from WFG, Primerica and IG mortgage product, of which most is poor at best and is obviously very poorly explained to a client. Don't think for a second the Mortgage Broker industry issues don't extend to yours and others. I understand there is a large difference between financial planning offices, just like you should understand there is a large difference between Mortgage Broker offices, to lump them all as being bad, is, well, bad.

    I think the article did a very good job in bringing a couple of things to light, one that there will be situations of miscommunication or misunderstanding in all avenues of our industry and, two, that social media is powerful, powerful stuff.

    Clearly only a small few of the posters on here picked up on the reason the article was written in the first place. Do your job or have your name smeared via social media, google reviews, etc. We live in an interesting world.

  • George Christopoulos on 23/02/2013 5:10:46 AM

    I cant believe so many brokers feel the client has no burden of responsibility. This demonstrates the power of social media and at the same time how useless it can be. So this guy blew off steam and we all responded, in the end did it help him recoup money from a contract he entered into? NO. Maybe the banks can condense their policies into 140 characters or less for the brainless generation being created or even better maybe this guy can take his complaint to TMZ. My advice , time to grow up.

  • Ron Miller on 23/02/2013 5:27:49 AM

    Whoever (broker/bank rep) gave him the mortgage possibly didn't explain what would happen if he broke the mortgage. Or he didn't understand.

    "I can't believe the comments on here... Every mortgage broker calls themselves a mortgage advisor, a specialist, a professional, etc. etc. -" I love this line by James.

    When signing mortgage docs with a client and at the pre-approval point especially cash back mortgages, you have to make sure the client clearly understands what they are doing. If not, you are not doing your job. Simple! Same with collateral mortgages, give the client a scenario with consequences. Find out thier future goals, make sure this mortgage works for them. That's what a mortgage broker/agent is suppose to do. Call yourself what you want, just do your job.

  • A Broker on 23/02/2013 8:59:12 AM

    C'mon guys,do your homework. We all know the penalties involved and that the banks are going to receive their interest on the remaining term.
    Either the mortagge agent is uneducated or purposefully lisled the client to gain commission.

  • Waran on 24/02/2013 3:03:04 PM

    The real problem is how the prepayment penalties are calculated by the financial institute (mainly the banks). They calculate the penalty based on the posted rate at the time we obtain the mortgage. If you notice now, the 5-year fixed-closed mortgage rate is around 5.24%. But the same bank will lend you the same term for 2.85%. So keeping the posted rate at an artificially high rate, they can charge you hefty penalty when you try to break the mortgage later on during the term 5-year term. We all should stop giving our business to them. A reasonable method would be not to include the discount (charging 0.25% on top of the given rate should be ok too) when calculating the penalty. We all should complain this to our Finance Minister Honourable James M. Flaherty ( jflaherty@fin.gc.ca). If you own a mortgage, take two min to voice your concern. It will pay off at some point: Maybe when you go for your next mortgage renewal.

  • Anita M on 11/06/2013 12:17:09 PM

    I just came across this story....i'm with TD and very disappointed as well. I signed a variable mortgage in 2009...last march I received a call from the bank that rates were going up the next day and to come in by 6pm that day to lock in at 2.99, don't recall what I was at but I was already under financial constraints so I went in and locked in for 4yrs 2.99. June last year a friend of mine told me I shouldn't have done what I did because of the penalties, I went into the bank, asked about the penalties and they printed out what they call for discussion only paperwork that should my penalty was a 3month prepayment around $2600. NOW, to this year...still under financial issues, I decide to do a re-finance and scotiabank worked magic on the numbers for me that got me to the lawyers office about to sign only to have the lawyer tell me the numbers that TD sent him are off what we estimated the penalty to be. We reviewed it, turns out the TD penalty came in at just over 9K...I went into td immediately, took the paperwork they gave to me last year and was told read what it says, that paperwork is for discussion only and that the rates can change but they weren't sure what the paperwork I had only showed 3 months prepayment when it should have showed IRD....now i'm understanding that even though TD rates have gone up to 3.01 as of today and my rate I have with them is 2.99 I should only be paying the 3 month interest penalty but apparently that's not the case, when I was called into the bank last year, the rep gave me a 1.60% discount off the posted rates which is why i'm stuck with such a huge penalty. Completely stuck/disappointed. Now my scotia advisor says lets wait another week because rates are still changing or tells me to ask TD to do the same offer he did....nice of him even after all the work he did. Why TD, why?

  • Bruce Schoenne - PaylessPenalty.com on 11/06/2013 12:40:58 PM

    Providing the PaylessPenalty.com service I can tell you that it is very difficult to get a straight answer from the banks over penalties. We just did a deal for a client where he himself was given 2 different answers on two separate phone calls. We called a total of three times and three times we got three different answers. Basically they were not going to let the client do anything to lower the penalty. We knew that they record all phone calls so we got the manager to listen back on all the calls and finally got them to admit that they made a mistake. I'm happy to say that we saved the client about $2,600 in a penalty. My point, when you talk to a bank, get it in writing, get the name of the person you are talking to and record the date that you had the conversation.

  • Anita M on 11/06/2013 1:00:11 PM

    I did sign for the reduced rated and even got the penalty in writing when I went in last year but neither matters they say. I didn't do a cash back mortgage. I'm just venting I guess at the sheer experience....but when you're under stress and someone calls to make an offer, don't accept so easily.

  • Nicholas LaRamée on 11/06/2013 4:23:33 PM

    I would recommend NOT dealing directly with a bank and find an experienced mortgage broker who is able to correctly calculate potential future penalties as this is a very real cost that you are likely to pay at some point in the future. I would also recommend that you NOT take a collateral charge mortgage as most of the banks "offering" (forcing their clients into) collateral charge mortgages have a little clause in the legal docs that you sign that the rate is not guaranteed. On average big bank penalties are about 500% higher than typical good monoline mortgage penalties that you can get through a broker (MCAP, Home Trust, First National, B2B, Merix, Street Capital).

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