Brokers don’t mince words when it comes to banks’ collateral charge mortgage practices but a recent MortgageBrokerNews.ca poll shows just how prevalent they are in the mortgage broker industry as well.
72 per cent of brokers admitted to having placed a client in a collateral charge mortgage at some point, compared to just 28 per cent who have not.
However, of those polled only 20 per cent of brokers said they would place a client in a collateral charge mortgage in the future.
Still, brokers have been calling for more transparency from their big bank counterparts regarding collateral charge mortgages.
“Transparency is very important to the consumers as they can make an informed decision of whom they would like to conduct business with,” Angela Wong-Lao of Invis The Money Lady recently wrote on MortgageBrokerNews.ca. “Our broker channel has been bombarded with so many disclosure forms since January 2009 and I believe that the lenders -- whether it is a bank, credit union, trust company, investment firms, etc. -- should have similar disclosures when they are dealing directly with consumers as it is their fiduciary duties to do so.”
That transparency, however, may be on the horizon.
Canada’s eight largest banks have now agreed to provide more information about collateral mortgages; including online educational resources and better training for their employees to help them better explain the difference between collateral charge mortgages and their more-conventional counterparts.
“Our government is standing up for consumers and saving Canadians money,” Finance Minister Joe Oliver recently said.
The government’s latest move to hold banks more accountable is welcome news but there’s more that needs to be done, argue mortgage professionals.
“As a broker, we need to strictly follow the rules, but for those bank staff, it seems that they can do whatever they want,” comments one broker on MortgageBrokerNews.ca.