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The Big Story: Do you require loyalty agreements?

Clients fleeing in the 11th hour can be frustrating... can loyalty agreements put an end to it?

Video transcript below:

Justin Da Rosa, Mortgage Brokers News

Justin Da Rosa: You do the math, negotiations and paperwork, comes closing time and a client leaves, what can you do? Are loyalty agreements the answer? Or cancellations fees? I am Justin Da Rosa, this is the Big Story.

Brokers spend time building client relationships and trust. Expertise and service costs money. Are loyalty agreements the only way to stop clients from walking?

Deepak Bansal, Mortgage Broker, Dominion Lending

Deepak Bansal: Loyalty agreements in my opinion are not a good thing for the industry. I find that if you are in the practice of using a loyalty agreement on a day to day basis, it could actually have a negative impact on your business. I personally feel that you shouldn’t have to have a risk contract to hold the client to you. If we are doing everything right as mortgage brokers, we are providing excellent customer service, we are going out of our way to provide service even after the mortgage has funded and doing everything always in the client’s best interests, we are naturally going to build this relationship and trust and that trust is what’s most important. The trust is what will hold the client to you. You don’t need a loyalty agreement for that. However, I do feel that a loyalty agreement, having some sort of existence of a loyalty agreement in the industry is okay. One that is actually legally binding, can be held up in a court of law, for certain transactions such as commercial transactions, where there is a great deal of time involved and work involved, but to be used sporadically in specific situations, but not on a regular mortgage transaction on a day to day basis.

Justin Da Rosa: It’s all about the money for buyers. So are cancellation fees the way for it?

Edward Ricciardi, Mortgage Agent, Dominion Lending

Edward Ricciardi: I have had instances where I have searched high and low for some clients, whether it’s difficult credit score or their income levels had to be supported in different manners of documentation, did a lot of work for people, then when they go to signing day at the solicitor’s office, they will go get the certified funds for the agreement of the down payment for [proposing] costs at the solicitor and the person behind the desk who is qualified at nothing but taking down an application will say oh, what are you doing, are you going for a mortgage, well come talk to us, we will give you something. And then everything we have done is gone down the drain. Everybody is allowed to write up choice, however if you have taken somebody to that end stage, he should be committed. After all they have signed a commitment and I am not saying that they don’t have choice even before that, but if they have accepted the obligation of the lender for that commitment, please go through with it, otherwise they should be a penalty.