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The Big Story: Should clients' legal and appraisal fees be covered?
What have you done for me lately? Increasingly, that’s the attitude of refi clients who expect lenders and by extension brokers to cover legal and appraisal fees. Are these expectations out of line? More and more bank branches don’t think so. Most brokers, however, think that incentives should be offered sparingly, on n a case-by-case basis. On today’ s Big Story we spoke to Linh Ly of Unity Financial Mortgage Services and Sharon Ferguson and Bill Mitchell of The Mortgage Centre-Durham. Find out on today’s The Big Story, on MortgageBrokerNews.ca TV, your home for industry news, opinion and analysis.
Video transcript below:
John Tenpenny, Mortgage Brokers News TV
John Tenpenny: Hi, I’m John Tenpenny, Editor of CMP Magazine and welcome to the Big Story on Broker News TV.
What have you done for me lately? Increasingly that’s the attitude of more refi clients who expect their lenders and by extension brokers to cover legal and appraisal fees. Are these expectations out of line? One or more bank branches don’t think so. Most brokers however think that incentive should be used sparingly on a case by case basis.
Sharon Ferguson, Agent, The Mortgage Centre, Durham
Sharon Ferguson: Today clients come in with expectations of appraisals and legal fees to be paid by the lender. Do I think that that’s something that happens on a regular basis or should happen? The answer is no. Every circumstance will be different in what you need to get your transaction completed. I do believe that once you make your explanations to your clients they will agree you and understand that legal fees are part of their responsibility. I do find more and more that the questions of appraisals being paid by us does come up and in the circumstances where I need to make the transaction run smoothly I will pay for that transaction for my client.
John Tenpenny: So it may not be realistic to expect lenders to pick up the tab for every refi appraisal and legal fee. But one option may be for lenders to designate select brokers, give them the power to decide who gets that special treatment.
Bill Mitchell, Agent, The Mortgage Centre - Durham
Bill Mitchell: Well I think rightly or wrongly clients have that expectation that if the lender wants your business, the lender should be prepared to pay for it for those costs and I don’t think it’s realistic to expect the lender to have to open their wallets in all those situations. I think a better solution would be for a lender to use those tools a little more judiciously and by that I mean to offer them to their key broker partners and then after that trust that those brokers are going to use those tools when it makes sense to.
John Tenpenny: Some brokers think it’s a slippery slope, to pay the fees should only be put on to the table to hold on to a client.
Linh Ly, Agent, Unity Financial Mortgage Services
Linh Ly: As a broker I do not feel that we need to cover legal fees and appraisal fees for our clients in every single circumstances. I do however feel that in this competitive environment that we sometimes need to cover legal fees and appraisal fees in order to retain the business.