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Brokers defends position on representing private lenders

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Mortgage Broker News | 07 Nov 2012, 11:11 AM Agree 0
It may go against the grain of many brokers, but one seasoned mortgage professional makes it clear to borrowers that he represents the lender in private deals and not, in fact, them.
  • Dale Koeller | 08 Nov 2012, 07:33 AM Agree 0
    Notice that his final quote is that if you choose a sophisticated private lender that you can represent both the lender and borrower equally. You should choose a sophisticated private lender for the benefit of your borrower, not simply so that you can then give them advice and represent their interests, but because they will be indebted to a more professional private lender.
    Our insurance industry also tells us that the biggest source of claims against brokers is from individual private lenders who believed the mortgage broker had their best interests at heart.
    Ensure you always choose a sophisticated and professional private lender for your own benefit, and for the benefit of your borrowers.
  • Ron Butler | 08 Nov 2012, 09:24 AM Agree 0
    I appreciate your insight Dale.

    Over 17 years we have placed well over 2500 private mortgages from individual investors, not MICS and we have retained most of the same investors for that 17 years who have referred us to others to invest and often to their children.

    We have never even had a official complaint from an investor in all that time let alone an insurance claim.

    I do respect that what you say is true, poorly handled private mortgages are a prime source of insurance claims and litigation in our industry. My belief has always been if you try to treat the investor's mortgage as if it was your own money going out, it is the best guiding principal.

    Also, I know several very sophisticated private lenders and some MICS where I would not be doing a borrower any favors if I arranged those mortgages.

    In the private mortgage business I think the best practise is the most honest disclosure and insistence that the borrower is always represented by a seperate lawyer representing the borrower's interest no matter what the size of the mortgage.

    Perhaps a recommendation that only professional private investors be used is also coming from a professional private investor.
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