CMT – Bank Mortgages: Disclosure and Suitability

There are so many things the Average Joe doesn’t know about the mortgage business.disclosure-of-mortgages

One is that bank mortgage reps often get paid more for selling higher rates—as do many brokers.

Another is that banks sometimes direct borrowers to outside lenders that the bank has financial relationships with. This happens when the bank chooses not to service the applicant directly (due to qualification issues or an inability to meet the customer’s expectations).

Both of these issues entail potential conflicts and disclosure problems, but banking regulators don’t monitor these matters as closely as you’d think. That was the topic in this week’s Globe column: That story

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CMT – TD Takes Heat for its Collateral Mortgages

Collateral charge mortgages got more bad press on Friday after CBC’s Marketplace ranthis report.Collateral-Mortgage

The gist of it is thatcollateral mortgages“effectively trap you at the bank,” says the CBC (which is not entirely true…more on that below).

TD Canada Trust, which sells only collateral charge mortgages, was caught in CBC’s crosshairs. An undercover reporter went into a TD branch with a hiddencamera, asking the mortgage rep what made TD mortgages different than those at other banks.

After being questioned in four different ways, the TD rep finally disclosed that TD’s mortgage was a collateral charge, saying:

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CMT – Variables Still Play Second Fiddle

Will we ever stop writing about which rate is better: fixed or variable?Fixed-Variable-Mortgages

It’s doubtful.

And the answer will probably always be: “It depends.”

Yesterday, Rob Carrick from the Globe & Mail ran this story on why variable-rate mortgages should not be written off. Its main arguments are that rate risk has declined and historical studies support variable rates.

Well, in our books, Carrick is one of the best tell-it-like-it-is writers in personal finance. But this particular story needs at least a teaspoon of perspective.

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