Canadian Mortgage Trends – April 19, 2011
RBC-Mortgage Banks have extensive policies governing what their representatives can tell the public. The alleged actions of RBC mortgage rep Corinne Schindler demonstrate why.
Schindler has reportedly been circulating this flyer, which grossly mischaracterizes mortgage brokers in relation to bank specialists. It’s a document that demonstrates a stunning lack of knowledge, professionalism and discretion.
The piece, which displays RBC’s logo and web address, has gone viral and caused a PR embarrassment at the nation’s biggest bank. Incensed brokers from across the country have demanded that RBC retract the misstatements on the specialist’s behalf.
Here is a sample of the distortions attributed to Ms. Schindler (our perspectives follow each line):
1. Brokers charge “set-up fees” and “other hidden costs”
· Truth: Broker fees are exceedingly rare on prime residential mortgages. When fees or borrowing costs are warranted, provincial regulations require full disclosure.
2. “Ask a broker what their compensation will be for completing your mortgage.”
· Truth: Broker compensation is geared primarily to the term and secondarily to the rate. As with any incentive-based model, conflicts can exist, but no more so than with various bank rep models that pay more commission for selling a higher rate.
3. Misrepresentation. Brokers pick lenders “based on only the lowest rate, no other factors”
· Truth: Rates are commodities so successful brokers always prefer to leverage trusted advice and relationships. To build each, brokers become experts in their craft, which includes term selection, product comparison (from multiple lenders…key point) and strategic mortgage planning.
4. Brokers…”cannot fit your mortgage solution together with your overall financial plan.”
· Truth: Needs assessments are a fundamental tool that brokers utilize. Brokers are trained to uncover future needs that financing might have to address.
5. “Brokers will not be there in a few months when you need to ask questions about your mortgage or change the terms of conditions”
· Truth: Referrals are a broker’s lifeblood and maintaining relationships is impossible without exceptional post-closing support.
6. “You have to be careful to deal with an institution that will give you a great rate term after term.”
· Truth: Banks’ renewal models are designed to maximize profit. That’s done through selective pricing (i.e. not offering the best rate to everyone up front). It’s a fallacy that banks reward loyalty with great rates. (Here’s some relevant research).
After poking around at RBC, this piece appears to be Schindler’s own doing. This advertorial is definitely not in RBC’s marketing library we’re told. Moreover, RBC’s corporate materials are far more polished (i.e., generally no grammar or formatting issues, missing slogans, mistruths, etc.).
From what we hear, Schindler violated RBC compliance guidelines and sent it out without RBC’s or her manager’s consent.
In response to all this, RBC provided us with a comment:
“The opinions expressed in the document by the mortgage specialist do not reflect the positions, strategies or opinions of RBC. We are following up directly with this mortgage specialist to ensure future collateral accurately reflects the RBC brand.”
We have a better idea. How about no “future collateral” from this individual period?
Fiduciaries that mislead the public for personal gain are hazards and liabilities to their employers. Anyone who would author this sort of content should be sent packing because Lord only knows what she’s telling clients in private.