Mortgage question is this unethical? - Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

gildo · 10-22-2012, 10:32 PM

We were looking to sell our home then buy another, but we found a smokin' deal and went for it so essentially bought another home before selling our current home, our mortgage broker bent over backwards and got us approved to make this new purchase. He is a great guy, but he no longer deals with our current bank (we knew that going in) and if we don't port our mortgage the payout is $8000. All indications from our end have been we would use the broker and go with him. We eventually sold our house in a week and now with a month to go we have a decision to make, port our mortgage or go with the broker who deals with MPAC. I feel bad for turning on him after all he did but $8000 is a lot of money and we only have 2 years left until we have to re new.

So my question is....what should I do? And we filled out some initial paperwork with the broker...could he hold us to it and are we essentially stuck with him legally? Any tips and advice would be much appreciated, thanks.

GP_Matt · 10-22-2012, 10:41 PM

It seems unethical to use their services when you are in a bind and then bail when you find something cheaper.
You could always ask your broker what his commission is on the deal after expenses and pay him the money.
Another option would be to have him set you up with a completely open mortgage. That way you can take your time selling your current home. Once the home is sold you can port the mortgage to the new home and pay off the old mortgage. It is open so there is no penalty and the broker will have gotten his commission. The advantage of this plan is that you can take longer to sell your house and possibly get a better price. You will likely accept less if you have to sell the house by a fixed date.

4X4 · 10-22-2012, 10:49 PM

The guy did his work and deserves to get paid. I agree with GP, ask him what his commission is, and pay him. Of course, it might be illegal to pay a mortgage broker for a mortgage you didn't get. Might want to check that out.

Deegee · 10-22-2012, 11:01 PM

We often bid on accounts and then people take them to the place they "hate" so much and have them match it. What's worse is we are actually putting the credit together ourselves. It always seems to happen with complex deals such as timber-frame builds or the like where materials need to purchased up front.

It's kind of the nature of the beast, don't feel bad.

Deegee · 10-22-2012, 11:02 PM

Also, you could offer to go with the broker pending he pays your payment penalty.

That seems fair.

gildo · 10-22-2012, 11:03 PM

Thanks, I do feel bad. It's eating me up to the point where I am maybe wanting to bite the bullet on the $8000 payout fee.

Titan · 10-22-2012, 11:15 PM

Quote:

Originally Posted by gildo

Thanks, I do feel bad. It's eating me up to the point where I am maybe wanting to bite the bullet on the $8000 payout fee.

Before I did that I would call him and explain the predicament. Ask him straight out how much he was going to make and offer to pay that. He will probably say don't bother just refer me to his friends, which in the end will be far better for him anyways. No way I would want someone to eat $8000 in a situation like this.

Stillman16 · 10-22-2012, 11:22 PM

Quote:

Originally Posted by Titan

Before I did that I would call him and explain the predicament. Ask him straight out how much he was going to make and offer to pay that. He will probably say don't bother just refer me to his friends, which in the end will be far better for him anyways. No way I would want someone to eat $8000 in a situation like this.

You could also commit to using him in 2 years when your current mortgage is up.

Winsor_Pilates · 10-22-2012, 11:55 PM

Quote:

Originally Posted by gildo

Thanks, I do feel bad. It's eating me up to the point where I am maybe wanting to bite the bullet on the $8000 payout fee.

Don't eat the $8000
His commission won't be that high, so you could even save the $8000 and pay him and still be better off.

I would just tell him the full situation, give him a sincere thank you, a nice gift or gift card for his efforts and send referrals his way down the road.
He should understand, and be thankful that you actually care and are sincere in your thanks.

topfiverecords · 10-23-2012, 12:17 AM

I think it would be unethical of the broker to force you to be out $8000 so he can make a commission. He should understand your situation and a token of appreciation for the work he put in would be a good idea IMO.

8sPOT · 10-23-2012, 07:16 AM

If you have an $8000 penalty that means you have a fairly high rate. You will probably save a fair amount over the term of the new mortgage. As I'm assuming you will have a much lower rate.

ken0042 · 10-23-2012, 07:29 AM

Quote:

Originally Posted by 8sPOT

If you have an $8000 penalty that means you have a fairly high rate.

Doesn't seem like a high rate to me. If he owes $200K and has a 2% mortgage; that would be almost $8000 payout. I used simple calculations as the odds are either number is likely to be higher.

username · 10-23-2012, 07:30 AM

I wouldn't eat the 8K. If it's unethical to pay him then maybe ask him what he's into and buy him a nice gift. I'm sure you won't be the first person to do this to a broker, it's a competitve business.

8 grand will go a long way with all the stuff you're going to need for your new house. Congratulations!

8sPOT · 10-23-2012, 07:36 AM

Quote:

Originally Posted by ken0042

Doesn't seem like a high rate to me. If he owes $200K and has a 2% mortgage; that would be almost $8000 payout. I used simple calculations as the odds are either number is likely to be higher.

There's no way a $200K mortgage with a rate of 2% would have a penalty of $8000.

I have about a year and a half left on my mortgage, has a high rate by todays standards, mortgage is less than $300K and the penalty is about $10,500.

The rate differential calculation with todays low rates creates bigger penalties.

bizaro86 · 10-23-2012, 08:25 AM

Quote:

Originally Posted by ken0042

Doesn't seem like a high rate to me. If he owes $200K and has a 2% mortgage; that would be almost $8000 payout. I used simple calculations as the odds are either number is likely to be higher.

Nope. A 2% mortgage would probably only owe 3 months interest as the penalty, not the interest rate differential.

So 200,000*0.02*(3/12)= 1,000

He's probably paying an interest rate differential. If his mortgage is 1.5% higher than current rates and he has 2 years left he doesn't need a ridiculous mortgage to have a payout that high.

Example: 266,666*0.015*2 years = 8000

1.5% isn't out of line considering how much rates have fallen in the last few years.

red sky · 10-23-2012, 08:33 AM

I have a five your term with 2 years remaining. The rate I locked in at was 3.5% so there isn't really that much of a difference between rates at the moment.

polak · 10-23-2012, 08:35 AM

Definitely don't pay the $8K hit but you need to go and at least tell him what happend. No reasonable person is gonig to expect you to pay an extra 8 grand when you don't need to.

Bring_Back_Shantz · 10-23-2012, 08:40 AM

His job is to get you the best deal possible on the mortagage.
He hasn't been able to do that, so I'm not sure why you should stick with him if it's going to cost you more.

The guy probably did a good job and worked hard for you, but if he doesn't work with the instituation that is going to be the best for you, that's his fault/problem, not yours.

ken0042 · 10-23-2012, 08:40 AM

Quote:

Originally Posted by bizaro86

Nope. A 2% mortgage would probably only owe 3 months interest as the penalty, not the interest rate differential.

My point was really the same thing you said later on in your post; that $8K penalty doesn't nessesarily mean the person has a bad mortgage or high interest rate.

polak · 10-23-2012, 08:45 AM

Also, if your institution is so good, then he is probably aware of that and this probably won't be the first time this has happend to him.

This is similar to when I switched my car insurance from AMA to Meloche Monnex. After I got a quote from MM the lady at AMA told me flat out that they cannot offer me the same type of deal as MM.

Nature of the business.

If you want to be a nice guy I would tell him what happened and get him a gift. Don't offer to pay his commission or anything like that because thats not right either. He didn't get you the best deal and thats that. But you could get him a nice bottle of scotch or something (ask beforehand) as a thank you. I'm sure he would understand.

And if he doesn't, punch him in the teeth and call him a prick because as others have said, he didn't get the job done.