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We’ve all heard this line before: “A mortgage is probably the largest financial commitment you’ll make in your lifetime.”
We’ve all heard this line before: “A mortgage is probably the largest financial commitment you’ll make in your lifetime.”So what happens when the process goes sour? Who’s got your back?
People run into mortgage service problems all the time. The three most common grievances relate to penalties, portability caveats and pre-approvals. (Source: OBSI’s 2016 annual report)
Fortunately, several organizations across the country are equipped to handle mortgage-related disputes, whether they be between you and a mortgage broker, a bank or another financial institution.
Complaints Against a Mortgage Broker
About 43% of mortgage originations are handled by Canada’s 23,000 licensed mortgage brokers. Most go off without a hitch and survey after survey shows that clients are pleased with broker services overall. (The latest poll from CMHC found that 77% of homebuyers were satisfied with their brokers in 2016.)
But disputes are nonetheless inevitable. And since each province has its own mortgage broker regulations, you need to contact the regulator in your province if you have a problem. Here they are:
| Alberta | Real Estate Council of Alberta (RECA) |
| British Columbia | Financial Institutions Commission of British Columbia (FICOM) |
| Manitoba | Manitoba Securities Commission (MBS) |
| New Brunswick | Financial and Consumer Services Commission (FCNB) |
| Newfoundland & Labrador | Service Newfoundland |
| Nova Scotia | Service Nova Scotia (SNS) |
| Ontario | Financial Services Commission of Ontario (FSCO) |
| Quebec | Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ) |
| Saskatchewan | Financial and Consumer Affairs Authority (FCAA) |
Step 1: Discuss your problem directly with the mortgage broker to see if you can arrive at a resolution. This is often the fastest way to resolve a complaint.Here’s the general process for initiating a complaint against a mortgage broker:
Step 2: If you’re not satisfied that your concerns are being addressed, the Financial Services Commission of Ontario recommends writing to your mortgage brokerage’s administrator (a.k.a. “broker of record”) asking for their final position on the matter.
Step 3: If the complaint still cannot be resolved within a reasonable period of time, or if you feel that the provincial law governing mortgage brokers has been broken, contact the respective regulator above. Information on how to file a complaint can be found on their websites.
Complaints Against a Bank
The Financial Consumer Agency of Canada (FCAC) oversees federally regulated financial institutions, which includes all banks and trust companies.
How to file a complaint against your financial institution
Step 1: By law, all banks, retail associations and federal trust, loan and insurance companies must have a complaint-handling process in place for consumers. In the event of an issue with your financial institution, your first step should be to try and resolve it directly with the manager or customer service rep at your local branch.
Step 2: If your complaint cannot be resolved at the branch or local level, ask for it to then be referred to a senior staff member or an internal ombudsman. The bank is required to do this.
Step 3: If the complaint still hasn’t been resolved to your satisfaction, you can then elevate the complaint to an external complaints body (ECB), a third-party mediator that will work to resolve your issue to completion. All banks and federal credit unions are required to have a complaint-handling process in place for consumers, and this includes belonging to an ECB of their choice. Complaints against RBC and TD are handled by ADR Chambers Banking Ombuds Office, while complaints to most of the remaining financial institutions are handled by the Ombudsman for Banking Services and Investments.
Do Your Due Diligence
No one wants to go through the time and effort of pursuing a complaint. The best way to avoid this whole headache is to protect yourself from the start. By doing some research and due diligence, you lower the chances of problems down the road.
Ask the Right Questions of Your Mortgage Advisor
Most mortgage advisors have your best financial interest at heart. But you should still be prepared to question them on their qualifications and services.
Questions to ask your mortgage broker:
- Are they licensed to work as a mortgage broker?
- You can verify this from the provincial regulators listed above. Most have search pages where you can look up brokers, brokerages and mortgage administrators to confirm that they are licensed.
- Does the broker make you sign a service contract?
- If so, read it over carefully and ensure you understand it, especially any exclusivity agreements or fees.
- Do they charge a fee?
- If so, how much and when does it come into effect?
- How they will be compensated?
- On most residential mortgages, brokers/brokerages are compensated directly by the mortgage lender and they don’t charge extra fees.
- How many lenders have they themselves submitted applications to in the last year?
- Anything less than 8-9 can mean that the broker doesn’t do much business (a red flag) or doesn’t shop enough lenders.
- Brokers who send more than 50% of their business to one lender are essentially a salesperson for that one lender, so their objectivity may be an issue.
- How long have they been in business?
- Experience is crucial. Mistakes at closing or bad recommendations can cost you time and stress.
- Steer clear of anyone who hasn’t been in business at least a year and hasn’t personally closed at least 30 mortgages.
Questions to ask your banker or credit union rep:
- How long have you been in business?
- Do you make a bigger commission if I pay a higher rate (compared to your “floor rate”)?
- How do your penalty calculation, portability, blend and increase policies compare to major broker lenders like First National or MCAP?
It’s worth every minute of your time to educate yourself before committing to a mortgage provider. The more questions you ask of your mortgage broker or lender upfront, the less likely you’ll ever need to worry about complaint resolution.
15 Comments
Great info here. I suspect a great number of disputes could be avoided if people took the time to read contracts thoroughly or spent the time to ask their mortgage brokers/banks questions about the process. That’s not to say there’s not a few bad apples out there though!
Excellent list of questions to ask brokers/bankers. Agree 100% with the comment above – ask these questions and you greatly reduce the odds of needing to escalate your grievance to a full-fledged complaint.
No client should start the mortgage process without asking this question: “Do you charge a fee?”
This is a pretty good list of questions. In hindsight I should have asked more of my mortgage broker before signing the contract, but luckily he got me a great deal and saved me a bunch. But we all know there are a few apples out there. At least we can take comfort in knowing there are comprehensive complaint processes across the country.
Very helpful and appreciate questions, you have listed above. I will be now more and more careful and ask more information to my mortgage broker.
Broker took some fee saying it is brokerage fee to get approved…Later I read that brokers get commission from lenders not from customers.
I want to complain about this unethical behavior of the broker.
Please advise if I can.
Do you have weak credit, very high debt and/or problems proving your income?
How did you pay the broker?
Did the broker put the fee in writing before you paid it? If so, what did the broker’s fee agreement state?
The Spy no i have good score and good income all provable income on T4….My friend was agent with that broker and he just over trusted him and paid on my behalf.
The amount he paid was cash :(.
Hi,
Who do we complaint if a TD Home Mortgage Broker has taken your documents and claims to have submitted the application, but he is not responding to calls and at the same time not giving any details about the application to me?
Hi Prav, By “TD Home Mortgage Broker” I assume you’re referring to an actual mortgage broker and not a TD employee (mortgage specialist)?
If so, step #1 would be to confirm who the “broker of record” is at his firm. Then call him/her to request an immediate response on your file status. You can confirm the contact information from the regulator in the broker’s province using the links above. Good luck!
A broker/agent at [a] mortgage [brokerage] told me he had a lender for us. He did not. Send us the documents. In writing (email) he said he would send it he is just getting everything ready. Two weeks went by then he emailed and said and wrote it is all good we would get the documents within a week. A week went by no documents. I emailed him and said where are the documents. No response. I called. I emailed and told him I was going to get a new broker as I do not trust him and it is taking too long. He calls me and says. Everything is good he has a lender and everything will be completed in the next week. We wait again. Nothing comes. Email him again. No response. Call no response. Email telling him I am going elsewhere. He emails and says it’s completed and the documents will be here within a few days. Once again nothing comes. This is six weeks of the run around and no documents just false promises. I contact the VP of mortgage [brokerage]. She said she will look into it and have him contact me ASAP. He contacted me and said why would you contact head office. What did you think that would do? Let’s not worry about that right now let’s just get your mortgage done. I said you have had everything for seven weeks. My mortgage is due in 5 days and we are screwed be cause we have no mortgage. You told us to not renew with our current company and we declined their renewal He said he would get a letter to speak with alpine credit and let them know that we have a new mortgage lender and it will all be taken care of within the next day. Well low and behold nothing comes. He never contacted alpine credit. He never sent the release for us to sign for him to contact alpine credit. I emailed him. I called him. I texted him. No response. I contact the VP again. She said she will escalate it to the compliance officer. Well our mortgage is due in 83 hours and we have nothing. What can I do now aside from contacting the FSCO.
I will be suing the agent and the firm in small claims court for breach of trust, distress and for the money that we will have to pay at a higher rate to get a mortgage in a few days
Debra,
See: http://www.fsco.gov.on.ca/en/mortgage/Pages/faq-c.aspx#iq1
Our mortgage specialist promised us 750$ in gift cards for a mortgage switch and later just left the bank he was working with and told us he is not going to pay us. What are my options?
If you have it in writing take it to his manager. If the manager doesn’t do anything then take it to the bank’s ombudsman.
If you don’t have it in writing your probably out of luck.
Is $20000 in fees combined from two mortgages totaling $175000 to much?
Hi Kat, I’m assuming that’s solely a lender/broker fee and doesn’t include pre-paid interest or other things. If so, only a desperate borrower with seemingly no other options would pay 11.4% in fees to a lender/broker. And I’m not judging. That’s just a fact, as it’s an extremely high amount. Would be curious to know who the lender was and how great the risk was on this financing.