Sub Prime Mortgages/loans and secret commission

[42man]

Interesting as I have written confirmation from them that they HAVE charged an additional fee, and they have pointed me to their FLA leaflet !!! which states a commission....however to the lay person this is confusing....and moreover the amount is NOT disclosed

[Sparkie1723]

Hi 42man

Am also posting this on the Swift site.

 

sparkie

[bach]

Hi, and subbing

Lynn

[SergioAlmeida]

I have to say that there is a lot of whingeing and complaining about so-called 'Secret Commissions'. I am a mortgage advisor/broker and have been for the best part of 10 years. There is no such thing, as far as mortgages are concerned, as secret commissions. As per usual, people who have taken a mortgage offer out have failed to fully read their offers. All mortgage offers are standardised as per FSA Regulations and are all set out the same. If, those of you who are moaning that you were never explained about procuration fees (this is what your so-called 'Secret Commissions' are actually referred to as), then read your mortgage offer. It clearly will state in section 13 what commission is paid to the broker. And before you all start panicking, this fee is NOT charged to the client, they never have to pay it back and no interest is ever charged on it. In all my time as an advisor/broker, I have ALWAYS made it crystal clear to ALL my clients that I will be receiving a fee from the lender, it is something that the FSA says that I have to make my clients aware of (and before you all start, if your broker did not explain this, it is still written in black and white, in your mortgage offer) and I have never had an issue with it.

 

Once again, it is consumers who have got the wrong end of the stick, and, as a result of a few bad apples in the mortgage industry, we have all been tarred with the same brush.

 

With regards to secured loans, these are governed by the Office of Fair Trading and not the FSA, and therefore different rules and regulations are applicable.

[42man]

I have to disagree...it may well be an implied term in the fisa booklet, but the fact that it NEVER says a figure means that it is secret...I know for a fact that on a recent loan £6,000 had been paid as a commission to the broker...if you refer to the case of Wilson vs Hurstanger then the judge said that the companies concerned had a fidiciary duty to reveal the figure....

[42man]

I'll make it clear that this figure was NOT revealed to the person (or appeared in the agreement) who was loaned the money and this was in ADDITION to a quoted brokers fee of around £1,800 !!

[42man]

If I'd have known that my loan was going to get £6,000 undisclosed then I certainly would have queried it !!

[Sparkie1723]

I have to say that there is a lot of whingeing and complaining about so-called 'Secret Commissions'. I am a mortgage advisor/broker and have been for the best part of 10 years. There is no such thing, as far as mortgages are concerned, as secret commissions. As per usual, people who have taken a mortgage offer out have failed to fully read their offers. All mortgage offers are standardised as per FSA Regulations and are all set out the same. If, those of you who are moaning that you were never explained about procuration fees (this is what your so-called 'Secret Commissions' are actually referred to as), then read your mortgage offer. It clearly will state in section 13 what commission is paid to the broker. And before you all start panicking, this fee is NOT charged to the client, they never have to pay it back and no interest is ever charged on it. In all my time as an advisor/broker, I have ALWAYS made it crystal clear to ALL my clients that I will be receiving a fee from the lender, it is something that the FSA says that I have to make my clients aware of (and before you all start, if your broker did not explain this, it is still written in black and white, in your mortgage offer) and I have never had an issue with it.

 

Once again, it is consumers who have got the wrong end of the stick, and, as a result of a few bad apples in the mortgage industry, we have all been tarred with the same brush.

 

With regards to secured loans, these are governed by the Office of Fair Trading and not the FSA, and therefore different rules and regulations are applicable.

 

I bet you never explained to your clients that you will select the lender who will pay you the biggest commission. Not the one that pays the least .....but would more than likely offer a better deal at a lower interest rate because the commission would be less to take care of in the interest rate.

 

If the borrower does not pay this commission then answer me....... who does.........I'll answer that for you ......it is taken into consideration in the interest rate that is applied to the loan which of course the borrower pays ...so do not try and convince people otherwise ....that the borrwower does not pay it.

 

You also never mention that certain lenders also pay an extra £1000 per £10.000 worth of business placed with that lender ON TOP OF THIS COMMISSION

 

sparkie

[42man]

I was referring to sub prime loans/2nd charge 'mortgages' as opposed to prime loans...apologies if there was confusion on my part....

[SergioAlmeida]

Sparkie,

 

I am very insulted by your suggestion. I have always chosen a lender according to the client's needs, not the commission paid. Not only would this be ethically wrong, it would also mean that the FSA would ban me as a broker and never be allowed to work in the financial services industry. Seeing as this is all I have done and known since finishing university, why would I risk it all for that. Also, if you knew what you were talking about, you would not have said what you did. 95% of my business is with prime lenders, and they all offer pretty much the same commission (ie 0.35% of the mortgage). To say that I chose a mortgage on the basis of what commission I get is highly offensive to me. Judging by your name, as an electrician, would you do the same? I doubt it, and I would never accuse you of the same. So kindly pay me the same respect too.

[SergioAlmeida]

42man,

 

As I said previously, secured loans, as opposed to mortgages, are governed by different rules and regulations. I do not have any dealings with secured loans (I never have a call for them) and therefore would not be able to respond to your thread.

[42man]

Well you did come into a forum entitled 'sub prime mortgages/loans and secret commissions' and belittling people who whinge and complain about secret commissions....

[42man]

But as you correctly stated for Prime mortgages it is different....

[42man]

So what do you know about the Sub Prime market Sergio ? I would be interested if you imparted your knowledge on that...(if you have some knowledge of this of course !!)

[Sparkie1723]

Sparkie,

 

I am very insulted by your suggestion. I have always chosen a lender according to the client's needs, not the commission paid. Not only would this be ethically wrong, it would also mean that the FSA would ban me as a broker and never be allowed to work in the financial services industry. Seeing as this is all I have done and known since finishing university, why would I risk it all for that. Also, if you knew what you were talking about, you would not have said what you did. 95% of my business is with prime lenders, and they all offer pretty much the same commission (ie 0.35% of the mortgage). To say that I chose a mortgage on the basis of what commission I get is highly offensive to me. Judging by your name, as an electrician, would you do the same? I doubt it, and I would never accuse you of the same. So kindly pay me the same respect too.

 

Point taken but if you had made it clear that you were actively involved in the sub prime market, the I would most likely not have made my remark in such a strong fashion there Having said what I said could be incorrectwher your particular position is ...it is the subprime brokers/agents that this is about ....unregulated second charge secured lending, I apologise for such stong words.

 

Sub prime commission is between 3 & 8% so you can see why people are "whingeing" as you put it.

 

sparkie

[SergioAlmeida]

42Man,

 

Let me know what you want to know about the sub-prime market, have plenty of experience there. Only moved into the prime market post-credit crunch.

[SergioAlmeida]

Sparkie,

 

That I agree with you whole heartedly. I think secured loans, though they may have a place in today's market, are very much a last resort to lending, especially considering the rates that are being charged. Secured loans should only ever be used if a borrower is within their 'tied-in' period with their lender, and, as most people are only tied in for 2-5 years, in my opinion, secured loans should only be used a last resort.

 

Personally, I think that the whole credit crunch and the restruction on lending has been a good thing, though the extent of it has gone too far. Money was far too easily available and a lot of people did not appreciate the implications of paying it back in the long term may be. I will also hold my hand up too; there have been occassions in the past where I have met clients that obviously cannot conduct their finances properly, but lenders were still willing to lend to them. You can say I provided a service to those clients when I was asked to, but in hindsight, I truly feel that some people should not have been lent a library book, nevermind a mortgage.

 

Live and learn!

[Sparkie1723]

Sparkie,

 

That I agree with you whole heartedly. I think secured loans, though they may have a place in today's market, are very much a last resort to lending, especially considering the rates that are being charged. Secured loans should only ever be used if a borrower is within their 'tied-in' period with their lender, and, as most people are only tied in for 2-5 years, in my opinion, secured loans should only be used a last resort.

 

Personally, I think that the whole credit crunch and the restruction on lending has been a good thing, though the extent of it has gone too far. Money was far too easily available and a lot of people did not appreciate the implications of paying it back in the long term may be. I will also hold my hand up too; there have been occassions in the past where I have met clients that obviously cannot conduct their finances properly, but lenders were still willing to lend to them. You can say I provided a service to those clients when I was asked to, but in hindsight, I truly feel that some people should not have been lent a library book, nevermind a mortgage.

 

Live and learn!

 

 

Thank you for being so open and honest and I apolologise to you completely..................and say that I agree with all you have said above

 

sparkie

[SergioAlmeida]

Sparkie,

 

Thanks for your response.

[kregrs]

Sorry to drag up an old thread, I have a question relating to the whole commission thing. When I finally get round to sending off my sar to Igroup, Southern Pacific and Kensington, do I need to specifically ask for the underwriting sheets? Also, will I need to contact the broker that I used, as I can't for the life of me remember who they were, only that they were based in Truro, miles away from me.

[Helford]

Hi Kregrs,

 

The Broker couldn't possibly be 'The Money/Mortgage Group' could it, now part of GE Money who also bought out iGroup?

 

www.gemoney.co.uk

 

 

 

p.s. Always worth googling the name 'Tony Murtagh' the Founder of The Money Group !!!!

 

 

H, formally of Truro ish

[kregrs]

I honestly cant remember, just that I remember having to post a load of paperwork special delivery to Truro, and that I found the number in one of the free ad papers. I know they arranged the mortgages with SP and Kensington, the Igroup mortgage was arranged by another broker, again cant remember who though, which is why I'm hoping I don't need to contact them, or if I do, that the mortgage companies will supply the name and address of the brokers...

[andrew1]

I honestly cant remember, just that I remember having to post a load of paperwork special delivery to Truro, and that I found the number in one of the free ad papers. I know they arranged the mortgages with SP and Kensington, the Igroup mortgage was arranged by another broker, again cant remember who though, which is why I'm hoping I don't need to contact them, or if I do, that the mortgage companies will supply the name and address of the brokers...

 

If you did a Subject Access Request and sent your £10 to the finance companies they'd send you all the paperwork (or they should ) and you'll get the names of brokers in there. It's unlikely they'll send you the Underwriting sheets, but make sure you ask specifically for it as it will have you data on it and you are entitled to ANYTHING with your data on.

[HomerJSimpson]

If you can find out which Solicitors acted for the lender and dealt with the disbursement of your loan, then SAR the Solicitors and you will get the Underwriting sheet.

 

Done this with GE Money. They were as obstructive as possible in keeping the secret commission information. They even have a Contentious Litigation Department to further obstruct you!

 

I found that Bernard Elliston, Sandler & Co had acted for GE with my loan.

I SAR'd BES&Co and though initially they played silly beggars, they did eventually comply and sent all information they had, including the underwiting sheet.

 

GE's bung to Ocean finance was 10% of the loan amount.

[johannab]

Hello Homer,

I am gonig to SAR ge's solicitors from when I took out my mortgage years ago. I know they will give me the run around though.Is there a template or anything specific to state in my first contact with them? They are not Bernard ellistons but another company.

 

Did you win this after discovering the 10% bung?