Are Mortgage Brokers honest with home buyers and refinancing homeowners?
25/03/2012 
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First home buyers and borrowers refinancing home loans need to know that their mortgage broker is honest and is looking after their best interest.
Mortgage brokers are in the firing line of late, and now Westpac bank and the Commonwealth bank are putting pressure on accredited mortgage brokers, telling them that if they don’t have a certain number of home loans settle with them within a 6 month time frame, they will lose their accreditation with the home loan lender.
The mortgage brokers have responded by saying that their “Independence” is in jeopardy, because many brokers will bow to the pressure and set loans for clients for the home buyers or borrowers refinancing home loans with these lenders, rather than the best home loan for the customer.
In my prior article I was a little harsh on these brokers, and this brought up the question of honesty of the Mortgage brokers.
So here is my revised take on this important topic.
The Mortgage Brokers Intent indicates his or her honesty.
Honesty should not in my opinion be taken on a legal or literal definition of the relationship between the mortgage broker and the lender and the home buyer or borrower refinancing, but on the intent of the mortgage broker when they are helping their customer select the best loan for them.
If the Mortgage Broker has the intention of always selecting the very best mortgage lender and mortgage loan product for their customer, then its obvious that the mortgage broker can be considered an honest mortgage broker.
If the Mortgage Broker explains to the customer that they are offering a no cost home loan service to them, because the lenders are paying them a commission for introducing the home loan to the lender, they are being honest in my view.
If on the other-hand the mortgage selected favours the mortgage broker and his or her own personal interest, then it seems to me that the mortgage broker would have to be considered dishonest.
Banks and other mortgage lenders that offer lenders inducements to put loans through them, compromise the brokers’ impartiality. So do lenders that force lenders to have sales targets.
Doing so in my view makes mortgage brokers appear commission representatives of the home loan lender.
That has to be a concern for the mortgage broker industry and the first home buyer or refinancing homeowner that place their trust in a Mortgage Broker to do the right thing by them.
Rick Adlam has been helping clients with home loan finance since 1985 when he was home consultant with AV Jennings. Rick started Equity Home Loans in 1996 to help homeowners become property investors. Rick currently consults in the development of Mr Mortgage for mortgage brokers and HomeMate for new home buyers.
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