The banks been registering mortgages as collateral charges for a long time. Finally, working with the Federal government, the announcement came this month that Canada’s banks will provide consumer information on collateral charges “to help consumers make more informed choices”.
It amazes me that it takes government involvement to get these banks to do what they should be doing from the very beginning. You are selling me the biggest loan of my life and you are making the decisions for me? You don’t tell me that you will register the charge for 125% of the value of my home so that I will not be able to get secondary financing elsewhere? You don’t tell me it will be more difficult for me to transfer my mortgage at the end of the term to get a better rate at another institution? And if I have any other loan with your bank it is lumped into the same “loan”, so that if I default on my car loan, you can come after my house?! You have to be kidding!
I often expect large corporations to do the right thing. Not because they are better or more ethical, but they have more resources and more of a reputation to protect then a small fly-by-night operation…you would think. But I am disappointed again and again.
Many consumers signed on the dotted line without knowing whether their mortgage is a collateral charge or not. Often you find out at the signing that the amount registered is not the amount of the loan and then the specialist tells you “it is okay, that is how it’s done. Don’t worry”.
Last year a friend of mine had a small mortgage due at BMO. Because it was in Ontario, I couldn’t pull up title to check to see if it was a collateral mortgage. If it was then it would not be worth the extra fees and hassle to move the mortgage elsewhere. I had my friend call to find out whether his mortgage was registered as a collateral charge or not. He tried for a couple of weeks and nobody was able to definitively tell him what he has. Most of them seemed confused around the terminology. Poor training or a conspiracy?
Regardless, now the banks are supposed to have collateral charge disclosures on their website. I am sure they are there, but some of them are very difficult to find. But hopefully their specialist will explain it to the clients.
I see the benefits of smaller government and free enterprise as much as the next guy, but sometimes a little government involvement balances out the forces of corporate greed. Doesn’t happen often, so savour it when you can.
Alternative lending.ca help people with difficult situations get financing and people in good financial situations get better financing through non-bank lenders. We operate out of Vancouver, BC, but can assist people in all of BC and selected locations in Alberta, Manitoba and Saskatchewan.
