Mis sold Mortgage Commission & Fees
How to claim back hidden broker fees on mortgages. If you have taken out a mortgage, secured loan or another form of finance in the last 12 years then you may have been an unwitting victim of dishonest broker commissions.
These secret commissions are payments made by lenders to brokers on top of the usual disclosed broker’s fee to ensure that the broker sends borrowers the lender’s way; Fees can also be payable to secure specific products, to guarantee ‘fixed rates’ for example if a sub-prime mortgage was sold
Obviously brokers are entitled to commission as that is how they make their living, but if they are offered an additional and undisclosed commission from the lender then it inevitably creates a conflict of interest. Commission received from lenders or mortgage packagers was often called a procuration fee this could be a percentage of the loan or a fixed amount
The incentive then for the broker is to arrange a finance agreement that secures them the most profit regardless of whether that product is actually suitable for the borrower or not – meaning that the borrower loses out financially at the expense of the broker.
Also, if a broker fails to disclose all the fees and commissions involved in a mortgage or secured loan transaction then they are breaking their legal duty. Disclosure is always regarded as best practice in treating customer fairly. It needs to be fair, effective and never misleading; customers need to see all upfront fees and service levels available to them.
Secret commissions are predominantly restricted to the sub-prime (bad credit) market as this area is less regulated, particularly where secured loans are concerned, than the prime market where it is against regulations for any broker fees to go undisclosed.
Before the recession, the sub-prime market was extremely competitive and so secret broker commissions were rife as lenders were desperate to attract business. Potentially thousands of borrowers were given unsuitable and fraudulent mortgages or loans as a result.
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