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25 Oct

BUSTING The Banks-Collateral Mortgages

General

Posted by: Angela Calla

A major TV news program calls out TD Canada Trust’s collateral mortgage.  CBC Marketplace aired an episode called ‘Busting the Banks’ on January 25th.  If you want to skip to the video link, just click here and scroll to the 8:00 min mark.

During the program, CBC took a hidden camera into a TD branch….the reporter posed as a potential mortgage borrower….   Only when questioned for the 4th time did the TD banker disclose their mortgage was a collateral charge….  but they didn’t seem to explain the difference between a conventional mortgage and a collateral mortgage… The Banker only agreed that the collateral charge was a disadvantage.

The CBC reporter also produced TD mortgage documents obtained at the branch.   After a thorough search, they couldn’t find the word ‘collateral’ anywhere.   The only place they could find the word ‘collateral’ was in one document sent to the lawyer during mortgage registration.   Of course, the big problem here is that most lawyer’s get mortgage instructions from Banks around one to two weeks before closing….  A bit too late to start shopping for a new mortgage.  Leaving the consumer with no option but to proceed with the TD collateral mortgage.

WHAT’S A COLLATERAL MORTGAGE?

Collateral mortgages are more commonly used when obtaining a secured line of credit…. or a product that has revolving credit with no set amortization.  There are several other differences that affect what your current and future options will be (more on this later).  A collateral mortgage has it’s place but for the vast majority of us, I believe it’s just not the right product. The biggest problem I have is that most borrowers are unaware of what they are getting into.

Back in October 2010, TD quietly announced they would begin registering all their mortgages as collateral mortgages.   http://www.angelacalla.ca/blog_post?id=8190  the differences between collateral and conventional mortgages….  Does anyone remember this?  At the time, this was a huge story….  and yet, there was hardly no coverage…. Maybe the hundreds of millions that the BIG SIX BANKS spend in advertising each year has something to do with the lack of coverage.?

I could be wrong but my feeling is that since October 2010, the majority of TD clients have no idea their mortgage is registered as a collateral charge…..they will only find out once they go to refinance, renew or make a change with their mortgage…

I applaud CBC Marketplace for taking on the BIG SIX BANKS…..and my advice is to anyone needing a mortgage is to speak to an unbiased advisor.

TD is not the only lender doing this, they just happened to be the lender CBC showcased. It is common for the credit unions as well as sometimes with aby of the big banks HSBC, CIBC, RBC, Scotia, BMO. It’s an option for some cases without question; its just very importnat for there to be transperency in the products you select and to be aware of all the the pro’s and cons.

As always we are here to help callateam@dominionlending.ca 604-802-3983