Mortgage Broker chasing his fees.

ACG

saajan_12 said:

Lots of assumptions on what the brokers fees were conditional on. The reality is there can be various different agreements and charging schedules, eg 
- fixed fee for working with you at all, paid by customer
- conditional on getting you an offer, paid by either customer or lender 
- conditional on mortgage being drawn down, paid by lender

You need to establish exactly what the agreement was with the broker. This may or may not be conditional on whether you agree anything with the lender. 

I think that in bold is the key one. If it was offer, I would still tell them where to go. 
The offer is worthless. Its not what was agreed or applied for. Thats the brokers problem. 

To be honest, as a broker I would be calling up the customer and explaining what has happened and the options (ie take it, leave it or try somewhere else). If they took it, I would probably lower my fee as a bit of a goodwill gesture. If they left it, I would not charge. If they wanted me to try somewhere else I would do. 

If the fee was charged on application or earlier, I think the customer is in a tough position. If it was on offer or completion then the broker has to take the hit. 

Leng18

CSI_Yorkshire said:

Leng18 said:

The problem is he said I could get 86k that's why I said go ahead. In the end I was offered 78k. As I am not accepting this offer, I surely should not have to pay the broker fee to him right? 

Not necessarily - if you agreed to pay him to find an offer, he's done that.  If you agreed to pay him when you take the offer, then he hasn't.  What does your contract say?

And I don't think he would have actually said "I guarantee that you will get £86k".  Probably more likely "you should be able to get £86k based on survey and valuation".

The mortgage broker did not give me a copy of the contract.

Leng18

ACG said:

You went to the broker for £100k.
They told you they could get you £86k. You proceeded on that basis. 

They have not obtained £86k and what they can get you is not going to work. Thats the brokers problem and one of the risks of being a broker. We are always at the mercy of the valuer. 

The broker has the option (in my opinion):
- Knock it on the head and you both go your separate ways. 
- Appeal it based on the fact you are in receipt of higher rent (unlikely to work but no harm in trying).
- Try a different lender. 

But as it stands I dont think the broker has a leg to stand on.You went to them for £100k/£86k, they have not supplied you with it.

The only exception to that I can think is if they charge their fee on DIP/Application. Ultimately at that point they are charging their fee regardless of the outcome. I dont agree with that personally, but it is allowed and especially with it being a BTL you are treated with big boy pants as a business rather than consumer rights as an individual. 

He said fee is charged on getting a offer, but the offer 78k is below the value 86k what he said I can get.
I feel like he just went and got any offer on the market, not to the interest of the client, so he can get his broker fees.
Which is not right, so if I had gotten a offer of 50K, he would still ask for his fees.

And he wants his broker fee paid half in cash and half by bank transfer. 

ACG

Leng18 said:

ACG said:

You went to the broker for £100k.
They told you they could get you £86k. You proceeded on that basis. 

They have not obtained £86k and what they can get you is not going to work. Thats the brokers problem and one of the risks of being a broker. We are always at the mercy of the valuer. 

The broker has the option (in my opinion):
- Knock it on the head and you both go your separate ways. 
- Appeal it based on the fact you are in receipt of higher rent (unlikely to work but no harm in trying).
- Try a different lender. 

But as it stands I dont think the broker has a leg to stand on.You went to them for £100k/£86k, they have not supplied you with it.

The only exception to that I can think is if they charge their fee on DIP/Application. Ultimately at that point they are charging their fee regardless of the outcome. I dont agree with that personally, but it is allowed and especially with it being a BTL you are treated with big boy pants as a business rather than consumer rights as an individual. 

He said fee is charged on getting a offer, but the offer 78k is below the value 86k what he said I can get.
I feel like he just went and got any offer on the market, not to the interest of the client, so he can get his broker fees.
Which is not right, so if I had gotten a offer of 50K, he would still ask for his fees.

And he wants his broker fee paid half in cash and half by bank transfer. 

Tell him you did not get an offer for £86k at the rate agreed. The £78k is not enough and you will not be proceeding. 
If he wants his fee, he will have to take you to court. See what happens. 

dunstonh

He said fee is charged on getting a offer, but the offer 78k is below the value 86k what he said I can get.

The broker would use the value you told them during the application process.  They are not responsible for the actual valuation turning out to be lower.

And he wants his broker fee paid half in cash and half by bank transfer. 

That is not good.   payment in cash could suggest either tax evasion or trying to defraud his network i.e. declaring half the fee to the network who take a share of the fee against the bank transfer and are not aware of the actual fee.

Have you signed a fee agreement showing the total fee? - that would be expected.
Does the key features illustration issued by the broker prior to the application show the full fee?
Does the key features illustration issued by the lender show the full fee?

silvercar

CSI_Yorkshire said:

Leng18 said:

The problem is he said I could get 86k that's why I said go ahead. In the end I was offered 78k. As I am not accepting this offer, I surely should not have to pay the broker fee to him right? 

Not necessarily - if you agreed to pay him to find an offer, he's done that.  If you agreed to pay him when you take the offer, then he hasn't.  What does your contract say?

And I don't think he would have actually said "I guarantee that you will get £86k".  Probably more likely "you should be able to get £86k based on survey and valuation".

That would be an unfair agreement, what if the mortgage offer was only for £40k, would you still say the broker was entitled to payment?

CSI_Yorkshire

silvercar said:

CSI_Yorkshire said:

Leng18 said:

The problem is he said I could get 86k that's why I said go ahead. In the end I was offered 78k. As I am not accepting this offer, I surely should not have to pay the broker fee to him right? 

Not necessarily - if you agreed to pay him to find an offer, he's done that.  If you agreed to pay him when you take the offer, then he hasn't.  What does your contract say?

And I don't think he would have actually said "I guarantee that you will get £86k".  Probably more likely "you should be able to get £86k based on survey and valuation".

That would be an unfair agreement, what if the mortgage offer was only for £40k, would you still say the broker was entitled to payment?

An agreement that said in effect "I charge this fixed fee for working with you, and I will find you an offer" is legitimate.  Why do you think it isn't?

It's not whether I say he's entitled or not.

dunstonh

silvercar said:

CSI_Yorkshire said:

Leng18 said:

The problem is he said I could get 86k that's why I said go ahead. In the end I was offered 78k. As I am not accepting this offer, I surely should not have to pay the broker fee to him right? 

Not necessarily - if you agreed to pay him to find an offer, he's done that.  If you agreed to pay him when you take the offer, then he hasn't.  What does your contract say?

And I don't think he would have actually said "I guarantee that you will get £86k".  Probably more likely "you should be able to get £86k based on survey and valuation".

That would be an unfair agreement, what if the mortgage offer was only for £40k, would you still say the broker was entitled to payment?

It would depend on the terms of employment but yes with caveats would be my answer.

If the broker has acted in good faith with the information that was supplied and it turns out that the potential borrower has been mistaken in their valuation which has resulted in a lower amount being available, then why should the broker not be paid for the work they have done?

Mortgage regulation requires everything to be done and issued prior to application.  So, pre-application is a lot of work.  Post application is a lot less.     Being charged at or just before the application is a common model.    

On the other hand, if it was lending criteria that the broker should have known about (e.g. income/affordability criteria), then the application shouldn't have been submitted in the first place.  

Some brokers will have a model that says no mortgage = no fee.   Others will say they will not charge if the information you have told them is correct and results in rejection, then there is no fee but if the information was wrong, then a fee would be charged.     its all about the fee agreement and the terms agreed.