Mortgage Broker Fee

Hi! i would like some advice on this, please. i got a mortgage approval from a mortgage broker, who is my boy friend's colleague's wife. And by the time, i had a meeting with her, and she was agreed to ''help'' me get a mortgage free of charge.

i went to her office and signed the application form, which is an agreement between us. she normally would charge a fee, but as we agreed, she crossed the fee amount and stated with her pen, wrote down ''no fee'', as im a friend of hers. (she had the original copy of that, and she had never posted me a copy)

now i have got a better offer from another bank with lower rates, so i told her that i probably would not go with her offer in two month time. and i was thinking to get her a very nice personal gift to say thank you anyway in good faith. But now she is very annoyed with me getting mortgage from another bank, and being kinda nasty to me over the phone. And asked me to pay her the fee (normally its 600eur), as she said she did ''a lot of work for me'' which is not true. i had to filled in all the form, then posted them back to her, then she posted them back to the bank and made a few calls.

So is she entitled to claim the fee now? i thought a contract is based on an offer and acceptance. Because she offered me the service for free (as a friend's friend) that's why i accepted. If i knew she would charge me, i would not need her ''help'' at the first place.

Please help! thanks a lot!

I presume that there was no written contract? In which case was the nature of the verbal contract simply that there would be no fee regardless of the circumstances (i.e. going with her offer or not)? If so then you don't owe anything as far as I can see. Maybe put in writing to her what your understanding of the situation is? Sounds like you could be in danger of losing a friendship now though.

thanks! i did sign the application form with t&c. and she crossed the fee on that one. and i cant call her a friend. i only met her twice. and my bf only met her 3times. it was my bf's colleague (who is now left the company) said his wife could get me a good deal. now she is being very bitter to me & asked me for the fee, im in an awkward situation, wondering what i shoud say to her?

Hi eskei,

In your posts above, you say that you met the mortgage broker twice and your boyfriend met her three times. So that's either three meetings she's had with you, or possibly five. Presumably you went through the various rate options at these meetings and selected a suitable lender and rate. You sent her the application and she would have kept copies on file, before sending it on to the lender with her own recommendation. You also say in your posts above that she made a few calls. Did you / your boyfriend also call her / e-mail her as well?

From where I'm reading (I'm a broker also), I'd say that three (or five) client meetings, submission of a mortgage application and associated calls does mean that she did a considerable amount of work for you.

However, it appears that she didn't allow for this in her written documentation. In crossing out the provision for payment of a fee she assumed that she would be paid commission by a lender. It appears she didn't make any provision in her terms and conditions for what would happen if you didn't proceed. Her mistake.

So legally, you're probably correct to refuse to pay her anything for work done for you to date. Whether or not you would feel that any of the work she did for you, advice she gave you at meetings etc., is of any value would be up to you.

LDFerguson, i met her twice only. once in the cafe, once in the office. then my bf and his colleague met her just after work. nothing to do with this. im sure she did certain amount of work, but not '' a lof of work for months'' as she said. and i'm appreciated that. and would get her a nice gift for what she had done. but now she said because i dont get mortgage from her, and asked me to pay the full amount nearly 600. she didnt give me this t&c when i was agreed.

eskei said:

...and i'm appreciated that. and would get her a nice gift for what she had done.

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Why not just pay her some money instead, ie negotiate a price for her work?

Best adivce is never go through a friend of a friend.. Only ends up in trouble!

yeah i know now. i have never received a copy of the application form with t&c that i signed, i only signed one copy, which she crossed the fee, and she has it. so is the contract avoided after a centain time of period if she has never given me a copy? i only have a blank copy of t&c that she gave to me in her office.

Just to clarify I don't disagree that she probably did more work that you assume and might have expected to get paid for this in some way. My original response was just dealing with the facts as presented which led me to conclude that you probably don't have any legal obligation to pay anything. However others might argue that there could be some other (e.g. moral) obligation.

eskei said:

so is the contract avoided after a centain time of period if she has never given me a copy? i only have a blank copy of t&c that she gave to me in her office.

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LDFerguson said:

So legally, you're probably correct to refuse to pay her anything for work done for you to date. Whether or not you would feel that any of the work she did for you, advice she gave you at meetings etc., is of any value would be up to you.

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Hi eskei

Unfortunate situation by the sounds of it. Pretty confusing also.

If she is a broker and agreed to charge you no fee then one assumes either she was doing it totally free or getting commission from the lender?

In either case, if this is what was agreed then I dont think its up to you to pay up €600 (which seems highly excessive anyway)

The broker should do the best they can to get the best deal for you using the information you have supplied.

Assuming that you supplied the same information to the bank that offered you the better rate then it looks like she may not have done all the work she said as surely she would have gotten you this rate in the first place.

Im pretty sure legally she is obliged to give you a copy of the documentation you signed, in any case if she crossed out the fee's part on the orignal then she cant really come after you for fees.

The broker I use does not charge clients a fee. As far as I know most take commissions from the bank.

If the mortgage she offered was not the one for you and you managed to find a better deal out there then in my opinion, you are well within your rights to decline her offer.

Morally, where you stand on this is up to you I guess, but if she is not a friend, and didnt get you the best offer, personally I wouldnt pay a penny.

thanks for the advice. i understand that she is now annoyed that she could not get her commission from the bank. maybe she presumed that i would definitely to go with her offer and also through a personal contact, she decided not to charge fees. End up now she is being very bitter to me over the phone and got her manager to send me the invoice and asked me to pay asap. but i just cant afford to keep her happy and go with the longer term and higher interest rate mortgage that she got me.

Because she offered me the ''free'' service, thats why i accepted it. at the meanwhile i went to two banks to get deals myself. and i didnt know at all and she had never told me that if i decided to go to other banks then she would charge me for the full fee. then i wud not have accepted her ''help''. it is just very stressful and disappointing for me as a first time buyer trying to get a good mortgage, doing snag, and probably have to borrow more money to furnish the apt.

eskei said:

thanks for the advice. i understand that she is now annoyed that she could not get her commission from the bank. maybe she presumed that i would definitely to go with her offer and also through a personal contact, she decided not to charge fees. End up now she is being very bitter to me over the phone and got her manager to send me the invoice and asked me to pay asap. but i just cant afford to keep her happy and go with the longer term and higher interest rate mortgage that she got me.

Because she offered me the ''free'' service, thats why i accepted it. at the meanwhile i went to two banks to get deals myself. and i didnt know at all and she had never told me that if i decided to go to other banks then she would charge me for the full fee. then i wud not have accepted her ''help''. it is just very stressful and disappointing for me as a first time buyer trying to get a good mortgage, doing snag, and probably have to borrow more money to furnish the apt.

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There is no moral or legal requirement for you to now pay her a fee. For her to expect you to, is bad business practice as you might have referred someone else to her. Send her a polite letter reminding her that she offered the service for free and that she at no stage mentioned any charges in the event of you withdrawing. She has a cheek to be taking this position now

eskei said:

thanks for the advice. i understand that she is now annoyed that she could not get her commission from the bank. maybe she presumed that i would definitely to go with her offer and also through a personal contact, she decided not to charge fees. End up now she is being very bitter to me over the phone and got her manager to send me the invoice and asked me to pay asap. but i just cant afford to keep her happy and go with the longer term and higher interest rate mortgage that she got me.

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So she normally gets a commission from a bank AND charges the customer a fee. Charming! It sounds like she was never doing you a favour for 'free' if she was going to be paid by the bank anyway.

I wouldn't pay. Even if you don't have a copy of the t&c with the fee crossed out, she has to have kept it and will have to produce it if asked. Stand your ground.

If there was a clear understanding at the outset that you would not pay her for the work she was going to do, then I don't think you would have a moral obligation to pay. Indeed, if she wrote 'no fee' that would corroborate the understanding.

I don't think that filling out an application, 2 meetings to get info and a couple of calls is a lot of work tbh.

You last post suggests you did not get a good deal from her, as she promised.

There is a general problem with commission based broker services imo in that it creates the wrong incentive. I don't understand what 'value added' this service and pricing structure gives especially as none of them sell all the mortgage products available. These potential conflicts of interest have been highlighted before.

I would also wonder whether they have a certain affiliation with a particular bank and that she may have pushed a particular mortgage you r way as it paid a higher commission.

In this regard that is extrememly bad practise. If she did not offer you the opportunity to find you the most competitive mortgage to suit your requirements then you may have a case against her!

Brokers are also obliged to furnish you with a 'reasons why' document as to why they have obtained and or recommending you a particular financial product.

i dont know how much commission she wud get. she got me two loan approval, and i got two as well by myself from different banks with the same amount. now im just afraid what if she will change the contract that i signed, because the thing she wrote is on the first page of the application or mark off ''no fee'' that she wrote? as she had the only copy. im just wondering what i should say to her in a polite way that i dont owe her the fee, cos i dont want to bump into her again in the future and it will just be embarrassed for me. maybe im going to borrow a book and read the contract law.

So as well as several meetings with yourself and your boyfriend, phone calls etc., detailed above, it now transpires that she processed two applications to approval stage. So presumably as well as the application forms, you also submitted background documentation, bank statements, salary certificates, payslips etc. It sounds like she did more work than was originally suggested in your first post.

But I repeat what has been said by me and others in the various replies above - if you didn't agree to paying a fee, you don't have to pay one. Whether or not you feel the work she did for you merits any payment by you would be up to you.

Askar said:

I don't think that filling out an application, 2 meetings to get info and a couple of calls is a lot of work tbh.

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How many hours work would you be happy to do for nothing?

rustbucket said:

I would also wonder whether they have a certain affiliation with a particular bank and that she may have pushed a particular mortgage you r way as it paid a higher commission.

In this regard that is extrememly bad practise. If she did not offer you the opportunity to find you the most competitive mortgage to suit your requirements then you may have a case against her!

Brokers are also obliged to furnish you with a 'reasons why' document as to why they have obtained and or recommending you a particular financial product.

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Of course, if eskei has any reason to believe that the broker acted illegally, she should complain to the Financial Regulator. But there is nothing in this thread to suggest that she did, so it seems you're just putting two and two together and coming up with twelve.

A broker has an obligation to find the most competitive mortgage from the range available to them. This range will be detailed in the Terms of Business letter, which would be given to a client from the outset.

As you say, a broker is also obliged to furnish a client with a "Reasons Why" letter which details in writing why the recommended product is suitable for them.

It turns out that the broker actually got approval from two different lenders from eskei. So maybe she wasn't engaging in "bad practise", maybe she didn't have any illegal covert affiliations with any bank, maybe she has no "case" to answer against her...

...maybe the broker was just doing her job.