Consumer's Institute warns about "carpetbaggers"
A string of enquiries to the Consumer's Institute about mortgage "restructurers" is prompting chief executive David Russell to warn about "these carpetbaggers of the financial world".
Monday, July 26th 1999, 12:00AM
by Paul McBeth
A string of enquiries to the Consumer's Institute about mortgage 'restructurers' is prompting chief executive David Russell to warn about "these carpetbaggers of the financial world"."While you've got to be careful you don't damn the good with the bad," Russell says, "the ones that I'm critical of are those that charge big, fat fees for offering very elementary financial advice."
He breaks down mortgage service providers into two camps, the first being mortgage brokers who act as an intermediary between someone looking for a mortgage and the lending institution (and who are generally paid their fee by that institution).
But it's some of the operators within the second camp that are causing him concern. "These people offer to reorganise your finances and show you how to reduce your mortgage by so many thousand dollars, usually by taking a shorter time to pay it back..
"That's worthwhile advice but it's often dressed up, it presupposes you've got the money to do so, and they're charging what I would term exorbitant fees. You can often get that advice for free from your mortgage lender, by listening to National Radio and from reading Consumer or your own publication."
People calling the Consumer's Institute have cited fees of $2,500 and above. In an earlier story on this page, we gave the example of someone charged $3,000 for mortgage restructuring only to find they'd lost their ability to claim their interest payments as a tax deduction.
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I am currently planning a series of articles on ways to reduce your mortgage and, as part of this series, I'd like to include any ideas you've tried or recommended (and whether they have or haven't worked!). I'm particularly interested in anyone's experience with flexible finance/revolving credit facilities. Please email me with any details, or send your phone number and let me know a good time to call.
Many thanks, Ann Cunninghame