Turn on your radio, and you’ll be inundated with advertisements from mortgage vultures who are using scare tactics to lure borrowers who have mortgages with Firstline.
But in reality, there will be very little fall-out…
That’s right – Firstline Mortgages is closing up shop.
It’s rare that a mortgage lender, especially one of this size, closes their doors, and people across the industry are all wondering “why?”
We could gossip and theorize all day long, but that’s not the point of this essay.
Today I wanted to talk about the “fall-out,” or lack thereof, from the demise of Firstline.
I say this both as a member of a closely-associated industry, as well as somebody who has had three mortgages with Firstline over the last decade.
If you have a mortgage with Firstline, and you log into your online account, you’ll see the following message:
For FirstLine Mortgages Clients – Important Information Regarding your FirstLine Mortgage
Thank you for choosing FirstLine Mortgages to meet your financial needs. FirstLine Mortgages is a division of CIBC Mortgages Inc., and we want you to know about some changes you will notice when your current mortgage is up for renewal, or if you require assistance with refinancing your mortgage before maturity.
We recently announced that our FirstLine Mortgages business would no longer accept new mortgage applications after July 31, 2012. This has no effect on your current FirstLine mortgage – your payment, interest rate and renewal date all remain the same, and we will continue to service your mortgage beyond July 31, 2012.
When your mortgage approaches maturity, you will receive information from us about your renewal options within CIBC. Our team at CIBC has been working to meet your needs since you first applied for your mortgage through FirstLine, and we will continue to do so in the future.
At this time, no action is required on your part. We’re looking forward to sending more information to you as your mortgage approaches maturity.
If you wish to discuss refinancing your mortgage or if you have any questions, you can contact us directly at 1-800-970-0700 (Hours of Business are Monday to Friday, 8:00 a.m. – 8:00 p.m. EDT).
We appreciate your business, and look forward to continuing to meet your financial needs.
Thank You,
The FirstLine Mortgages Team
The key to this, in case the “BOLD” wasn’t enough, is that your current Firstline mortgage will not be affected.
Firstline vows to still service mortgages until the end of the term, and upon maturity, borrowers will have the option of renewing with CIBC, or exploring other options – just as they do in every single other case when a term expires!
However, that hasn’t stopped companies like Butler Mortgages from running radio advertisements trying to scare people into switching over, when in fact, there is nothing to worry about, and there is virtually no advantage to the borrower.
Since the dawn of time, businesses have been using scare tactics to solicit business, but this one makes no sense to me.
Consider that a mortgage lender cannot terminate a previously written contract, and therefore after July 31st, 2012, these mortgages don’t spontaneously combust. They remain in tact, and the only difference is that borrowers will then be clients of CIBC and not Firstline.
CIBC is taking over Firstline, and they will run the Firstline arm separately from their own division. Firstline will essentially be under the CIBC “umbrella,” but very little will change for the borrower. Everything stays the same! From your mortgage, right down to your user-name and password on your online account!
The key words here are “seamless transition.’ That’s how my mortgage broker described it today, and I can’t think of a better term to use.
But this morning I was driving to work, and I heard a radio ad from Butler Mortgages, that like so many other ads in today’s society, featured two bumbling morons making a mountain out of a mole-hill. I’m paraphrasing, but it went something like this:
Woman: “Oh no, Firstline mortgages is going under! What-ever do I do?”
Man: “That’s terrible! Why not talk to Butler Mortgages?”
Woman: “Really? You mean all is not lost? The world is not coming to an end?”
Man: “No, it’s not. You can switch from your Firstline mortgage to Butler Mortgages, and take advantage of our low 2.99% rates!”
Woman: “Wow, my life has meaning again!”
Disclaimer: that’s an exaggerated account.
But you get the idea…
In reality, there is very little advantage in switching from Firstline to Butler Mortgages, unless you locked into some high-rate mortgage several years ago. However, this has nothing to do with Firstline going under! Anybody can switch, at any time, under penalty.
Butler Mortgages is trying to get people to cancel their contract with Firstline, in the process – incurring penalties and break-fees, and then register a new mortgage through them.
But as I said – anybody can do this at any time.
If you have a 5-year, fixed-rate, 3.39% mortgage with Scotia that is 2 years through a 5-year term, you can terminate that mortgage tomorrow, and register a new mortgage with any of the dozens and dozens of lenders in our marketplace.
What bothers me about Butler’s ads, other than the fact that they are preying on the weak, is that they’re trying to link two things that really aren’t linked: Firsline Mortgages closing their doors, and the opportunity to terminate a mortgage and renew with another lender.
Butler Mortgages may as well run ads that say, “Mosquitos are running rampant across Toronto! Time to terminate your existing mortgage and speak to us about our 2.99% fixed rates!”
Or why not, “Do you love pizza? If so, then terminate your mortgage with Firstline, TD Mortgages, MCAP, Scotia Express, First National, or any other lender, and talk to us about our low-low rates!”
I’m not sure why this bothers me so much.
I just hate predatory ads.
It’s like those late-night advertisements for the Q-Ray:
“Put on this bracelet, and your life will change!”
“We can’t explain why, or how, or when – but trust our advertisements, because we use the third-runner-up in the 2010 Kentucky National Beauty Pageant to endorse our product!”
I guess I don’t blame Butler Mortgages for trying to drum up some business.
At the end of the day, if a borrower with Firstline panics and pays $10K in break-fees to get out of their mortgage and register a new mortgage with Butler, then they’re getting what’s coming to them. “A fool and his money are soon parted.”
As for the question at the onset: why did Firstline close its doors? We’re not sure.
Their customer service has slipped significantly in the past 12 months as they were exploring an “exit strategy” from the business, and after speaking with multiple potential buyers, for some reason, they elected not to sell, and simply closed up shop – another thing that puzzles us!
Firstline Mortgages is a broker-only lender, like MCAP, and like First National, and brokers brought Firstline approximately $15 Billion in mortgages in 2011.
Something must be tragically wrong in the under-belly of that company to turn away $15 Billion!
If you’re like me, and you have a mortgage with Firstline, talk to your mortgage broker if you have any concerns. Your mortgage broker should always have your best interests in mind, and as I’ve said before, I trust and prefer to work with mortgage brokers over banks. (I know many of my readers disagree and actually work for banks – JG I’m looking at you, but we all have an opinion!!) 🙂
But don’t be scared by silly radio ads. This isn’t like a bank going under and you losing the money in your savings account. Although come to think of it, that might make for a great radio ad…
Joe Q.
at 9:30 am
I’m sure it was a simple financial decision — the parent company (CIBC) probably makes more money on its in-house mortgage division than through the broker channel that FirstLine serviced.
Ralph Cramdown
at 10:04 am
While the CIBC mortgages will undoubtedly be more profitable, they won’t be doing the same volume of business. The real key is in getting all of a client’s business — bank accounts, investment accounts, mortgage and insurance. Heck, just selling the client mortgage balance insurance, the kind that pays off your balance if you die, is big profits. Life insurance that costs the same every month even as the insurable balance declines, and they don’t even ask whether you’re a smoker? THAT’S profitable.
That said, CIBC IS the large Canadian bank most likely to walk into a sharp object, and this just looks like another one of those. Hey look, their common shares pay 5.05%, and TD only has to pay 3.65%!
SylLive
at 6:16 pm
Just like David Fleming, thank you so MUCH Mr Cramdown, for all your great advise!
Oufff..
Just trying to understand what you mean here…forgive me, I’m just the girl next door sort of speak. Don’t know much about how brokers/banks/insurance work?
Who to “watch” for? And, who’s the best? Or should I say; who is the less damaging..;-))
I think I have a good idea. But, with regards to “those” who pays off mortgage balance insurance and same amount even if you smoke, wont change..
Can you refer us to some of the good ones?
Cause, I’ll tell you, it’s getting pretty crowded in here! We just don’t know what to look for and not anymore, who’s who, who does what and how..I mean, at the end of the day, we’re left with more questions than answers??
Would you be kind enough to send me in the right direction…please??
Best Regards,
SylLive
JG
at 7:51 pm
LOL! Thanks for calling me out David.
You are right, our industries are very closely related, and just like there are many misguided Real Estate agents out there, there are equally as many professional, dedicated individuals such as yourself, who always put clients first.
I work closely with Mortgage Brokers as well, and do see their value, but for every professional as Joe Sammut (mortgage broker) and myself (w/ one of the big 5 banks) – there are those who just should not be in the business – broker world or not.
Clients should make sure they are working with a professional and properly represented.
I want to also thank you David for shedding light on this very hot topic. Your essay is spot on. It could not be any clearer. It addresses many of the issues that are currently happening in the market place.
At the end of the day, companies are allowed to drum up business as they see fit, even if they are predatory. However, many clients need to read/understand a sentence that is Bolded, Underlined, and Italicized. If they did, maybe there would be less predatory practices.
Thanks
raviparamurealestate
at 12:02 pm
I have found this post while searching Toronto Mortgage Broker at Google and I am glad I found it. Thank you for the valuable information’s……
Royal Nistendirk
at 7:12 pm
Not to hijack this thread, but, I want to track down an investment advisor that was named as my parents’ retirement consultant. I’m really frustrated over this at the moment because I want to use the same advisors that my parents did but, i can’t find them in any of the local directories online. Carlton Financial Group – 106 Mission Ct #701 Franklin, TN 37067 phone (615) 794-2536 Can someone recommend an industry association or directory that is free to find this company?
Ron
at 9:36 am
I am currently with Firstline and need to transfer in April 2014.
Can someone recommend a good Mortgage Broker?
Susan
at 2:18 pm
http://www.durhammortgage.com/taxford/
SylLive
at 5:57 pm
Thanks so much Mr Fleming for your comment with regards to First Line Mortgages “going under”!
I am, also a customer of First Line and did not know about this precious information!! What’s up with that..seriously!
Anyways, again thank you for letting us know!
My question is:
When you say; “talk to your broker” If FirstLine is out of the picture and CIBC took over, who is my broker then?
Can someone answer this for me please?
Best Regards,
SylLive
SylLive
at 6:03 pm
Oups.I forgot to add to my last “question” the following:
Mr David Fleming; Not only I am, like you, a FirstLine Mortgages customer but I am also, just like you, very passionate about coaching “softball” children’s Brampton Rec leagues.
Again, tks for sharing your precious info. It helps people!
SylLive
nasrin rajani
at 8:29 am
I came across this post and to be perfectly clear – I am a mortgage agent. I do everything from 1st mortgages, 2nd mortgages and investments in real estate all across Canada. Based in Toronto but have helped people out in Saskatoon , New Brunswick etc.
I came across this because I am working with a client out east who is with First Line and she is panicking. Unfortunately, her credit is an issue with collections and hence will work out a package where she is not paying any extra penalties then necessary. If everything is the same then CIBC will renew but having a mortgage agents advise is invaluable because there are clauses that can be restrictive and if I was not a mortgage agent that knew what to look for – I would miss it. BANKS Mortgage Specialists are not licensed or governed the same way we are.
I just wanted to say that as a Mortgage Agent, I get involved with my clients where I get to know them on a personal basis and they count and rely on me. I owe them the courtesy of doing what I can and guiding them to what is in their best interest.
I am always available for a free consultation for anyone and will answer questions and guide you – no strings attached:)
Nasrin Rajani
rajaninasrin@gmail.com
payam
at 1:56 am
about line of credit from my house equity.please contact me.
Mandy
at 8:00 pm
When I got my renewal from firstline back in July it’s stated that I had missed a payment. When I called to ask where this payment was missed nobody could tell me. After many calls from me CIBC bank and the lawyer I end up having to get firstline could still not tell me where I owe them money.In fact I had overpaid them by a payment but this didn’t stop them from stopping payment on my mortgage holding me up for over a year stealing 2000 and some dollars from my account making it look like I had agreed to a second mortgage they had sent me out six months later.Then put it on my credit file as non-payment and sent me to the collections department and credit bureau,then trying to foreclose on my house. This Is the worst company I’ve ever had to deal with. I tell everybody I know not to ever deal with first line.