Broker stands up to alleged contract breach

by Julia Corderoy12 Sep 2014
The Consumer Action Law Centre (CALC) are warning consumers to avoid mortgage brokers, arguing that clawback fees passed on by brokers to consumers are ‘unfair contract terms’ potentially in breach of Australian Consumer Law.

This was in response to a Sydney couple who are refusing to pay a clawback fee to their broker after they refinanced their $940,000 loan from St George to ANZ at the end of last year.

Australian Broker spoke with Amine Berrada from Home Loan Experts, who was the couple’s mortgage broker who settled their loan with St George. He said he followed the proper processes and gave them great service, so he was blindsided.

“Mr Lee shopped around, and repeatedly came to my office to get the best service and deal. He came back to me with lots of offers and asked me to match or beat those offers, which I managed to do. He was very happy with the process and my service. After I got him an offer he was happy with, he bought his wife and his kids to my office to chat about what would be the next step and how we could organise the loan. Everything went perfectly. At no point did they give me any indication that they were going to refinance the loan. I was shocked when I got the notice from St George that the account was closed. I was surprised; I thought that maybe they had to sell their property. They never came to me and asked me about refinancing.”

There are many times throughout the loan process where the contract – in particular, the clawback clause – is discussed, Berrada said. As such, he believes it is not unfair and that he is entitled to be paid what he is owed.

“Mrs Lee is also a solicitor, and I explained everything to her about our services and what the repercussions would be if the loan was repaid within the first 18 months. This was all stipulated clearly on the application that she signed too.  As a solicitor, you wouldn’t engage in a contract and sign a contract if you didn’t read, understand and reread the contract. A few questions were asked, which I answered clearly and then the document was signed.”

Most of all, Berrada said he is disheartened that his client didn’t come to him for advice. As a broker, he argued he only wants what is best for his clients.

“I am not here to rip people off. If they engaged my services to refinance then the clawback fee would be waived. Home Loan Experts never charge an existing client. Our aim is to keep our clients and keep them happy,” he said.

Home Loan Experts’ position on clawbacks echoes the position of many other mortgage brokers – it is unfair for brokers to wear the cost from the bank, particularly after the work brokers have put in for the client to get their mortgage approved.



  • by Nardia 10/02/2015 10:44:06 PM

    I engaged Amine as my mortgage broker in late 2013; whilst I can't comment on the experience of the individuals in this article, I can comment on my own experience which was that that the fees, terms and conditions of the agreement where clearly explained to me. I had a credit default due to a failure to change address with a utility company after moving interstate (AGL & Actew AGL I have learnt are different companies and not to be confused). Amine went above and beyond to find me a loan at a competitive market rate with a lender who looked at my credit profile more holistically rather of focusing on one error. Whilst I wholeheartedly agree that the mortgage broking sector has its fair share of shady characters engaging in unscrupulous fee gouging practices, based on my personal experience, I can say with confidence that Amine is not one of them.

  • by Papery 11/02/2015 10:27:57 AM

    I dont know anyone connected with this story, but Im pretty sure this is a run of the mill story... I dont care what anyone says, most clients treat us transactionally one the deal is settled & they get passed the settlement excitement. AS a Broker you pride yourself on the 'Relationship' you believe you have built up that you are positive will be long term & ongoing, but sure enough despite the usual marketing emails, birthday/Xmas messages, RBA updates, milestone phone calls, the client sells or refinances 'out of the blue'.