Lawsuits Against Customers?

We shook our heads after reading this one…

BrokerNews says Greenberg Paralegal has a new service that helps brokers sue clients who take the broker’s mortgage approval and shop it around to other lenders.

Jeff Greenberg, owner and paralegal, says: "Brokers don't want to sue their clients and it's not good business, but the fact is that it's not good business for a client to negotiate in bad faith and to take advantage of someone who relies on their commissions to live.”

In our view, it’s hard to imagine how any mortgage professional would contemplate this seriously.

If a broker provides excellent rates, helpful advice, and quick service, and the customer takes the broker’s rate elsewhere, the customer clearly doesn’t value the relationship (and they probably never did).  How this is grounds for a lawsuit, however, is beyond us…unless, perhaps, the customer signed a retainer up front.

For the top mortgage planners, these thoughts almost never come up. The best in the business seldom lose clients due to rate. Instead, their clients rely on them as experts and fiduciaries. The clients know they’ll receive highly competitive rates, and more importantly, they tend to understand the difference between rate and value.

Rate is what people pay. Value is what they get.  Successful mortgage planners get successful because they can communicate the difference between the two.  Top planners don’t spend their limited time in 0.01% bidding wars with competitors. The return on their time is far greater when they invest it in improving service and advice—advice on things like term selection, risk minimization, penalty avoidance, prepayments, liquidity planning, and deal structuring. Proper guidance in these areas often equates to long-term value that’s worth far more than a few basis points.

There will always be a small percentage of customers who intentionally take advantage of planners who work hard on the client’s behalf, but suing them isn’t the answer.