Cousins slams broker remuneration on GMAC loans
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Treasury select committee Labour MP Jim Cousins has hit out at the way that mortgage brokers were remunerated for offering GMAC loans.
At a Treasury select committee meeting this week, Cousins grilled former B&B chairman Rod Kent over practices of mortgage brokers introducing the GMAC loans that B&B later bought up.
Kent said: “One of the reasons for buying loans from GMAC is that its network of mortgage intermediaries were slightly different from our own.”
Cousins said: “Indeed it was. I have constituents with experience of those mortgage intermediaries that GMAC was using who are very well aware that they were a different sort of mortgage intermediary.
“Did you realise that the mortgage intermediaries were charging very fat fees and then putting the fee into the mortgage?”
Kent replied that this was standard procedure and that B&B did so itself, adding up to 2.5 per cent of fees to the loan balance.
He said that some of the brokers were good and some bad, just as in any line of business, but said the remuneration practices were standard.
Cousins said the GMAC loanbook purchase by B&B was an “extraordinary” deal that had left the Government saddled with a £7bn legacy of “some of the worst mortgages” sold.
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