It’s surprisingly difficult to get true impartial financial advice. Want investment advice? The talking heads on TV are just trying to impress so you invest in their fund. Want real estate advice? Good luck finding a real estate agent to give a negative opinion of the market. Real estate agents have two market views. They’re either bullish or really bullish. Chances are, if someone is saying positive things about something, they’re looking to benefit from this opinion.
Even me. I try my best to be an independent market observer, giving opinions straight from my guts, where opinions come from. But even I’m motivated to have certain opinions. I’m a good ol’ fashioned stock picker, so of course I’m going to be in favor of people picking individual stocks. Even if I could’t give two craps if you buy it, I still want Blackberry to go up. I want to be proven right, so then all the ladies will sleep with me in exchange for stock picks. I will soon grow tired of all this attention, but will revel in it for the time being.
There are certain sources of information that people think are fair and unbiased, and nothing could be further from the truth. Take newspapers, particularly the Toronto Star.
In a piece called The Pros and Cons of Using A Mortgage Broker, writer Ryan Starr (sounds like a porn name, amirite?) tells us about recent homebuyer Christina Cleveland’s experience of using a mortgage broker, and how great it was. The broker got her a low rate, made things easy, and just generally made the mortgage getting experience easy. You’re not going to hear any arguments from me, mortgage brokers can be extremely helpful. To quote the article:
Christina Cleveland was feeling overwhelmed by the process of buying her first home.
“There’s so much to think about: the cost of the home, what can you afford, what kind of (interest) rate you can get,” says the Milton-based management consultant. “It can get completely confusing.”
A friend suggested she go with a mortgage broker, who facilitated things. She did.
Yeah, I just said that. Who’s running this crap blog, anyway?
Notice the last sentence of the quote. A “friend” recommended a mortgage broker. No word on whether it was a friend with benefits, but let’s go with probably. I saw the picture in the article. She’s a bit of a cougar.
But wait, there’s a pretty giant conflict of interest that wasn’t disclosed. For the deets, (do the kids still say deets?) let’s go to everyone’s favorite real estate bear, Garth Turner.
The Star’s go-to guy for mortgage broker information, and presumably Christine’s lender, is Raj Babber. He is president of Toronto-based CLN Mortgages, a broker, former banker (Canada Trust, CIBC) and head of the Independent Mortgage Brokers Association of Ontario. In the article Babber pumps brokers as being independent, well-trained and more flexible than the banks.
What Raj did not tell Ryan (at least what didn’t make it into print), is that his wife, who is Director of Marketing at CLN Mortgages, has a sister. Michelle Cleveland-Babber’s sibling is, you guessed it, Christina Cleveland.
That’s some good journalistic integrity, Toronto Star.
If you bother to click through to the original Star piece, it’s such a BS-pro-broker fluff piece. Sure, they’ve got the token bad guy who has the gall to question the almighty broker, (played this time by Robb from Boomer and Echo) but it’s obvious how you should feel about a broker. Mortgage brokers will get you the lowest rate, the best terms, and 100% prepayment privileges, all serviced by some hottie wearing a short skirt and one of those sexy business-type suits. NELLY LIKEY. The bank, meanwhile, will crap in an envelope and call that their mortgage offer.
Sorry to burst your bubble mortgage brokers, but you are not nearly as good as you think. Anyone with Google and functioning grey matter can compare mortgage quotes in a manner of minutes. I’ve done broker mortgages and bank mortgages, and bank mortgages are easier in most every way, since they already had most of my info on file. Both methods have their place, and each have their own set of pros and cons.
We have one of the biggest newspapers in Canada publishing a bigger fluff piece than Pravda’s last reporting of Stalin’s 5 year plan. I’d be impressed if Raj managed to pull this off without cutting a cheque to the Star. This is why you shouldn’t trust the media.
The worst part about this? The Star did basically the same thing a week ago. Instead of quoting, let me just give you the gist of it. (Here’s the link)
The Star finds a young renter who is pissed that her rent has gone up. The renter assumes that Toronto’s rent control act protects against this, even though your author (who is 3,356km away from TO) knew didn’t apply to condos. And he’s not exactly a Toronto resident. The Star takes this and turns it into a pro real estate piece, saying that you should probably buy a downtown Toronto condo because if you don’t some dirty landlord will jack the rent on you.
The problem? The woman featured in that piece was Kerri-Lynn McAllister, who just happens to be Chief Marketing Officer at Ratehub.ca, a Canadian mortgage comparison site. Turner argues that perhaps McAllister knew full well she wasn’t protected by this rent control act, and it was all an elaborate ruse to increase demand for housing, which would benefit the site that employs McAllister.
I have little problem with the people using the newspaper to promote their business. I would do the same if given the opportunity, and so would you. They’re trying to increase business, and there’s nothing illegal about their way of doing it.
No, the big loser here is the Star. Thanks to the internet, the Star’s classified revenues have basically collapsed. What’s the growth industry in Toronto right now? It’s real estate, stupid. Condo developers are huge newspaper advertisers these days. The Star knows who butters their bread, so they make sure to regularly publish articles that are in favor of owning real estate.
If there’s one thing you’d take away from this blog, it’s that I think Taylor Swift is attractive. If there’s two things, the other would be the importance of doing your own research. Seek out both sides of the story. Ask smart people questions. And as you consider their responses, keep their bias in mind. Once you have all the data, make up your own mind. You owe it to yourself.