This is the second entry in a series on why Singapore's loan broker system needs fixing. The first entry told the story of a client who was charged a 30% consultation fee on a $980,000 loan he took out to cover business debts, using a property his father had paid for in cash. This one picks up where that left off — with a different broker.
A Promise With Nothing Behind It
A second broker put the client into a separate caveat loan of S$150,000, on the promise that they would find another lender to take over the full loan shortly after. There was no concrete takeout plan behind that promise — no lender lined up, no term sheet, nothing beyond the broker's word. Once the caveat loan closed, that broker disappeared.
Left Holding the Risk
Left holding a loan he'd been told was temporary, the client was now paying 3% interest per month — 36% annualized — with no refinancing in sight. He fell behind on payments, and the caveat lender began threatening recovery action against a property that, until this whole episode began, had been fully paid off and free of any debt. By the time I got involved, I wasn't able to find a lender willing to take over the loan either; the situation had already moved past what a straightforward refinance could fix. From what I understand, a family member ultimately stepped in and helped settle it, though I don't have the specifics of how.
What This Reveals
Again, nothing here was technically dishonest in the way fraud usually is. The caveat loan was a real loan with real terms. What's missing is any obligation on a broker's part to have something concrete behind a promise like "I'll find you a refinance" before that promise is used to get a client to sign. Once the loan closed and the fee was collected, there was no consequence for walking away.
What to watch for: Never take on a bridging or caveat loan on the strength of a verbal promise that someone will "sort out" the takeout later. If a takeout lender isn't identified — at least in principle — before you sign, you're not bridging to a solution, you're just accumulating exposure at whatever rate the caveat lender wants to charge.
Borrower Charged 30% Consultation Fee by Broker for Simple Mortgage Loan Referral →
20 years in corporate banking and moneylending — credit risk, portfolio management, and business development. Read more →
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