When dealing with borrowers and lenders, brokers and agents will adhere to the following guidelines as established in the Regulations.
Role of the brokerage
The broker or agent must determine whether the brokerage represents the borrower, the lender, or both and must disclose same to all parties in the prescribed manner.
In the case of conflicts of interest, all conflicts (whether real or perceived) must be disclosed in the prescribed manner. Examples of potential conflicts include:
When dealing with borrowers
- if the lender is also a broker, brokerage or agent
- if the lender is related to the broker or agent
- it’s the broker, agent or brokerage maintains a controlling interest in the lender
When dealing with investors
- if the broker, agent or brokerage will receive additional benefits from the transaction other than those disclosed in the normal course of business
- if any party related to the transaction (borrower, appraiser, solicitor or other party) is also related to the broker, agent, or brokerage
Suitability of Mortgage Investments
Except in the case where the lender is a financial institution, the broker or agent shall take reasonable steps to ensure the investment is suitable for the prospective investor. This will include maintaining an understanding of the lending criteria of potential investors.
Verification of Identity
Brokers and agents will make every effort to verify the identity of their borrowers. If they are unable to do so they will notify the potential lenders forthwith.
When dealing with a private investor for the first time, it would be prudent to verify the identity of that investor.
Identification of Material Risks
Except in the case of institutional or designated lenders, brokers and agents will notify potential lenders or investors of any material risks in the transaction in the manner prescribed in the regulations.
Unlawful Transactions
A broker or agent will not act as a representative of any borrower, lender or investor if he has reasonable grounds to believe that the transaction is unlawful.
If a broker or agent has reason to doubt a borrower’s legal authority to mortgage a property, you will notify prospective lender at the earliest opportunity.
If a broker or agent has reason to doubt the accuracy of information contained in a mortgage application or in supporting documentation, he will advise the prospective lender immediately.
Payments By Borrowers, Lenders & Investors
Advance payment by borrower
If the principal amount of a mortgage is $300,000 or less, a brokerage shall not require a borrower to make, and shall not accept, an advance payment or deposit for services to be rendered or expenses to be incurred by the brokerage or any other person.
