for the security property;
n
a statement setting out the details concerning
the first mortgage; and
n
a sheet outlining the terms of the proposed
mortgage investment (including that the first
mortgage had a balance owing of $543,000).
e lender approved the mortgage
and advanced $108,000, secured by a second
mortgage. A year later the mortgage was,
at the borrower's request, increased to
$158,000. e further $50,000 was to clear
off an onerous third mortgage that had
been registered to pay off the borrower's
stock debt.
THE ISSUE
A big part of a broker's job is to gather
mortgage loan application information about
borrowers (such as employee information,
credit reports and appraisals) and present it to
lenders for approval and funding. What level
of care does a broker have to put into making
sure the presented information and any advice
provided as to the wisdom of funding the
transaction is accurate? What liability does the
broker have when a funded transaction later
appears to have been an unwise deal for the
lender? What might a broker do to limit the
possibility of any such liability?
e November 19, 2018 decision in Royce
Holdings Inc. v. Jupe, 2018 BCSC 2025 goes
some distance in filling the void of informa-
tion available to answer these questions. Of
course, you would want to obtain legal advice
to cover specific instances.
WHAT HAPPENED?
A broker provided a loan application package
to a lender, including:
n
a mortgage application (including a
statement of assets and liabilities, as well as a
credit report, regarding the borrower);
n
an appraisal indicating a value of $810,200
42 | winter 2019 cmba-achc.ca CMB MAGAZINE
REQUIRED
STANDARD OF CARE
Sharing application
information fully and
honestly can avoid
sharing in liability
BY RAY BASI, L.L.B., STAFF,
EDUCATION AND POLICY REVIEW
