Mortgage Broker

Fall 2019

Mortgage Broker is the magazine of the Canadian Mortgage Brokers Association and showcases the multi-billion dollar mortgage-broking industry to all levels of government, associated organizations and other interested individuals.

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something from others," while "clients are under the protection of others." On an average day a broker or agent may receive a call or inquiry from someone asking for a quote on mortgage rates or wanting to discuss their situation. So far all is good. What does the mortgage professional owe this person? ey owe them the right to competent, qualified, knowledgeable information and advice. And as long as the mortgage professional does not mislead the person, they are extending their best attempts at professional instruction. e person can best be defined as a customer at this time. e broker/agent must deal with them in a capable, proficient manner, without being misleading or deceitful. is responsibility flows over to the patron when they become a client. But in addition to fiduciary duties, the duty of care and the requirement to meet a high standard of care also becomes a legal obligation upon the mortgage professional. WHAT IS THE DUTY OF CARE? e duty of care responsibility falls upon the professional to take responsible efforts to avoid injury (financial or otherwise) to the patron by his/her actions or omissions of action or advice. WHAT IS THE STANDARD OF CARE? e standard of care obligation is the level of care that the professional should extend their duty of care to their patron to the standards that is expected of their profession. WHY DO THESE LEGAL RESPONSIBILITIES MATTER? e client is generally the naïve party in the mortgage transaction. ey place their faith and trust in the mortgage professional to represent them and to manage their financial requirements to the best of the broker/agent's skills. If at a later point it is discovered that the broker/agent did not perform their duties to the best of their abilities and they failed in meeting the standard expected of them regarding "client suitability" then a lawsuit may very well ensue! is generally results to the detriment of the broker/agent and the brokerage! In summary, when a mortgage broker/ agent is dealing with a member of the public, whether it is a simple inquiry or an actual retained client, they have responsibilities and obligations to that party. Failure to assume and exercise those responsibilities could result in legal consequences. If that individual chooses to actually formally retain that broker/agent to assist them to obtain financing, by way of an electronic or personal application for financing, they are now a client. What does this mean to a practicing mortgage professional? When that individual becomes a client an absolute cavalcade of responsibilities may fall upon the shoulders of the mortgage broker/ agent. Recognizing that, the mortgage professional may assume fiduciary duties even when dealing with an unnamed customer. CMB MAGAZINE fall 2019 | 29 bestpractice When that individual becomes a client, an absolute cavalcade of responsibilities may fall upon the shoulders of the mortgage broker/agent.

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