BY nigel trevethan and steven abramson
MortgageBroker mbabc.ca fall 2014 | 35
legalprinciples
Why Me
One Of the mOst important things to
help avoid getting sued is to understand what
causes other mortgage brokers to get sued by
their clients or former clients. Unfortunately,
anyone can walk into the court registry and file
a lawsuit so there is no way to make yourself
completely immune from litigation. However,
you can take steps to help protect yourself
from lawsuits by understanding what gets
mortgage brokers into lawsuits.
Are some clients more likely
than others to sue me?
Homebuyers who come to a mortgage broker
looking for a first mortgage on their primary
residence and have sufficient income from
employment to qualify for a mortgage from
the big banks are unlikely to end up suing
you. You are likely to offer this type of client
mortgage options with major financers with
little variability between the lenders.
In our experience, clients who are looking
to the secondary lending market because they
cannot qualify for traditional mortgages or
because they are looking for second or third
mortgages are more likely to get involved in
claims against their mortgage brokers, or other
mortgage brokers involved in the transaction.
Also, lenders who lend on the secondary
market and who fund second, third and fourth
mortgages are also, in our view, more likely to
sue their mortgage brokers than other lenders.
Operating in the secondary lending market
where brokerage fees, commitment fees and
interest rates can be significantly higher than
in the traditional market can result in clients
being more sensitive and 'trigger happy' when
it comes to trying to spread blame through
litigation when something goes wrong. High
risk and high reward for the lender and
borrower oen mean higher risk and higher
reward for the broker as well.
Although this article is directed at mort-
gage brokers, others involved in the purchase
and sale of homes including realtors and
Protect yourself from lawsuits by understanding what gets mortgage brokers
into lawsuits
•
What Causes People
to Sue?
but I...
