registrationrequired
MortgageBroker mbabc.ca winter 2015 | 19
better protected by regulating the person
who arranges a dozen mortgages with a
total face value of $60,000 and excluding
from regulation the person who arranges
a single mortgage with a face value of $6
million? In the
AZTA case, the unregistered
mortgage broker (the plaintiff ) failed to enter
into a written agreement for his brokering
services. is omission led to lengthy court
proceedings, where the parties were unsure
of the amount of the fee, or who, if anyone,
was obligated to pay them. In addition, the
$630,000 fee for broker services was valued
by the court to be worth only $95,000, and
thereby demonstrates the predatory nature
of this transaction. e plaintiff 's omissions
and poor handling of the transaction fall
well below professional mortgage broker
standards, and this begs the question: what
else did this unregistered mortgage broker
fail to do?
Mortgage broker registration helps to
protect the public by regulating the integrity
of the individuals who broker mortgages, and
ensuring that certain standards and required
practices are adhered to, including providing
appropriate disclosure and obtaining client
agreement to fee charges. Surely protecting the
public interest demands change.
e
MBABC proposes some solutions to
the public protection issues identified above,
which include:
1. Eliminating the section 21 requirement
that in order to enforce the portion of the
definition of mortgage broker contained
in section 1(d), the person must be
carrying on the business of mortgage
brokering; and
2. Requiring that in order for a mortgage
broker to collect a broker fee, including
finder's fees and consulting fees from a
client, the mortgage broker:
a. must be licensed as a mortgage broker; and
b. must enter into a written services agreement
that sets out the contractual terms of the fee
arrangement.
ese proposed changes would help to
eradicate the problem of unregistered or
unlicensed mortgage broker activity without
placing an enforcement burden on the
regulator. Prohibiting unregistered industry
players from collecting fees may even be a
more effective deterrent against unregistered
activity than a Registrar's cease-and-desist
order. is is a particularly noteworthy issue at
a time when the
MBA is being looked at by the
government for amendment or replacement.
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