MortgageBroker mbabc.ca winter 2015 | 23
funding if a mortgage commitment has been obtained and cost of credit
disclosure rules are followed.
e proposed New Brunswick rule appears to prohibit mortgage
brokerages from receiving "other remuneration" until the mortgage
transaction is closed. e wording here could also prevent brokerages
from collecting costs in the course of a transaction to cover out-of-
pocket expenses such as appraisal fees. is provision potentially
creates a substantial risk to the mortgage broker, who should not
have to bear any of the borrower's costs to facilitate the mortgage
transaction.
Also, commercial mortgage transactions generally unfold much
differently from conventional residential transactions, in that fees are
paid by the borrower to the brokerage either before or at the time a
commitment is provided to the borrower. e rationale for this is that
commercial transactions are more complicated and time consuming
than residential transactions, and brokers need to secure their fee at
the time they complete their work for a client, which is at the time
of obtaining a commitment, and not later, at the time of funding.
However, the proposed rule appears to apply to both residential
and commercial mortgage transactions. Not only are commercial
borrowers generally more sophisticated than their residential
counterparts, advance fee scams mostly target more vulnerable
residential borrowers. e advance fee limitation will therefore have
a severe impact on commercial mortgage transactions without any
apparent public protection benefit.
Accordingly,
MBABC recommended that the rules be amended to
permit:
• e charging of fees and costs at any stage of a commercial transaction;
• e charging of costs at any stage of a residential transaction; and
• e charging of fees upon the delivery of an acceptable mortgage
commitment for residential transactions.
e Financial and Consumer Services Commission of New
Brunswick will review its proposed new rules and publish a guide on its
implementation. It expects to implement mortgage broker licensing in
New Brunswick in the latter half of 2015.
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