Mortgage Broker

CMB MAGAZINE cmba-achc.ca winter 2016 | 23 licensingfines MORTGAGE BROKERS MIGHT wonder how the range of fines provided in licensing statutes will be applied to them if they get in regulatory hot water. e maximums in many of the statutes are as high as $100,000 for some violations. A recent case in Ontario provides some guidance. WHAT HAPPENED? e broker was facing a $100,000 maximum fine for dealing in mortgages without a licence. Upon his and his brokerage's licence being revoked, he became the office manager of a new brokerage. An agent from the previous brokerage headed the new brokerage. Over the first six months of operation, the broker completed 14 transactions (while not licensed) and netted the new brokerage commissions totalling about $49,000. e broker was charged and pled guilty to one count of dealing in mortgages without a licence. e one charge covered the six months and all 14 transactions. e broker now faced a maximum fine of $100,000. What would be the appropriate fine and how should it be determined? WHAT FACTORS WILL A COURT CONSIDER? e Court looked at the following factors, including the indicated facts, to determine the amount of the fine: The size of the broker's mortgage profile – e Court was aware of the broker's licence being revoked and his involvement in the new operation. The scope and the scale of the mortgage activity – ere were the 14 transactions and $49,000 generated in commissions for the brokerage. It was unknown how much the broker received, but his tax return for the year indicated total earnings of about $17,000. No windfall profits were earned from the prohibited activity; the $49,000 is the amount the brokerage would ordinarily have earned. e transactions were all completed within six months of the broker's licence being revoked. Upholding protection of the public by the requirement of registration – e conviction would make the broker ineligible for future licensing. Any harm to the clients, financial or otherwise – No one had suffered direct harm. e transactions involved finding borrowers the best available rates rather than lending money. No money had changed hands. Deceptive acts in regard to registration as a broker – e broker had papered the files as if the transactions had been brokered by another, licensed person. e Court balanced the need to appreciate the wrongness of the violation, protect the public by preserving the need to obtain a licence before brokering, and convince others not to commit similar violations. It took note that the broker had no previous regulatory or criminal violations, had pled guilty, had expressed remorse, an��e arned a modest income. THE DECISION e Crown asked that the fine be the maximum $100,000, although later it reduced the asking to $75,000. e Court agreed with the defence's suggestion that a $10,000 fine was appropriate. THE TAKEAWAY Where regulatory laws impose a maximum fine, regulators and courts consider many factors in coming to an appropriate fine. It is up to you to show that the circumstances in your case warrant a fine at a lower level. You would want to take time to consider what those relevant circumstances in your case might be and make the regulator or court aware of them. Some factors in the assessment BY RAY BASI AMOUNTS FINE

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