CMB MAGAZINE cmba-achc.ca fall 2016 | 33
debtservices
specifically intended to be used to pay out a
collection of a mortgage borrower's debts. In
addition, at the time of mortgage renewal,
a mortgage broker will oen increase
the principal amount of the mortgage to
accommodate the payout of any accumulated
debt unwanted by the borrower. A typical
mortgage broker may pay out debt belonging
to the borrower on approximately 25 per
cent of the transactions they arrange. Other
brokers and lenders may specialize in debt
consolidation and perform a higher percentage
of debt payouts on transactions they arrange.
e concern is that mortgage brokers
appear to be prohibited by the CDSSA from
representing mortgage borrowers who are also
debtors and arranging to have debt paid out. In
such cases, a mortgage broker would be acting
for a debtor in arrangements or negotiations
with the debtor's creditors, which appears to be
in contravention of the CDSSA.
Mortgage brokers provide a valuable service
to the public by arranging debt-consolidation
mortgages or arranging for the payout of debt
upon mortgage renewal. ese services enable
borrowers to better manage debt, stave off debt
collection or foreclosure proceedings, and repair
or improve their credit score.
e Ontario legislature, by expanding the
scope of collection agencies and collectors in
the CDSSA, has, ironically, enabled collection
agencies to now carry out multiple functions
for clients with opposing interests. Collection
agencies operate as agents for creditors and
generally have ongoing agency relationships with
corporate creditors. However, it is those same
corporate creditors that the collection agency will
now be negotiating with on behalf of a debtor
under the new debt-settlement-service sections
of the CDSSA. However, unlike the MBLAA, the
CDSSA does not have any conflict-of-interest
guidelines that address this problem.
Mortgage brokers are already licenced
under the MBLAA, and are subject to licensing
and qualification hurdles, product suitability
standards, conflict-of-interest rules and
other compliance requirements. Regulating
mortgage brokers under other legislation
(with weaker consumer protections) serves
no valuable public-protection purpose. It
will inevitably complicate matters for some
borrowers who may then need to engage both
a mortgage broker and a debt-repayment agent
to consolidate debt at an exponentially higher
cost than by simply engaging a mortgage
broker. is needless additional expense
would likely be something a person seeking to
consolidate their debts could ill afford.
In British Columbia, the provincial
government has advised the CMBA that it
does not intend to capture mortgage brokers in
its debt-settlement-services legislation and has
promised a review of the issue. Hopefully, the
Ontario government will do the same.
1. NoMoreDebts.org/debt-help/debt-settlements-canada/
settlement-companies-dangers.html
Mortgage brokers are already licensed under the MBLAA, and are
subject to licensing and qualification hurdles, product suitability standards,
conflict-of-interest rules and other compliance requirements
