Mortgage Broker

letters to the editor CmB magazine cmba-achc.ca spring 2017 | 15 (a) keep such books and records as are necessary for the proper recording of his business transactions and financial affairs; (d) keep and maintain a record showing i. the repayment terms of each mortgage, ii. the total amount actually paid or to be paid to the mortgagor of each mortgage, and iii. the fees, expenses, costs and other charges required to be borne by the mortgagor in respect of each mortgage transaction; and (e) keep and maintain up to date trust records in connection with his business to record i. all trust money received by him, ii. all disbursements of trust money made by him, and iii. the unexpended balance of trust money held by him in total and separately for each person for whom that money is held. Mortgage Brokers Bulletin 12-001, "Record Keeping Requirements for Mortgage Brokers" provides the Registrar's detailing of the books and records to be kept pursuant to Mortgage Brokers Act Regulations, section 6(a). Except for one broad item at the end ("any other relevant documentation or information relating to the transaction"), the list is extensive and detailed. It can be found at www.fic.gov.bc.ca/pdf/ mortgagebrokers/mb-12-001.pdf. e Bulletin also provides requirements concerning the storage and accessibility of the records. Good luck and feel free to contact us if you require further clarification. We are here to help our members. Disclosure of Client Records in an Audit [e Acting Registrar of Mortgage Brokers] talked about more audits. I assume that means that they will be looking at borrowers' files. Here is the issue: the borrowers have never authorized FICOM or its representatives to look at their personal and financial information. And so, I am wondering if brokers could be held liable for providing unauthorized disclosure of a borrower's information? Peter Dale Reply: e Freedom of Information and Protection of Privacy Act (FOIPPA) applies to FICOM (or in this case, more precisely, the Registrar of Mortgage Brokers). It allows the Registrar to collect personal information if: • the information is collected for the purposes of law enforcement, or • the information relates directly to and is necessary for a program or activity of the public body. A regulatory body, as is the Registrar, is recognized as a law enforcement body. It is permitted to collect, without the permission of the borrower or the broker, personal information in the performance of the law enforcement function. e Registrar's programs and activities are outlined in the scope of authority and powers (particularly those related to protection of the public) provided in the Mortgage Brokers Act; the collection of personal information such as you describe would be permitted, without the permission of the borrower or the broker, in the exercise of the authority and powers. Blind oversight e proposed change to have the Ontario Securities Commission (OSC) oversee syndicated mortgages will harm the real estate market as the borrower will have to pay to have an offering memorandum (OM) prepared, which takes time and costs money. A lot of the borrowers will not have either. is will reduce the liquidity in this marketplace. en, one must locate an exempt market dealer, who will charge a fee to review the OM as they have costs for being licensed with the OSC that are far higher than being licensed with FSCO. e agents for the exempt market dealer have to be trained to learn which mortgages are to become proficient in selling. e fees charged by exempt market dealers for selling are higher than that of the experienced mortgage brokers, who can charge two to four per cent, because they have an established client base of knowledgeable investors. Also, these brokers can act quickly because they understand the real estate market, as do their investors. Some of the existing brokers can commit on loans of up to $10 million and act quickly to close the transaction, which can be less than one month. ese brokers have existing clients and normally they require a minimum investment of $50,000, so their investors have money. With the OSC in charge, the time frame will be extended. Will the OSC require all syndicated mortgages to have an OM? If so, then a $500,000 mortgage may not be able to be placed, because of the costs and time frame. So, the other alternative is for that borrower to find a mortgage investment corporation (MIC) that has already raised money by way of OM. How would the borrower find the MIC? ere will be less protection for the public because the OSC does not approve OMs. All that happens is that aer closing, the OM is filed with the OSC with the list of investors. e OSC only gets involved aer the closing if investors complain; which is to say, the OSC only gets involved aer the barn door is closed. Further, the OSC will have to find qualified staff to investigate, and that will take time. e panel chosen by Minister Sousa did not include a person with expertise in this marketplace, so the recommendations made to him in the area of mortgages were flawed. David Franklyn Lawyer Please send letters to the editor to info@cmba-achc.ca

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