Mortgage Broker

10 | summer 2017 cmba-achc.ca CmB magazine understanding mortgage brokering and securities regulation. AllegAtion: Canada's shadow lending is akin to the 2008 U.S. subprime lending crisis Sam Cooper: "A number of cases involving these lenders contain allegations with characteristics similar to the fraudulent loans exposed in the aermath of the U.S. subprime lending crisis of 2008." Fact Check: e U.S. subprime mortgage crisis was created by a frenzied, unprecedented growth in subprime lending – from a historic level of about eight per cent to over 20 per cent, combined with plummeting property values, whereby home owners could not refinance their homes and many were foreclosed upon. In Canada, while alternative lending has increased in popularity, and many property owners are financially benefitting from increased property values, most Canadians are not using their homes as bank machines. Pundits have been predicting the demise of the Vancouver and Toronto real estate markets for years; to date, there have been periods of slowdowns, but these markets remain stable. ere is no evidence to suggest that Canada is facing a potential subprime lending crisis. AllegAtion: FICOM is in charge of monitoring shadow banking in B.C. Sam Cooper: "In B.C., the provincial regulator BC Financial Institutions Commission, known as FICOM, is in charge of monitoring the growing shadow banking sector." Cooper furthermore identifies the shadow banking industry as being "mortgage investment corporations, hedge funds and private lenders such as realtors, crowdfunding companies, real estate lawyers and mortgage brokers." Fact Check: e Financial Institutions Commission does not regulate the provincial mortgage lenders, which Sam Cooper identifies as the shadow sector. e Registrar of Mortgage Brokers regulates mortgage lending and brokering activities of alternative or private mortgage lenders and brokers under the Mortgage Brokers Act (MBA). e Registrar and his staff are housed in the offices of FICOM, but FICOM has no regulatory authority under the MBA. e capital-raising activities undertaken by crowdfunders, mortgage investment corporations and hedge funds are regulated by the BC Securities Commission. Again, the media needs to get it right when it comes to reporting on the regulation of mortgage brokers and alternative lenders. AllegAtion: B.C. mortgage brokers are not trained to detect mortgage fraud and in general, are poorly trained Sam Cooper: Referencing allegations in a Notice of Hearing regarding mortgage broker AK Singh, Cooper states: "Singh said he strongly denies the allegations, and that he believes fraud is widespread in B.C.'s mortgage lending industry because brokers are poorly trained to verify loan application information, and speculative buyers are gaming the system." Fact Check: It's true, regulatory-required education for mortgage brokers does not teach mortgage brokers to detect fraudulent documents. In general, the education standards for mortgage brokers are low. Just as other sectors, such as notaries and appraisers, are ramping up their education standards, so too should the mortgage broker and alternative lending sector. AllegAtion: FICOM has not kept up with the risks that arise from the growth of shadow banking Sam Cooper: "In an interview, NDP MLA David Eby said he was concerned by the editorialsummary CMBa met with Vancouver-Point grey Mla david eby to discuss the Cooper article and the strengths of the mortgage broker sector.

• Cover