Mortgage Broker

legalease Foreclosure A private lender is oen a second or subsequent lender. If there is a default under a prior mortgage, the lower-priority lenders are subject to being foreclosed upon and removed from title. Regardless, the foreclosure itself can be time consuming and expensive, during which time the property is possibly not being maintained, property taxes are possibly not being paid, the balances owed under the prior charges are increasing and legal fees are being incurred. Further, the borrower might strip the property of carpets, cabinets, fixtures and other valuables. (Summer 2017, page 35) If the seller is a non-resident, the government might demand the property's capital gains tax be paid by the seller, which raises the question of who is the seller when the sale is conducted under court order by a lender. (Spring 2017, page 42) ere is as well the possibility that if the private lender's usual and trusted lawyer also acted for the borrower in the mortgage transaction, the conflict of interest might prevent the lawyer from acting for the lender in the foreclosure action. (Spring 2017, page 22) ese possibilities need to be accounted for and addressed in the assessment and structuring of the mortgage transaction. Super Priorities e usual rule of "first in time, first in line" when it comes to determining priorities as between registered charges is subject to some exceptions. e Canada Revenue Agency takes the exceptions to a whole new level by possibly having the right to claw back payments made under your mortgage. (Winter 2016, page 24) Cashbacks A cashback is generally based on the borrower meeting certain conditions, such as keeping the mortgage outstanding for an agreed term. If there is a foreclosure, the cashback might not have been earned and hence may be repayable. However, the private lender might not be able to recover it within the foreclosure action and may have to commence a separate claim. (Winter 2017, page 54) Limitation Periods Lenders must take steps against defaulting borrowers within time limitations specified by limitation statutes; these statutes vary across the provinces. Once the limitation has expired, the debt may cease to exist. (Spring 2015, pages 43 and 46) Spam Subject to an available exception applying, commercial electronic messages (these are a type of spam and include messages soliciting business) are not to be sent without the recipient's advance consent. Legislation requires certain steps to be taken and records to be kept. (Summer 2014, page 39) Protection of Privacy Private lenders must protect the personal information of their clients and others in accordance with privacy legislation. is requires active planning. Consequences for non- compliance can be significant. (Spring 2017, page 58; Winter 2017, page 38; Summer 2016, page 23; Spring 2016, page 30; Fall 2015, page 38) Disclosure of Information No authority, not even the police, can demand information from a private lender without specific legal authorization. A private lender should not be timid in asking questions about the specific authority under which the demand is being made and ensuring that any preconditions for that authority to be exercised are in fact being met (such as ensuring that an active investigation exists if the demand in question is effective only in the context of there being an active investigation). Reporting to Credit Agencies A lender needs to provide accurate information to credit agencies or risk a civil judgment in favour of anyone who suffers damages because of inaccurate information they've provided. (Fall 2016, page 38) False, Misleading or Deceptive Advertising Advertising needs to comply with applicable provincial and federal legislation. For example: n In British Columbia, the Mortgage Brokers Act prohibits a broker from making false, misleading or deceptive statements in any advertisement, circular, pamphlet or other similar material. n In Ontario, in accordance with the Mortgage Brokerages, Lenders and Administrators Act, 2006, private lenders are prohibited from advertising their services. Only the licensed mortgage brokerage that they do business with can advertise. n Canada's Competition Act makes deceptive advertising and marketing practices, done knowingly or recklessly, criminal violations. e difficulty for the private lender is that the devil is in the details; for example, a lender's "advertising come-on" or advertising puffery may in some cases be seen by the regulator as deceptive. Restricting Competition Practices are not permitted to unduly restrict competition in the marketplace. Canada's business environment is based on there being a free and competitive marketplace operating in accordance with the law. Accordingly, the Competition Bureau of Canada is authorized to: n prohibit business mergers that would not leave a competitive marketplace; n not allow a dominant player in the marketplace to abuse the position of dominance (such as by the dominating player dictating the conduct of other players in the industry); and n not allow agreements that substantially lessen competition (such as "price-fixing"). certain steps to be taken and records to be kept. ( 2014, page 39 Protection of Privacy Private lenders must protect the personal information of their clients and others in accordance with privacy legislation. is requires active planning. Consequences for non- compliance can be significant. ( lender. If there is a default the lower-priority lenders to recover it within the foreclosure action and may have to commence a separate claim. ( Limitation Periods 40 | fall 2017 cmba-achc.ca CMB MAGAZINE

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