| December 08, 2016
Television building contractors always remind their audience to hire reputable companies to do their renovations. They say one of the signs of a reputable company is a licence, insurance, and the fact you don’t pay for their work until the job is done.
The same applies to other professionals, including mortgage brokers. Mortgage brokerage professionals in Alberta must be licensed, their brokerage must hold Errors and Omissions insurance, and they must not collect or attempt to collect a fee from a residential borrower until a lender has provided a written commitment to fund the mortgage and the borrower has accepted that commitment.
It doesn’t matter if you help a client get their finances in order, submit the paperwork, AND go above and beyond and drive to their child’s graduation ceremony to finish the application on time. If the lender provides a commitment, and the borrower doesn’t accept that commitment, you cannot ask for or collect a fee for your services from your client.
You can ask for payment for out-of-pocket expenses, such as registry searches, credit reports, or couriers, if you have a written agreement that says so, but you cannot charge a fee for your brokering the mortgage until the borrower accepts a lender’s commitment.
All mortgage brokerages are required to disclose how they’ll be compensated – but the actual process of when you can request that compensation is important, too.
RECA has sample Mortgage Borrower Disclosure documents available through Industry Guides and Tools on reca.ca. These documents meet the requirement for written service agreements with clients, and provide a means through which brokerages can make the required disclosures.
Professional behaviour breeds a professional reputation, which breeds more word-of-mouth clients.