Mortgage Brokerage - Acting as an Intermediary

The Real Estate Act Rules require that all mortgage brokers disclose to borrowers, in writing, the nature of their relationship with the borrower, the nature of their relationship with the lender, the range of lenders whose products it offers, how it will be compensated and the nature of any other benefits. [Real Estate Act Rules, s.65(c)(i)(ii)(iii)(iv)(v)]. Additionally, mortgage brokers are responsible for ensuring their role is clearly understand by their clients and third parties [Real Estate Act Rules, s.41(e)], whether the client is the lender or the borrower.

When you act as an intermediary between the lender and borrower
When your mortgage brokerage is not representing the lender or the borrower, it can act as an intermediary between them, offering mortgage products from multiple lenders to the borrower.

When dealing with the borrower as an intermediary, you must:

When dealing with the lender as an intermediary, you must:

You cannot represent the lender and borrower at the same time
Do not try to represent both the lender and the borrower in the same transaction. When you try to represent the lender and borrower at the same time, it is impossible to meet your obligations, to be loyal, and act in their best interests. This will put you in a conflict of interest, particularly when disclosing relevant information and keeping other information confidential.

Mortgage brokerages are cautioned that their industry members must only undertake activities that match the type of relationship the brokerage has chosen to have with lenders and/or borrowers. For example, if a mortgage brokerage business model is to act as an intermediary, an advertisement that indicates “we ensure borrowers get the best mortgage rate” may be false and/or misleading, as it could lead a borrower to believe that the mortgage brokerage is working on his or her behalf. Appropriate wording could be “we work with borrowers to provide appropriate options for their consideration.”

RECA has developed a Acting as an Intermediary Service Agreement to assist brokerages in making the relationship and compensation disclosures to borrowers, and to meet the requirements of section 43 of the Real Estate Act Rules. These agreement will also assist borrowers in understanding their relationship with mortgage brokerages and the mortgage broker’s relationship with lenders, and how the brokerage will be compensated.