Interesting conversations always happen when we have a RECA audit, now called a review because audit offended some people, and this years was no exception. The conversation started around our responsibility to the borrower and what we can or can’t say to them in regards to their mortgage. The question is basically this “Do you give your clients advice regarding their mortgage?” My response was that after 10 years and approximately 400 million dollars’ worth of mortgages that yes I feel qualified to give my client advice about their mortgage.
RECA has two forms that mortgage brokers in Alberta are required to have signed before they pull your credit. The forms are called service agreements and they differ in the way you conduct your business. If you broker is an intermediary they are to be honest, be careful, collect your paper work and determine the options available to you and submit it to a lender. When the deal comes back take the paper work to you and explain it as best they can. Pretty straight forward but there is no mention of their responsibility to give you advice.
If your broker is Acting for the Borrower they wording changes considerably, we are require to represent your best interest, recommend a mortgage solution, advocate on your behalf, provide confidential advise as well as all of the above items of an intermediary. In both cases we have the responsibility to act honestly with the lenders and present an honest and truthful application.
The point is this, if you are a skilled mortgage professional and all you do is take orders and process paper then you are an intermediary. If you truly have the experience to give clients knowledge backed advice then you have to be working for the borrower. If you are using the intermediary form then RECA says you shouldn’t give them advice, make sure you read that to your clients. It can make a world of difference should something go wrong.