“I think they need to work more on the ethics side when it comes to licensing,” Walid Hammami, a Montreal-based broker with Dominion Lending Centres
told MortgageBrokerNews.ca. “Most of these guys feel pressure to get clients and compromise themselves as a result; they are under pressure and want to make money as fast as possible.”
Home Capital announced Thursday it had severed ties with 18 independent brokers and two brokerages – a total of 45 brokers – after an investigation pointed to falsified information about borrowers’ income.
The contracts were suspended between September and March and the lender attributes these suspensions to a loss in mortgage originations.
Some believe ever-tightening guidelines may have encouraged these brokers to bend the rules.
“You can give everybody education but you can’t change their values,” Tony Piattelli of Verico
Quantus Mortgage Solutions told MortgageBrokerNews.ca. “The education should be much more focused on fiduciary duty but brokers aren’t making as much money as they once were and I’m not sure if some people are retaliating against the mortgage tightening because they don’t agree with it.”
The lender has not determined whether the brokers, themselves, were responsible or if it was the clients who falsely reported income.
“We have no proof brokers were responsible themselves, but business flows through them, so we held them accountable,” said Martin Reid, president of Home Capital.
Yet, certain players are calling for the regulators to strip the licenses of the brokers if they are proven to have knowingly included incorrect information.
“If it’s proven that they knowingly passed on fraudulent information then they should have their licenses stripped,” Piattelli said.
Added Hammami: “It’s not only up to the lenders – the brokerages have a part to play as well. The onus is on both of them and the regulators; if brokers are caught forging documents their licenses should be taken away.”
The case of 45 mortgage brokers facing suspension in the wake of allegedly falsifying documents is leading industry players to call for more ethics-based broker training.