“The term ‘private lending’ is one that is often used incorrectly, and that’s a big part of the problem,” says Ad Lakhanpal, a broker with Mortgage Alliance
Company of Canada. “Mortgage brokers need to correct clients who think all non-bank lenders are shadow lenders. We need to explain that alternative lenders – including monolines, B-lenders and even some private lenders – are all legitimate and regulated places to get a mortgage.”
While brokers do need to be held accountable, Lakhanpal also feels there is another group that should up its game when explaining the industry better.
“Some of the responsibility must also fall on the media,” says Lakhanpal. “Mortgage brokers can only educate one client at a time, but the media can reach a larger audience, so they must make the effort to learn the terminology and use it correctly.”
A lack of understanding among the media was brought to light when a CBC analyst erroneously lumped mortgage brokers and alternative lenders into the same category as “shadow lenders,” leaving the news agency with egg on its face.