The Financial Institutions Commission (FICOM) delivered a warning to mortgage brokers last Monday: Public scrutiny has never been greater.
At the CMBA-BC conference in Vancouver last week, FICOM’s acting registrar of mortgage brokers Chris Carter noted that untoward behaviour, like money laundering—which has made headlines in the province—and growth in private channel lenders is on the public’s radar and that brokers should be judicious.
“Broadly speaking, you can narrow that down to two reasons. We’ve grown our enforcement program—we’ve added investigators and we’ve added examiners who are looking for problems out there in the industry,” Carter is quoted as saying in Glacier Media. “It is fair to say the more we look, the more we find.”
That is all the more problematic considering brokers are simply agents between lenders and borrowers, helping the former achieve the best rate from the latter. Carter is concerned about the softening real estate market in B.C., which could be fertile ground for professional opprobrium. Sometimes that means knowing “when to say ‘no.’”
Carter further warned about the potential for Canadians to become burdened by massive mortgages and home equity lines of credit, thanks to avaricious brokers who will doubtless be placed under a microscope if things go awry in the public’s eyes.
While Carter recommends scaling back the torrent of new mortgage originations, the CEO of CMBA-BC believes that accessing credit is still imperative for Canadians. She also added that while FICOM is becoming a more assertive government agency, she has no problem with it provided the industry isn’t ignored.
“It’s important for our regulator to have a different take than industry,” said Samantha Gale.
Carter also warned brokers to be circumspect about putting clients into syndicated mortgages and mortgages from MICs because their interest rates, fees and penalties can be higher. While he isn’t against private lenders, he says predatory lending is on FICOM’s radar.
“We’re conscious of the ways risk flows through the system. That’s one reason we’re monitoring the private lending space quite closely.”