In March 2017, Gary Siegle joined the Real Estate Council of Alberta as it’s first-ever Mortgage Broker Practice Advisor.
Gary will support mortgage brokerages by responding to broker and delegate questions with practical, timely information, guidance, and advisory services that support them in their responsibilities and duties on a “without prejudice” basis. The creation of a Mortgage Broker Practice Advisor position is a tremendous step forward.
Contact Gary directly at email@example.com or call him at 403-685-7925.
These are just some of the questions Gary has answered so far, maybe the answers will help you in your own practice. Questions can range from issues with particular transactions to larger licensing concerns to brokerage administration issues:
When I leave my brokerage can I take my clients and borrowers with me? And do I have to give my client files and borrower information to the brokerage?
While you may feel as if the relationship with the borrower is all yours, borrowers you work with are actually in service relationships with your brokerage. Your brokerage must have complete file information. If borrowers want to work with you after you transfer to a different brokerage, they may do so, but only after ending any existing service relationship agreements with your former brokerage. Any file information from deals during your time at your former brokerage belong to your former brokerage.
My friend has moved to another province and is buying a home there. Can I do that mortgage deal myself or do I need to co-broker it with a licensed broker from that province?
Each regulator has somewhat different rules so it is always best to check for each situation. In most cases, if the borrower is a resident of the other province, and the property is in the other province, a licensed broker from that province would need to be involved. Also, if you’re originating the deal in Alberta, you, as a licensed Alberta broker would also need to be involved. At RECA we use the legal standard of ‘substantial connection.’ If there is a substantial connection to Alberta, the mortgage broker must hold a licence from RECA. For more information on what constitutes a substantial connection, click here.
What documents are required to be retained by the brokerage?
All documents relating to the file must be retained by the brokerage for a period of three years. Documents include notes, e-mail, text messages as well as the more “official” documents such as application, commitment, and documents providing borrower details (income, down payment, debt obligations, etc.). It is a requirement that the brokerage retain documents even for deals that do not proceed. All of these files are brokerage files, including your texts and emails with borrowers.
Can I retain these documents electronically?
Document retention methods must meet privacy standards. If they are retained on portable devices such as a flash drive or external hard drive they should be encrypted in order to ensure security if the drive is misplaced or stolen. If documents are stored on “the cloud” the servers must be in Alberta and accessible to the brokerage. The brokerage needs to know that the security measures that the cloud storage provider has in place will maintain the security and integrity of the information.
I have been working with a borrower for quite a while and we are almost at the file complete stage. Their purchase transaction closes next week. I have just learned that the borrower is shopping at other brokerages and lenders, and I don’t want to do more work for nothing. Can I just cancel my file and send the borrower on their way?
You can choose who you wish to work with, but based on the fact that there is an imminent closing and cancelling the deal may result in penalties and fees, you should consider the business ramifications. What could the borrower do to attempt to recover extra costs from you? The rules state that you must provide a competent service and you cannot act recklessly. You need to consider whether dropping the file at such a late stage meets the standards of competent service or recklessness.