In the last year I’ve started doing a lot of work as an Expert Witness for litigation involving mortgages, mortgage brokers, or mortgage agents in Ontario. A common theme I’ve heard a lot of defendants argue is that they weren’t acting as a mortgage broker or agent for the transaction in question. Someone else was arranging the mortgage. Maybe it was a bank, another financial institution, or another mortgage broker. The defendants will argue they were just on the periphery helping the borrower in some capacity. As Shaggy would plead, “It wasn’t me”!
To be clear, I’ve seen registered mortgage brokers, mortgage agents, realtors, previously registered mortgage agents, and even lay people use the “It wasn’t me” argument. Somehow, they feel that if they aren’t the primary person arranging the mortgage then their actions aren’t governed by the Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA).
The reality is that the MBLAA applies in almost any situation where someone is helping to arrange a mortgage. The only time it does not apply is if someone makes a simple referral to a third party. A simple referral would be providing a name and contact information to a bank or other lender as an example. Anything more than that and you are dealing in mortgages.
The MBLAA defines “dealing in mortgages” as any of the following:
1. Soliciting another person or entity to borrow or lend money on the security of real property.
2. Providing information about a prospective borrower to a prospective mortgage lender,whether or not this Act governs the lender.
3. Assessing a prospective borrower on behalf of a prospective mortgage lender, whether or not this Act governs the lender.
4. Negotiating or arranging a mortgage on behalf of another person or entity, or attempting to do so.
5. Engaging in such other activities as may be prescribed. 2006, c. 29, s. 2 (1).
There is no grey area under the Act. Even if you’re not the primary person arranging the mortgage you can still be found to be dealing in mortgages. Tip toeing around the periphery of a transaction doesn’t exempt you from the requirements of the Act. You have been warned…