Information collection and advice

Information collection

A mortgage broker must collect, among other things, information pertaining to the identification of the client’s needs and financial situation, including the characteristics and terms and conditions of the proposed loan, the immovable that will be charged with the hypothec (mortgage) and the client’s credit history, income, ability to repay the loan and level of financial knowledge This link will open in a new window.

A mortgage broker must also identify and ascertain the identity of the borrower, the mortgage lender and, if applicable, of the surety and other parties to the proposed transaction This link will open in a new window.

A mortgage broker must verify and ascertain the legal capacity of the borrower or the borrower’s representative to enter into the proposed transaction and the legal capacity of the mortgage lender and, if applicable, of the surety and other parties to the transaction This link will open in a new window.

All the information collected to meet these obligations must be included in the records kept and stored by the firm on behalf of which the mortgage broker acts or, if the mortgage broker is registered as an independent representative, by the mortgage broker.

Mortgage brokers may delegate the collection of information to a person who is not a mortgage broker.

Important

Mortgage brokers who decide to mandate non-certified persons to collect client information must be aware of the related risks:

  • They remain fully responsible for the collection of all the information required to analyze a client’s situation and needs and cannot transfer that responsibility to the person mandated by them.
    • For example, if a mortgage broker decides to rely on the information collected by a non-certified person and the information proves to be incomplete or does not reflect the information disclosed by the client, the mortgage broker will not be able to meet their obligations.
Insight

Reminder

Mortgage brokers are required to act with prudence, diligence and objectivity at all times, even if they delegate the collection of information to a third party!

End of the insight
  • They should make sure the client understands that the person collecting the information is not a mortgage broker and is not authorized to recommend a loan or lender or give advice, i.e., that their role is limited to collecting information.
  • They must make sure the manner in which the information was collected (e.g., the way the questions were asked) was neutral and free of bias to ensure the information is reliable.
  • If the non-certified person collecting information from a client is not authorized to receive a share of a commission in accordance with sections 100 This link will open in a new window or 143 This link will open in a new window of the Distribution Act, their remuneration must not be tied to a mortgage loan being recommended or granted.
    • The person may, moreover, be remunerated through payment of a specified fixed amount, a salary, fees, on the basis of the number of clients the person collected information from, and so forth.

A computerized tool may also be used to collect information. The comments above regarding delegating information collection to a non-certified person also apply to the use of such a computerized tool. Mortgage brokers remain fully responsible for the collection of information from and services offered to clients.

Warning

A non-certified person who collects information is at high risk of performing an act that falls outside the activities that may be performed by a non-certified person. When a question from a client may lead the non-certified person to perform such an act, the non-certified person must immediately refer the client to a broker.

Examples:

  • Question: What is the selling price of the house you want to buy? Answer: The listed price is $400,000.
    • FACTUAL – The information may be collected by a non-certified person.
  • Question: What type of mortgage are you looking for?
    • NON-FACTUAL – As this question does not concern the client’s factual situation, this information may not be collected by a non-certified person. Such a question necessarily leads to explanations that only a mortgage broker may give a client.
End of the warning

Mortgage brokerage advice

A mortgage broker must, among other things, appropriately advise the client and, if they propose a loan secured by immovable hypothec, they must ensure that the loan is suited to the client’s situation and needs. The mortgage broker must also give the client all such information as may be useful or necessary for making a decision about the proposed loan This link will open in a new window.

Advising is a key step in the mortgage brokerage transaction and may not be delegated to a non-certified person.

Examples

Actions that may be delegated

The following is a partial list of actions that may be delegated by a broker to a non-certified person:

  • Making and confirming appointments for people interested in a mortgage brokerage transaction.
  • Communicating with the people involved in the transaction (client, lender, etc.) to perform follow-up (make appointments, check whether the lender has received the signed commitment offer, etc.).
  • Obtaining the following information or documents from the client: income, assets and liabilities, information on real estate holdings, tax accounts, mortgage statements, other documents needed to prepare the client record.
  • Answering client calls without providing information about mortgage loans.
  • Answering a client’s technical/administrative questions, for example:
    • Sending a document
    • Confirming information in the client record without providing explanations
  • Forwarding the mortgage approval sent by the mortgage lender to the client for their signature.
  • Sending the client contracts, notices and consent forms that will be explained by the broker.
  • Collecting client information that is limited to factual information about the client’s situation. For example, filling out a questionnaire/form with information provided by the client.

Actions that may not be delegated

The following is a partial list of examples that the AMF considers to be “insurance advice” and that a mortgage broker is not allowed to delegate:

  • Recommending a mortgage loan or lender.
  • Presenting a borrower’s record to a lender.
  • Explaining a client’s situation or a loan to a client, which may lead the client to make a decision about a product.
  • Comparing mortgage loans.
  • Helping clients choose a product or loan option.
  • Discussing the choice of loan with a client.
  • Presenting a client with the results of the broker’s analysis.
  • Presenting and explaining a loan to a client: commitment offer, penalties, clauses and components of a loan contract.
  • Providing information, recommendations or answers, in any form, regarding a mortgage loan.
  • Verifying that all the necessary information and documents have been collected and that the client record is complete.