| Part 2 of this article covered the issues surrounding | | | | and with stronger language. It is this new regime that |
| potential for default and collateral. Mortgage brokers | | | | has allowed the Canadian market to avoid the |
| when gathering information for the lenders are often | | | | excesses of the US market. |
| questioned, "Why do you need to know that?" | | | | Beneath the calm waters of the usual mortgage |
| Mortgage brokers in BC are governed by the Financial | | | | negotiation are the hidden snares lying in wait. What |
| Institutions Commission - FICOM. FICOM is the | | | | has arisen over the past ten years is more applications |
| regulatory body that governs the activities and | | | | were identity theft and money laundering are involved. |
| practices of mortgage brokers and lenders. They have | | | | The mortgage broker must ensure that all information |
| a special interest in the area of second mortgage | | | | presented to the lender is true. The underwriting |
| lending because of the history of this part of the | | | | guidelines that must be met are clear and woe to the |
| industry. In the 90's, a company called Aaron | | | | broker who tries to step outside the lines. |
| Acceptance Corporation bilked investors for millions of | | | | Recently, there was a case where a mortgage broker |
| dollars. The money invested in the corporation was | | | | provided false income information on hundreds of |
| used to fund the extravagant lifestyles of the principals. | | | | successful applications. The buyers made all of their |
| In the end, a significant amount of money had | | | | payments and no mortgages went into default. But the |
| disappeared. Through out the period that Aaron was | | | | wrinkle in the scheme was that the houses were being |
| cooking the books FICOM was the regulatory body. | | | | used for grow ops...all of them. The mortgages were |
| After the Aaron debacle, the house was cleaned at | | | | foreclosed and the remaining value went to proceeds |
| FICOM and a whole new set of rules was put into | | | | of crime. |
| place for lenders and brokers operating in BC. FICOM | | | | It can be difficult for normal average Canadians to |
| operates with ruthless efficiency. An example of this is | | | | understand that the lenders and brokers must protect |
| were a prospective mortgage sub-broker falsified his | | | | themselves from false information. I have seen clients |
| application and the brokerage, which was unaware of | | | | become very upset by the requests for confirmation |
| the false information, was fined $25,000. Clearly, there | | | | of funds, sources of income, etc. Please be kind to |
| is a new sheriff in town. | | | | your broker when he or she asks for information, they |
| The tightening of the regulator has made the operating | | | | are required too. It will make the process of securing a |
| agreements between the lender and brokers tighter | | | | second mortgage faster and more pleasant. |