BCFSA Warns Consumers About Prohibited Fees Charged by Mortgage Brokers

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BC Financial Services Authority (“BCFSA”) is warning consumers that some mortgage brokers in B.C. are charging prohibited fees and using pressure tactics to push clients into completing mortgage deals. In some cases, brokers have threatened legal action to collect these fees if clients decide not to go ahead with their residential mortgage.

The following fees are prohibited:

Commitment fees: brokers cannot charge you fees before your residential mortgage is funded;
Application fees: brokers cannot charge you when you apply for or receive a residential mortgage commitment;
Cancellation fees: brokers cannot charge you if you decide not to proceed with a residential mortgage; and
Other fees: No fees can be charged before your mortgage is funded.

Acceptable fees include:

Third-party expenses: mortgage brokers can recover actual costs paid to third parties, such as appraisal fees and legal fees, if you agree to these costs in advance; and
Upfront deposits: third-party expenses can be paid with an upfront deposit, with any unused funds being returned, or by reimbursing actual costs

At the beginning of your search for a new residential mortgage or renewal, your mortgage broker may provide you with information that explains the services they will provide, any associated fees, necessary authorizations, and your potential responsibility for other costs, such as appraisals and legal fees. If you do not receive this information upfront, BCFCA recommends that you ask the mortgage broker to provide it in writing before proceeding.

Any money you pay in advance for third-party expenses must be kept in a trust account. Brokers must be authorized by BCFSA to handle trust monies.

Protecting Consumers

BCFSA is dedicated to protecting consumers from mortgage broker misconduct. If you think a mortgage broker has charged you illegal fees or used pressure tactics such as suggesting that they will charge you cancellation fees, we encourage you to report it to BCFSA at 604-660-3555 (toll-free at 866-206-3030) or email: BrokerConduct@bcfsa.ca