Real estate rep may also be mortgage agent
Back
My real estate salesperson is also a mortgage agent, or broker. Is that allowed?
In Ontario, registered real estate professionals can also be licensed mortgage agents.
Mortgage agents are regulated under the Mortgage Brokers Act by the Financial Services Commission of Ontario (FSCO) — not the provincial Real Estate Council.
A person who is both a registered real estate professional and a licensed mortgage broker is allowed to act in both capacities.
This means you could choose to have your salesperson act as your real estate agent in the purchase of a property, and then have that same person arrange your mortgage if they are licensed as a mortgage agent in Ontario.
However, before you have the salesperson act in this dual capacity and start shopping for the right lender for your situation, there are a few things that have to be done.
First, you can expect your salesperson to provide you with written disclosure that they will act as your mortgage broker before you sign a mortgage brokerage contract.
Second, they will advise you of any compensation they may receive based on the financing arrangements. This would be in addition to the terms of the buyer representation agreement. At this point, they would not know the exact amount, but if they do arrange your financing, they will know the amount of compensation at that time and will advise you of the exact amount when it is known.
The representation agreement for the real estate transaction that is used by most brokers and salespersons has a provision for finders’ fees, rewards and referrals — so you may want to go over that aspect again when the situation comes up.
Real estate salespersons and mortgage agents are obligated to disclose to you in writing any direct or indirect financial benefit they may receive from another person for services they provide to you. And if you have questions, ask your representative.
My real estate salesperson wants to refer me to a mortgage agent. Is that allowed?
Your real estate salesperson may refer you to a mortgage agent. But it is up to you whether or not you choose to go that route.
Asking a mortgage agent to arrange a mortgage is different than going to a chartered bank for a mortgage. A mortgage agent represents a large number of lenders — including some chartered banks — and matches the lender’s products to your personal situation.
In referring you, your salesperson must disclose in writing any compensation the real estate brokerage may receive from the mortgage agent.
The real estate brokerage then pays the salesperson for the referral. This is because salespersons can accept commission or other remuneration only from the real estate brokerage that employs them.
Your salesperson will likely recommend someone with whom they already have a business relationship. But ultimately it is up to you, the consumer, to determine whether you are comfortable with linking these two services.
If you are not comfortable, you can separate the two services entirely and hire a real estate professional and a mortgage agent of your own choosing, independent of each other.
Regardless of which route you go, if you decide to use a mortgage agent, you can look up the rules and regulations for licensed mortgage agents at the FSCO website,fsco.gov.on.ca.
