If the private lender is your client or if your client is borrowing from a private lender, it should be part of your due diligence to inquire whether the lender is a registered mortgage broker. The definition of “mortgage broker” is widely defined in section 1 of the Mortgage Brokers Act.
"mortgage broker" means a person who does any of the following:
(a) carries on a business of lending money secured in whole or in part by mortgages, whether the money is the mortgage broker's own or that of another person;
(b) holds himself or herself out as, or by an advertisement, notice or sign indicates that he or she is, a mortgage broker;
(c) carries on a business of buying and selling mortgages or agreements for sale;
(d) in any one year, receives an amount of $1 000 or more in fees or other consideration, excluding legal fees for arranging mortgages for other persons;
(e) during any one year, lends money on the security of 10 or more mortgages;
(f) carries on a business of collecting money secured by mortgages;
Section 11 of the Act sets out some exemptions to the registration provisions. Sections 21 to 22 deal with offences and penalties including the offences of failing to register as a mortgage broker or submortgage broker. See the BC Financial Services Authority website for more information about mortgage brokers including listed registrants, consumer alerts about mortgage broker activity, example scenarios to assist in determining is a person is “arranging mortgages”, and the mortgage broker registration process. Also, it is anticipated that the government will be making changes to the Mortgage Brokers Act, so be sure to check for updates to the legislation.