British Columbia Financial Services Authority warns consumers about prohibited upfront fees and pressure tactics by mortgage brokers

The British Columbia Financial Services Authority (BCFSA) issued a consumer alert warning that some mortgage brokers in British Columbia are charging fees that are prohibited for residential mortgages and, in some cases, using pressure tactics to push clients to complete deals, including threats of legal action to collect fees if clients do not proceed. BCFSA said brokers cannot charge commitment fees before a residential mortgage is funded, application fees when a borrower applies for or receives a residential mortgage commitment, cancellation fees if the borrower decides not to proceed, or any other fees before funding. The alert distinguishes these from permitted charges such as recovery of actual third-party expenses (for example appraisals and legal fees) where the client agrees in advance, including via upfront deposits for third-party costs with unused funds returned or actual costs reimbursed. Any advance money for third-party expenses must be held in a trust account, and brokers must be authorized by BCFSA to handle trust monies. BCFSA encouraged consumers who believe they have been charged illegal fees or faced pressure tactics to report the matter to the regulator.