A mortgage agent, Mark, is approached by a client, Mr. Henderson, who is looking to refinance his home in Calgary. Mark also owns a 20% equity stake in a private lending company that specializes in high-risk mortgages. He identifies that Mr. Henderson's credit score is low, making him a candidate for a private mortgage. What is Mark's primary obligation in this situation?

Question: A mortgage agent, Mark, is approached by a client, Mr. Henderson, who is looking to refinance his home in Calgary. Mark also owns a 20% equity stake in a private lending company that specializes in high-risk mortgages. He identifies that Mr. Henderson's credit score is low, making him a candidate for a private mortgage. What is Mark's primary obligation in this situation?

Answer options:

• Refer Mr. Henderson to the private lending company in which he has an ownership stake, but only if it offers the lowest interest rate. ✅ Disclose his ownership interest in the private lending company to Mr. Henderson and ensure Mr. Henderson understands he has other options.
• Avoid presenting any options from the private lending company to Mr. Henderson due to the potential conflict of interest.
• Recommend Mr. Henderson pursue a B-lender mortgage instead, even if it is not the best fit, to avoid any appearance of conflict.

Correct answer: Disclose his ownership interest in the private lending company to Mr. Henderson and ensure Mr. Henderson understands he has other options.

Explanation: Mortgage agents must disclose any potential conflicts of interest, such as an ownership stake in a lending entity, to their clients in writing before proceeding with any business, as required by provincial regulations and professional ethics.