An Ontario mortgage broker is facilitating a private mortgage for a borrower. Which of the following is a mandatory step the broker must take to ensure the borrower fully understands the risks associated with this type of financing?

Question: An Ontario mortgage broker is facilitating a private mortgage for a borrower. Which of the following is a mandatory step the broker must take to ensure the borrower fully understands the risks associated with this type of financing?

Answer options: ✅ Provide the borrower with a written disclosure statement clearly outlining the nature of private lending, associated fees, and inherent risks.

• Advise the borrower to seek independent legal counsel, but it is not mandatory to confirm if they actually did so.
• Ensure the borrower has a net worth exceeding a certain threshold to qualify for private financing.
• Only facilitate private mortgages for borrowers who have been declined by at least three institutional lenders.

Correct answer: Provide the borrower with a written disclosure statement clearly outlining the nature of private lending, associated fees, and inherent risks.

Explanation: FSRA regulations require mortgage brokers to provide comprehensive disclosure for private mortgages. This includes a written statement detailing the risks, costs, and terms to ensure the borrower makes an informed decision.