A mortgage agent holds an ownership interest in a private lending company to which they frequently refer clients. Under FSRA regulations, what is the agent's primary obligation regarding this relationship?

Question: A mortgage agent holds an ownership interest in a private lending company to which they frequently refer clients. Under FSRA regulations, what is the agent's primary obligation regarding this relationship?

Answer options: ✅ The agent must disclose this ownership interest to the borrower in writing and obtain their express consent before proceeding with the referral.

• The agent must only disclose the relationship if it directly affects the interest rate or terms offered to the borrower.
• The agent is prohibited from referring clients to any company in which they hold an ownership interest.
• The agent must ensure the client receives a better interest rate from the private lending company than from other available options.

Correct answer: The agent must disclose this ownership interest to the borrower in writing and obtain their express consent before proceeding with the referral.

Explanation: FSRA Rule 2018-001 (Mortgage Brokerages, Lenders and Administrators Act, 2006) mandates that agents must disclose any actual or potential conflict of interest to the client and obtain their written consent before proceeding, especially when referring to an entity where the agent has a financial interest.