A mortgage agent, Sarah, is arranging a mortgage for her client, Mr. Henderson, with a lender that regularly pays Sarah a referral fee for every successful mortgage application. Which of the following is Sarah legally required to do regarding this referral fee?

Question: A mortgage agent, Sarah, is arranging a mortgage for her client, Mr. Henderson, with a lender that regularly pays Sarah a referral fee for every successful mortgage application. Which of the following is Sarah legally required to do regarding this referral fee?

Answer options: ✅ Disclose the existence and amount of the referral fee to Mr. Henderson in writing before the mortgage commitment is signed.

• Disclose the existence of the referral fee to Mr. Henderson verbally upon first contact.
• Disclose the existence of the referral fee to Mr. Henderson only if he specifically asks about it.
• She is not required to disclose referral fees received from lenders, as it is standard industry practice.

Correct answer: Disclose the existence and amount of the referral fee to Mr. Henderson in writing before the mortgage commitment is signed.

Explanation: Mortgage agents are required to disclose all compensation received from lenders, including referral fees, to their clients in writing before the client enters into the mortgage commitment. This is a core requirement under provincial Mortgage Brokerages, Lenders and Administrators Acts to ensure transparency.