Mortgage Broker Michael is arranging a mortgage for a client and will be paid a lender-paid commission. In addition, the borrower has agreed to pay Michael a broker fee for his specialized service in securing a challenging mortgage. What is Michael's primary obligation regarding compensation disclosure?

Question: Mortgage Broker Michael is arranging a mortgage for a client and will be paid a lender-paid commission. In addition, the borrower has agreed to pay Michael a broker fee for his specialized service in securing a challenging mortgage. What is Michael's primary obligation regarding compensation disclosure?

Answer options: ✅ Michael must disclose both the lender-paid commission and the borrower-paid broker fee in writing, explaining how each is calculated, before the client commits to the mortgage.

• Michael only needs to disclose the borrower-paid fee, as the lender-paid commission is a standard industry practice.
• Michael must obtain a verbal confirmation from the client regarding the fees, and then proceed with the application.
• Michael can waive the borrower-paid fee if the lender-paid commission is sufficiently high.

Correct answer: Michael must disclose both the lender-paid commission and the borrower-paid broker fee in writing, explaining how each is calculated, before the client commits to the mortgage.

Explanation: Mortgage brokers must provide full, clear, and timely disclosure of all compensation, whether paid by the lender or the borrower, in writing, before the client enters into a mortgage agreement, as mandated by provincial broker legislation.