A key takeaway is that the regulatory landscape is complex. Private lenders should not rely solely on the licensing exemption. To mitigate legal and regulatory risk, professionals should:
- Engage a competent mortgage broker: A licensed mortgage professional is equipped to handle the complexities of disclosures, compliance and regulatory requirements.
- Retain a qualified real estate lawyer: Legal counsel is essential to ensure the mortgage commitment, charge and all related documents are legally sound and enforceable. The lawyer’s role is not just to register the mortgage; it is to ensure compliance with all applicable laws and regulations. Note: private lenders usually require the borrower to pay for their lawyer. The lender’s legal fees are deducted from the funds advanced to the borrower. As such, there is no financial obstacle to hiring counsel.
- Maintain meticulous records: All loan files, including applications, agreements, communications, and statements of account should be properly documented and stored. This is crucial for demonstrating compliance in the event of an audit or dispute.