Blogs | Alberta Mortgage Brokers Association - AMBA

Important update: Criminal Interest Rate lowered to 35%–What it means for your brokerage

2/25/2025

Effective January 1, 2025, the Criminal Interest Rate has been lowered

The criminal interest rate in Canada has officially been lowered from 60% to 35%, effective January 1, 2025. This significant change impacts mortgage brokerages, private lenders, and loan arrangements, making it crucial for industry professionals to understand their obligations under the new legislation.

Key compliance considerations for Mortgage Brokerages
If your brokerage arranges mortgages directly on behalf of private lenders, you must ensure that these lenders are aware of the new regulation. It is now a criminal offence to offer loans at an interest rate higher than 35%, subject to specific exceptions. For brokerages arranging loans where the lender is represented by another brokerage or is a direct lender, your primary responsibility is to the borrower. You must ensure that the interest rate—including fees and other costs--does not exceed 35%.

APR and the true cost of borrowing
Interest, as defined under the law, includes not only the stated rate but also various fees and additional borrowing costs. In cases where loans are small and short-term, these extra costs could push the Annual Percentage Rate (APR) above the 35% threshold. Mortgage professionals must carefully calculate the full cost of borrowing to ensure compliance.

Exceptions for certain commercial loans
Some commercial loans are exempt from this legislation. If your brokerage arranges commercial financing, it is critical to understand the legal definitions and applicable exemptions. There are many resources available online—including legal articles—that provide further guidance on these changes.

Ensuring compliance with the Real Estate Act Rules
The Real Estate Act Rules require all mortgage licensees to practice in full compliance with the Act, Regulations, Rules, and Bylaws governing mortgage transactions in Alberta. As a brokerage, it is your responsibility to stay informed and ensure adherence to the new criminal interest rate regulations.

For more details, consult legal and industry resources to better understand the impact of these legislative updates.

The important role mortgage brokers play in mitigating fraud

2/25/2025

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Fraud is an ongoing concern in the mortgage industry, posing risks to lenders, brokers, and consumers alike. As a mortgage agent or broker, protecting your business from fraudulent activities is not just a legal obligation but a crucial step in maintaining your reputation, reducing financial losses, and ensuring the integrity of the mortgage process.

Mortgage brokers and agents play a critical role in mitigating fraud. Here are a few reasons why it is crucial to be vigilant and conduct your due diligence to avoid fraud:

Financial and Legal Risks
Mortgage fraud can lead to significant financial losses, regulatory fines, and legal consequences. Fraudulent applications, identity theft, and misrepresentation can result in bad loans that may ultimately default, causing financial instability for lenders and investors.

Reputation Protection
A single case of fraud can severely damage your professional reputation. If a broker or agent is linked to fraudulent transactions, trust among lenders, clients, and industry partners can be compromised, leading to lost business opportunities and potential license revocation.

Regulatory Compliance
Regulators impose strict guidelines to ensure the integrity of the mortgage industry. Non-compliance with anti-fraud measures can lead to severe penalties, including suspension, fines, or legal action.

While fraud continues to be a concern across all industries, it is important to know which resources are available to help mitigate fraud, and what best practices are in identifying potential red flags. Here are some important steps you can take to help mitigate fraud:

  •  Implement Strong Verification Processes – Conduct thorough identity, income, and employment verifications. Cross-check borrower information with multiple data sources.
  •  Utilize Technology and Analytics -- Use automated fraud detection tools to flag inconsistencies.
  •  Stay Educated and Updated -- Keep up with emerging fraud trends and regulatory changes. Attending industry workshops and training sessions on fraud prevention can help you further identify how fraud continues to evolve.

How PurView Can Help Mitigate Fraud
PurView is a powerful tool that provides mortgage professionals with essential property data, ownership history, and fraud detection capabilities. By leveraging PurView, mortgage agents and brokers can:

  •  Verify Property Ownership: With access to title information, you can validate who is on title, historical sales, ownership information and more.
  •  Detect Potential Fraud: Access to the most authoritative property data can help identify any potential fraud risks on a property.
  •  Enhance Due Diligence: Gain a comprehensive view of borrower and property details to make informed lending decisions.

Insight into this data can allow you to validate the information you are provided by your client or dig deeper into anything that may raise a red flag. Having access to the PurView Property Report ensures that you are not only protecting your client but also protecting yourself and your reputation.

By implementing a thorough verification process, staying informed, and leveraging innovative tools like PurView, mortgage professionals can significantly reduce fraud risks and build a more transparent, trustworthy lending environment.

Are you ready to enhance your fraud prevention efforts? Book a customizable demo to learn more about PurView today.

Alberta Mortgage Brokers Association
7326 10th Street NE, Suite 310
Calgary, AB T2E 8W1
Phone: 587.774.9828
Email: [email protected]

At the Alberta Mortgage Brokers Association, we acknowledge that our work in the housing industry is deeply connected to the land we call home. We recognize and pay tribute to the traditional territories of the peoples of Treaties 4, 6, 7, 8 and 10. We also honour the Métis Nation of Alberta. As we work to facilitate homeownership in Alberta, we remember that we operate on land that has been home to Indigenous peoples for generations.