B.C. mortgage broker ‘panicked,’ gave client fake document to cover up mistake: regulator

A mortgage application document is seen in this file photo.

A B.C. mortgage broker will pay more than $35,000 to a provincial regulator after admitting he “panicked” when he inadvertently failed to submit an application on behalf of a client, then created a fake document to cover up his mistake.

Graham Campbell entered a consent order agreement with the B.C. Financial Services Authority last month, admitting he conducted mortgage business “in a manner prejudicial to the public interest.”

A redacted version of the order was published on the BCFSA website Wednesday.

According to the document, Campbell began working with a first-time homebuyer client in February 2023, and told her he could apply for rate holds from lenders on her behalf.

In late April 2023, he told the client—identified in the order by the initials DK—that he had secured a rate hold for a five-year mortgage at 4.89 per cent. The consent order indicates he told DK this “based on his belief and understanding at that time.”

DK entered an agreement to purchase a home in Kelowna for $480,000 in July 2023.

“Shortly thereafter, Mr. Campbell realized that due to an administrative oversight, DK’s rate hold application to Lender 1 had not been submitted,” the consent order reads, anonymizing the mortgage lender’s name.

“He realized this after reviewing correspondence from Lender 1 relating to another client’s file.”

Rather than telling DK what had happened, the document indicates, Campbell told DK the lender required more information, communicating with her as though the lender was still reviewing her file.

“He did this knowing it was not true, and he did not tell DK that the rate hold application had not been submitted,” the consent order reads.

While DK was working to get the additional information she believed the lender had requested, Campbell confirmed a financing approval from a different lender with a rate hold of 5.14 per cent.

According to the consent order, DK was concerned that the original lender would not honour its commitment to the rate Campbell told her he had secured, so she asked Campbell to share a copy of the lender’s pre-approval certificate.

Campbell “altered an existing pre-approval certificate” from a different client of his who had been approved by the same lender, and sent it to DK, the consent order indicates.

The deceit unraveled when DK contacted the lender to ask for clarification about her pre-approval and included the falsified certificate in her correspondence.

“Lender 1 informed DK there was no record of any mortgage application in her name,” the document reads. “Lender 1 observed the mortgage reference number … and determined that it belonged to another client of Mr. Campbell’s.”

The lender then notified Campbell’s employer that it would no longer be accepting applications from him, and contacted the BCFSA to file a complaint.

According to the document, DK secured financing through the other lender and Campbell “voluntarily paid” her to cover the difference between the promised Lender 1 rate and the actual rate.

“Mr. Campbell told BCFSA that he thought he had sent the rate hold submission to Lender 1 but realized after the fact that, by inadvertent omission or technical error, he had failed to submit the application,” the consent order reads.

“He told BCFSA that he panicked and attempted to find a solution for DK by securing financing with another lender at a slightly higher rate. He admits that his actions in misrepresenting the rate hold after realizing he had not secured it, and subsequently altering a pre-approval certificate, were a complete lapse in judgment on his part.”

The document also notes that Campbell “fully co-operated” with the BCFSA’s investigation and has no previous discipline history with the regulator.

“Mr. Campbell has since implemented updated administrative processes and is operating with improved dedicated compliance support,” the consent order reads.

In the document, Campbell agrees that both lying to DK about the lender’s approval and falsifying the pre-approval certificate amount to conduct prejudicial to the public interest.

As discipline, he agrees to pay a $35,000 administrative penalty, plus $2,500 in investigation costs, to the regulator.