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An unlicensed B.C. mortgage broker accused of arranging half a billion in mortgages for hundreds of clients has been issued a cease-and-desist order by the province’s mortgage regulator.

The Financial Institutions Commission of British Columbia (FICOM) announced last week that its Registrar of Mortgage Brokers issued the order against Jay Chaudhary, a former registered B.C. broker.

“The size and scale of Mr. Chaudhary’s unregistered mortgage broker activities, supported by a network of regulated individuals, represents a significant risk to the integrity of the real estate and financial services marketplace,” reads the order by acting registrar Chris Carter.

“Mr. Chaudhary led borrowers into thinking he was a mortgage broker dealing directly with lenders, when in fact, he had a network of registered mortgage brokers who arranged the mortgages with lenders on Mr. Chaudhary’s behalf. Mr. Chaudhary produced altered documents to support inflated financial information in mortgage applications and provided them to registered submortgage brokers to submit to lenders.”

FICOM logoAccording to the order, Chaudhary brokered $511 million in mortgage loans after his licence was suspended for forging clients’ tax documents in 2008, after which time his registration lapsed. In total there were 875 deals completed that generated more than $5.2 million in client fees and $642,300 in referral fees paid by the submortgage brokers, documents show.

The regulator confirmed it is also investigating more than 20 registered sub-mortgage brokers and realtors who allegedly partnered with Chaudhary.

“There were some reasonably sophisticated activities that took place to deliberately avoid detection, and that includes the use of pseudonyms, it includes multiple phone numbers and different e-mail addresses and companies,” Carter added.

The investigation was launched in the summer of 2017 following a complaint from an unnamed source and was ramped up following another complaint from an employee at BlueShore Financial. An internal audit at the credit union found 15 problematic files linked to submortgage brokers with connections to Chaudhary.

Carter explains that he issued the cease-and-desist order because a more involved disciplinary hearing “would require approximately 25 witnesses and at least 15 days to complete, which could not be realistically scheduled for at least nine months.”

This delay, he wrote, “would likely result in further non-compliance with the Act, which would harm the reputation of the mortgage broker industry, expose lenders to the risk of making loan decisions based on false information and would be detrimental to the public interest.”

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