Summary:
Fiduciary duty binds California real estate and mortgage brokers to act in their clients' best interest while facilitating property sales and loan transactions.
This duty requires the broker or agent to disclose all material facts and investment risks, whether known or should have been known...
Failure to investigate what should have occurred can be construed as constructive fraud, which can lead to legal consequences and damage to the broker's reputation.
This includes material facts such as a borrower's credit history, employment status, or any potential risks associated with the property discovered during the loan processing or underwriting.
When a credit report and a background search are pulled, the contents become material facts...
The private investor's decision to invest in a proposed loan transaction will involve reviewing the material disclosure package, including the investment risks, and providing a written affirmation about their background, knowledge, and experience to ensure the contemplated transaction is "suitable."
Article:
Brokers and agents, with their unique expertise and years of experience, are the linchpins of private money loan transactions. Their pivotal role ensures the smooth and fair execution of the deal, providing you with a profound sense of reassurance. A procuring loan broker, a trusted agent and fiduciary for borrowers, is responsible for making or arranging loans in exchange for a fee or compensation. Their unparalleled expertise and experience provide a solid foundation for successfully executing loan transactions, reassuring you that your transaction is in the most capable hands.
A separate and distinct mortgage broker is a crucial link between private-party investors and borrowers, serving as the 'middle person' or 'coordinator,' and arranging privately funded loans. As a fiduciary of the private investor, this mortgage broker is responsible for facilitating the loan transaction, delivering the material disclosure package to the investor, arranging for the disclosure documentation, loan documents, and closing.
As a fiduciary of the private investor parties, the broker is not just tasked with protecting the client's best interest but is deeply committed to it, ensuring the utmost security for your investments. This unwavering commitment to the client's best interest is a cornerstone of the fiduciary duty, providing a solid sense of security for the client's investments and peace of mind for the investor.
Sometimes, the broker may act as a dual agent for both parties, requiring the highest level of professionalism and a deep understanding of the 'laws of agency.' This ensures a confident and smooth transaction for all parties involved, instilling confidence in the broker's abilities. The professionalism and deep understanding of the 'laws of agency' ensure a smooth and confident transaction for all parties involved, giving you the confidence that your transaction is in the most capable hands.
https://www.consumerfinance.gov/ask-cfpb/what-is-a-fiduciary-en-1769/
https://www.investopedia.com/terms/f/fiduciary.asp