It is the fourth of Canada's five major banks to face penalties for such violations this year
Consumer Protection BC, British Columbia’s consumer protection agency, has fined Canadian Imperial Bank of Commerce (CIBC) over $3.4 million after it was found to have violated mortgage discharge rules.
According to the regulator, CIBC did not comply with its obligations in properly discharging mortgages upon sales.
“Consumer Protection BC’s recent assessment of the financial sector’s compliance with provincial consumer protection laws showed that there is broad non-compliance when it comes to the requirement to provide a consumer with a discharge document within 30 days of a mortgage loan being paid in full,” the agency stated last July.
According to the law, a mortgage lender needs to provide borrowers with a discharge document so the Land Title and Survey Authority of British Columbia can clear the property title. The maximum fee that a lender can charge for this is $75 in British Columbia.
Should a homeowner sell their home with money owed on the mortgage, either a lawyer or a notary will be vital in achieving a discharge as they take the money from the buyer and pay the lender while the leftover money will go to the seller. As this occurred, the bank will need to provide the discharge document to the borrower and land title office.
Consumer Protection BC said that investigations were launched after the Law Society of BC, Society of Notaries Public of BC, and Land Title and Survey Authority of British Columbia expressed their concerns.
CIBC will need to show the regulator that its standard residential mortgages had been paid out in the period of time it was investigated, between January 1, 2018 and April 1, 2022.
Ron Usher, the lead counsel for the Society of Notaries Public of BC, monitored the issues for years and said that he had seen the deterioration of compliance even as there was a high-profile fraud case that was aided by undischarged mortgages.
CIBC becomes the fourth out of the five major banks in Canada to be fined for this type of violation this year. The biggest penalty was issued to TD Canada Trust ($5.3 million) while Scotiabank ($387,150), Bank of Montreal ($132,700), and HSBC ($305,900) were also fined for their failure to discharge mortgages within 30 days of a mortgage loan being fully paid.
Other banks, credit unions, or financial institutions that have also been fined include First National Financial GP Corporation ($29,200), Coast Capital Savings ($47,900), Vancouver City Savings Credit Union ($86,300), First West Credit Union ($14,000), and Prospera Credit Union ($8,800).
