NLR 66/24 - Mortgage Brokerages and Brokers Regulations under the Mortgage Brokerages and Brokers Act

NEWFOUNDLAND AND LABRADOR REGULATION 66/24 Mortgage Brokerages and Brokers Regulations under the Mortgage Brokerages and Brokers Act (O.C. 2024-164) Amended: Mortgage Brokerages and Brokers Regulations under the Mortgage Brokerages and Brokers Act (O.C. 2024-164) (Filed October 10, 2024) Under the authority of section 34 of the Mortgage Brokerages and Brokers Act, the Lieutenant-Governor in Council makes the following regulations. Dated at St. John’s, October 10, 2024. Krista Quinlan Clerk of the Executive Council REGULATIONS Analysis 1. Short title 2. Definitions 3. Exemptions 4. Information on register 5. Application requirement 6. Educational requirements 7. Errors and omissions liability insurance 8. Disclosure 9. Process to determine suitability of mortgage 10. Records 11. Administration of trust money 12. Administration of trust accounts 13. Trust account records 14. Trust account reconciliation records 15. Advertising 16. Administrative penalties 17. Notice of administrative penalty 18. Additional orders 19. Publication of summary of order 20. Repeal 21. Commencement Short title 1. These regulations may be cited as the Mortgage Brokerages and Brokers Regulations . 66/24 s1 Back to Top Definitions 2. In these regulations, (a) "Act" means the Mortgage Brokerages and Brokers Act ; (b) "mortgage lender" means a person who carries on the business of lending money on the security of real property and includes the person's agent or assignee; (c) "register" means the register maintained under section 6 of the Act; and (d) "written assessment" means the written assessment required under paragraph 15(c) of the Act. 66/24 s2 Back to Top Exemptions 3. The following persons shall be exempt from the licensing provisions of the Act: (a) a lawyer acting in the ordinary course of the lawyer's profession; (b) a real estate broker, licensed under the Real Estate Trading Act , 2019 , acting in the ordinary course of the real estate broker's business; and (c) a securities underwriter acting in the ordinary course of the securities underwriter’s business. 66/24 s3 Back to Top Information on register 4. In addition to the name of a licensee, the register shall include the following information for each licensee: (a) the category of licence held by the licensee; (b) the licence number; (c) where the licensee is a mortgage brokerage, the name of the mortgage brokerage's principal broker; (d) where the licensee is a mortgage broker, the name of the mortgage brokerage with whom the mortgage broker is employed; (e) where the licence is suspended or cancelled, the effective date of the suspension or cancellation; (f) where the licence is varied, the effective date of the variation and the details of the variation; and (g) any terms and conditions imposed on the licence. 66/24 s4 Back to Top Application requirement 5. (1) In addition to the requirements in section 8 of the Act, the superintendent may require a person applying for a mortgage brokerage licence or a mortgage broker licence to provide letters of good standing from one or more jurisdictions in which the person applying for the licence is currently, or was previously, licensed to (a) broker mortgages; or (b) carry on the business of brokering mortgages. (2) Where the superintendent requires a letter of good standing under subsection (1), t he letter of good standing shall include (a) confirmation that the person's licence in the other jurisdiction ( i ) is not under review and has not been suspended or cancelled, and (ii) does not have any conditions or restrictions; or (b) details of ( i ) the review, suspension or cancellation of the licence , or (ii) any conditions or restrictions on the licence . 66/24 s5 Back to Top Educational requirements 6. (1) For the purposes of paragraph 8(1)(d) of the Act, a person applying for a mortgage brokerage licence shall provide proof, satisfactory to the superintendent, that the principal broker successfully completed the Newfoundland and Labrador Mortgage Brokerage Management Course Examination approved by the superintendent not more than 2 years before the date of the application. (2) Notwithstanding subsection (1), where the person applying for a mortgage brokerage licence is a sole proprietorship, the person shall provide proof, satisfactory to the superintendent, that the person successfully completed (a) the Newfoundland and Labrador Mortgage Brokerage Management Course Examination approved by the superintendent not more than 2 years before the date of the application; and (b) the Newfoundland and Labrador Mortgage Broker Course Examination approved by the superintendent. (3) For the purposes of paragraph 8(2)(d) of the Act, a person applying for a mortgage broker licence shall provide proof, satisfactory to the superintendent, that the person successfully completed the Newfoundland and Labrador Mortgage Broker Course Examination approved by the superintendent not more than 2 years before the date of the application. (4) Notwithstanding subsection (1) and paragraph (2)(a), a principal broker for a person applying for a mortgage brokerage licence or a sole proprietor applying for a mortgage brokerage licence who has successfully completed a training program in another jurisdiction in Canada is not required to complete the examination referred to in subsection (1) and paragraph (2)(a), where (a) the training program has been approved by the regulator of mortgage brokers and brokerages in the other jurisdiction; (b) the person provides proof, satisfactory to the superintendent, of successful completion of the training program; and (c) the superintendent is satisfied that the training program provides training that is equivalent to or exceeds the level of training provided in the course referred to in subsection (1) and paragraph (2)(a). (5) Notwithstanding subsection (3), a person applying for a mortgage broker licence who has successfully completed a training program in another jurisdiction in Canada is not required to complete the examination referred to in subsection (3), where (a) the training program has been approved by the regulator of mortgage brokers and brokerages in the other jurisdiction; (b) the person provides proof, satisfactory to the superintendent, of successful completion of the training program; and (c) the superintendent is satisfied that the training program provides training that is equivalent to or exceeds the level of training provided in the course referred to in subsection (3). (6) Where a mortgage broker's licence has been cancelled by the superintendent, the mortgage broker shall retake and successfully complete the examination referred to in subsection (3) before applying for a new mortgage broker licence. (7) Subsections (4) and (5) do not apply to a person referred to in those subsections where the person held a licence in another jurisdiction which has been suspended or cancelled in that jurisdiction. 66/24 s6 Back to Top Errors and omissions liability insurance 7. The errors and omissions liability insurance required under paragraphs 8(1)(e) and 10(2)(b) of the Act shall (a) have a minimum limit of $500,000 per occurrence and $1,000,000 per year; (b) be issued by an insurance company that is authorized to carry on business in the province; and (c) be in a form satisfactory to the superintendent. 66/24 s7 Back to Top Disclosure 8. (1) In addition to disclosure requirements under the Act, the Consumer Protection and Business Practices Act and the Cost of Consumer Credit Disclosure Regulations , a mortgage brokerage shall provide the following information, in writing, to a borrower: (a) details of the mortgage options from which the borrower may choose; (b) where the mortgage brokerage is directly or indirectly owned, in whole or in part, by a mortgage lender, the name of the mortgage lender; (c) the number of mortgage lenders to which the mortgage brokerage intends to submit a mortgage application on behalf of the borrower and the names of each; (d) where the mortgage brokerage or mortgage broker has an interest in a mortgage that is being presented to a borrower, the nature of that interest; (e) a statement outlining any remuneration or other incentives that the mortgage brokerage or mortgage broker has received, may receive or will receive in relation to a mortgage or mortgage renewal presented to a borrower; and (f) a statement outlining any fees or other remuneration that the mortgage brokerage has paid or may be required to pay in relation to a mortgage or mortgage renewal presented to a borrower. (2) A mortgage brokerage shall disclose the information required under subsection (1) to a borrower at least 2 business days before the earlier of (a) the day that the borrower first incurs an obligation to the mortgage lender in relation to the mortgage; and (b) the day that the borrower first makes a payment to the mortgage lender in relation to the mortgage. (3) Notwithstanding subsection (2), a borrower entitled to disclosure may waive the 2-day period referred to in subsection (2) and, in that case, the mortgage brokerage shall disclose the information to the borrower before the first occurrence of an event referred to in paragraph (2)(a) or (b). (4) A waiver under subsection (3) shall be in writing and signed by the borrower. (5) A mortgage brokerage that is required to disclose information to a borrower under the Act and these regulations shall ensure that the disclosure expresses the information clearly, concisely, in a logical order and in a manner that is likely to bring the information to the borrower’s attention . (6) A mortgage brokerage shall obtain a written acknowledgement from a borrower confirming that the borrower received the information required to be disclosed by the mortgage brokerage under this section. 66/24 s8 Back to Top Process to determine suitability of mortgage 9. (1) A mortgage brokerage shall take reasonable steps to ensure that any mortgage that it presents to a borrower for consideration is suitable for the borrower. (2) A mortgage brokerage shall identify, from a selection of proposed mortgage options available to the borrower, the mortgage that is most suitable to the borrower, based on a consideration of the following features of the proposed mortgage options: (a) whether the mortgage is conventional or high ratio; (b) the interest rate; (c) whether the interest rate is fixed or variable; (d) where the interest rate is variable, the description of how the formula for calculating a variable rate mortgage may change during the term of the mortgage; (e) the term of the mortgage; (f) whether the mortgage is closed, partially open or fully open; (g) the amortization period; (h) the fees, remuneration, or penalties payable by the borrower in connection with any existing mortgage or proposed mortgage; ( i ) the fees, remuneration, or penalties payable by the borrower in connection with the services offered by the mortgage brokerage; (j) in the case of a reverse mortgage, an estimate of the accumulated interest for the term of the mortgage; and (k) any other options or distinguishing features of the proposed mortgage. (3) A written assessment of the determination made under subsection (2) shall include (a) a comparative analysis of the proposed mortgage options referred to in subsection (2); and (b) the mortgage brokerage's reasons for selecting the mortgage identified under subsection (2) as the most suitable mortgage for the borrower. (4) A mortgage brokerage shall provide a written assessment to a borrower at least 2 business days before the earlier of (a) the day that the borrower first incurs an obligation to the mortgage lender in relation to the mortgage; and (b) the day that the borrower first makes a payment to the mortgage lender in relation to the mortgage. (5) A mortgage brokerage shall obtain a written acknowledgement from a borrower confirming that the borrower received the information required to be disclosed by the mortgage brokerage under this section. 66/24 s9 Back to Top Records 10. (1) In addition to the information referred to in paragraph 16(1)(a) of the Act and in sections 13 and 14, a mortgage brokerage shall keep records of the following: (a) all written agreements between the mortgage brokerage and a borrower; (b) all information disclosed to a borrower under subsection 8(1); (c) all documents, correspondence and other written information provided or received in relation to a mortgage; and (d) records of the following information with respect to each mortgage that it brokers: ( i ) the date of the mortgage, (ii) a description of the real property that is sufficient to identify it, (iii) the names of the parties to the mortgage, (iv) the repayment terms, (v) the fees, expenses, costs or other charges required to be paid by the borrower, and (vi) the fees or other remuneration received by the mortgage brokerage and the identity of the person paying the fees or other remuneration. (2) A mortgage brokerage shall keep the records that are required to be kept under the Act and these regulations for the following time periods: (a) where the records relate to a mortgage application that resulted in a borrower entering into a mortgage, not less than 7 years after the date that the final payment under the mortgage is due; and (b) where the records relate to a mortgage application that did not result in a borrower entering into a mortgage, not less than 7 years after the date of the mortgage application. (3) A mortgage brokerage shall ensure that all records kept under the Act and these regulations are (a) stored in a secure location and manner; (b) only accessible by persons authorized by the mortgage brokerage; and (c) destroyed in a secure manner after the expiry of the applicable time period referred to in subsection (2). 66/24 s10 Back to Top Administration of trust money 11. (1) Where a mortgage brokerage receives trust money with respect to a mortgage administered by the mortgage brokerage on behalf of a mortgage lender, the mortgage brokerage (a) shall pay the trust money to the mortgage lender within 30 days after receiving it; and (b) shall not pay any interest earned on that trust money to the mortgage lender. (2) Interest earned on trust money referred to in subsection (1) shall be the property of the mortgage brokerage. 66/24 s11 Back to Top Administration of trust accounts 12. (1) A mortgage brokerage may, with the prior approval of the superintendent, do one or more of the following: (a) open or maintain one or more trust accounts; (b) move an existing trust account to another financial institution; and (c) close a trust account. (2) A mortgage brokerage shall not (a) withdraw any money from a trust account that would result in a negative balance in an individual account in its trust ledger; (b) withdraw any money from a trust account except in accordance with the trust agreement relating to that money; (c) authorize a financial institution to deduct a service charge or any other charge from a trust account; or (d) pay a personal or office expense from a trust account. 66/24 s12 Back to Top Trust account records 13. A mortgage brokerage shall keep records of the following: (a) all trust money received and all transactions relating to the trust money; (b) the unexpended balance of trust money held by the mortgage brokerage ( i ) in total, and (ii) separately for each person on whose behalf the trust money is held; (c) a separate trust ledger for each person on whose behalf the mortgage brokerage holds trust money that shows the following in chronological order: ( i ) all receipts of trust money and all disbursements from trust money on behalf of the person, (ii) for each receipt of trust money, (A) the person from whom the trust money was received, (B) the form or manner in which the trust money was received, and (C) the purpose for which the trust money was received, including particulars of the mortgage to which the trust money relates, (iii) for each disbursement of trust money, (A) the person to whom the money was disbursed, (B) the cheque number or the confirmation number of the electronic transfer used to make the disbursement, and (C) the purpose for the disbursement, including particulars of the mortgage to which the disbursement relates, and (iv) the unexpended balance held on behalf of the person immediately after each receipt and disbursement; and (d) copies of the following: ( i ) a record of the deposit for each deposit to the trust account, (ii) all cheques with respect to the trust account, including cancelled cheques, (iii) all bank statements and banking records for the trust account, and (iv) any other documentary evidence of deposits and withdrawals with respect to the trust account. 66/24 s13 Back to Top Trust account reconciliation records 14. (1) A mortgage brokerage shall prepare and keep monthly trust account reconciliation records that reconcile the trust records referred to in section 13 for each trust account administered by the mortgage brokerage. (2) A monthly trust account reconciliation record shall be (a) reviewed by an officer of the mortgage brokerage, who shall certify that it is accurate, sign it and date it; and (b) prepared, reviewed and certified monthly, no later than ( i ) 30 days after the date that a monthly account statement is received, where the mortgage brokerage receives a monthly account statement from the financial institution where the account is maintained, or (ii) 30 days after the end of the month to which it relates, where the mortgage brokerage does not receive a monthly account statement from the financial institution where the account is maintained. (3) The review of a monthly trust account reconciliation record under paragraph (2)(a) shall not be performed by the same person who prepared the monthly trust account reconciliation record except where the mortgage brokerage that prepared the monthly trust account reconciliation record is a sole proprietorship. 66/24 s14 Back to Top Advertising 15. (1) Where a mortgage brokerage references the name of a mortgage broker in an advertisement, the advertisement shall clearly indicate that the mortgage broker is employed by the mortgage brokerage. (2) A mortgage brokerage shall clearly indicate in an advertisement that the mortgage brokerage is a mortgage brokerage. (3) A mortgage broker shall clearly indicate in an advertisement that the mortgage broker is a mortgage broker. 66/24 s15 Back to Top Administrative penalties 16. (1) The superintendent may require a person to pay an administrative penalty of not more than $2,000 where the person contravenes (a) one or more of the following provisions of the Act: ( i ) section 10 except paragraph 10(1)(b), (ii) section 11, (iii) paragraph 15(c), (iv) section 16, and (v) section 20; and (b) one or more of the following provisions of these regulations: ( i ) section 8, (ii) section 11, (iii) section 12, (iv) section 13, and (v) section 14. (2) The superintendent may require a person to pay an administrative penalty referred to in subsection (1) for each day or part of a day that the contravention occurs or continues to occur. (3) In determining the amount of the administrative penalty under subsection (1) the superintendent shall consider (a) the severity of the contravention; (b) the degree of wilfulness or negligence in the contravention; (c) whether there was any mitigation relating to the contravention; (d) whether steps were taken to prevent reoccurrence after the contravention; (e) whether the person has a history of non-compliance; and (f) any other factors the superintendent considers relevant. (4) An administrative penalty imposed under these regulations shall be payable within 60 days from the date of the service of the notice under section 17. 66/24 s16 Back to Top Notice of administrative penalty 17. (1) Where the superintendent requires a person to pay an administrative penalty under these regulations, the superintendent shall give written notice to that person. (2) A notice under subsection (1) shall include (a) the name of the person required to pay the administrative penalty; (b) a description of the contravention that led to the administrative penalty; and (c) the address for payment of the administrative penalty. (3) Notice under these regulations shall be given (a) to a mortgage brokerage, by ( i ) personal delivery to the registered office of the mortgage brokerage or to the principal broker, (ii) registered mail or other mail delivery which produces a receipt or other proof of delivery, to the registered office of the mortgage brokerage, or (iii) facsimile telecommunication or other electronic communication to the mortgage brokerage or principal broker; and (b) to a mortgage broker, by ( i ) personal delivery, (ii) registered mail or other mail delivery which produces a receipt or other proof of delivery, to the last known address of the mortgage broker, or (iii) facsimile telecommunication or other electronic communication. (4) Where the superintendent requires a mortgage broker to pay an administrative penalty under these regulations notice shall be given to the mortgage broker and the mortgage brokerage with whom the mortgage broker is employed. 66/24 s17 Back to Top Additional orders 18. In addition to the orders referred to in section 22 of the Act, the superintendent may make one or more of the following orders: (a) an order requiring a licensee to complete training as determined by the superintendent; (b) an order prohibiting a licensee from withdrawing money from the licensee's trust account; and (c) an order requiring a licensee to correct a false, misleading or deceptive statement in an advertisement. 66/24 s18 Back to Top Publication of summary of order 19. Where the superintendent publishes a summary of an order issued under section 22 of the Act or under section 18, the summary shall include the following information: (a) the licensee's name and business address; (b) a summary of the facts and circumstances leading to the making of the order; and (c) the contents of the order in relation to the enforcement action taken. 66/24 s19 Back to Top Repeal 20. The Mortgage Brokers Regulations , Consolidated Newfoundland and Labrador Regulation 1006/96, are repealed. 66/24 s20 Back to Top Commencement 21. These regulations come into force on the date the Mortgage Brokerages and Brokers Act SNL2023 c.M-17.1 comes into force. 66/24 s21