Chapter 1
1.
As of
January 2009, a brokerage must disclose to a borrower if one of its agents will
receive a fee from a lender in connection with the mortgage renewal.
True – this requirement is found in Regulation 188/08
2.
Borrowers
are entitled to the following information, only if they ask:
brokerage name and license number.
True – this requirement is found in Regulation 188/08
3.
It is a good
idea for a brokerage to have a complaints process but this is not required by
law.
False – section 9 of Regulation 188/08 requires that a complaints process be in place
4.
The
Superintendent of FSCO has the authority to refuse to grant a license to a
brokerage if the Superintendent thinks the name might confuse the public with
another existing brokerage
True – this option is available to FSCO under Regulation 408/07
5.
A sole
proprietorship must establish its eligibility for licensure as a mortgage
brokerage whereas a corporation does not.
False – both must meet eligibility requirements as required by Regulation 408/07
6.
Under
certain circumstances, the Superintendent of FSCO may suspend a broker’s license
without warning.
True – this option is available to the Superintendent under certain circumstances found in the MBLAA, sections 13 to 22
7.
No changes
may be made to the Regulations
without going through the formal process of receiving Royal Assent.
False – Under sections 51 to 57 of the MBLAA the Lieutenant Governor in Council may make regulations that affect specific topics without requiring Royal Assent
8.
The
Financial Services Commission is only concerned with one sector, the mortgage
brokerage industry.
False – it regulates several other industries in addition to the mortgage brokerage industry
9.
Standards of
Practice are guiding principles that businesses are encouraged to implement.
False – Licensees are required to adhere to the Standards of Practice applicable to that license
10.
Regulatory
decisions by the Superintendent of FSCO are final, based on the powers conferred
upon the position.
False – Decisions may be appealed to the Financial Services Tribunal
11.
As per the
MBLAA, there are currently three
different licenses in the mortgage brokerage industry.
False – there are currently four licenses: Mortgage Brokerage, Mortgage Broker, Mortgage Agent and Mortgage Administrator
12.
The
Superintendent of FSCO (or his/her designate) may visit a brokerage within the
FSCO registry to examine documents and records.
True – this option is available to the Superintendent under sections 28 to 42 of the MBLAA
13.
The
principal broker designation was created by the
MBLAA to address compliance issues
within the brokerage.
True – sections 7 to 12 of the MBLAA outline the requirements of the principal broker
14.
The role of
the brokerage may be defined as “taking steps, on behalf of another person or
entity, to enforce payment by a borrower under a mortgage.”
False – As per Regulation 406/07 this activity is defined as administering a mortgage
15.
A mortgage
broker may work only for one brokerage whereas a mortgage agent may be employed
by several brokerages at the same time.
False – As per the MBLAA agents may only work for the brokerage listed on his or her license
1.
What are the
educational requirements to obtain a mortgage agent’s license?
A per Regulation 409/07 an individual must have successfully completed an approved education program for mortgage agents within two years before he or she applies for the license. A person is deemed to have met the education and experience requirements if the Superintendent is satisfied that the individual has a combination of education and experience equivalent to the requirements. The individual may also be exempted from the required education and experience requirements if he or she was licensed as a mortgage agent at any time during the 24 months before applying for the license.
2.
What is/are
the difference(s) between a mortgage agent and mortgage broker?
A mortgage broker has additional education and experience, can supervise agents and may be appointed as the principal broker.
3.
Describe the
duties and responsibilities of the principal broker.
The position of principal broker is responsible for ensuring that the brokerage and all brokers and agents comply with the requirements of the MBLAA, including ensuring that any contraventions of the Act are dealt with, and that the brokerage has the proper policies and procedures in place to ensure that all brokers and agents are adequately supervised and that they comply with every requirement under the MBLAA.
4.
What
administrative penalties may be imposed on a brokerage, broker or agent?
An administrative penalty may not exceed $10,000 in the case of a contravention or failure to comply by a mortgage broker or agent or $25,000 in the case of a contravention or failure to comply by a brokerage, mortgage administrator or any other person or entity, or such lower amounts as may be prescribed. The maximum penalty for an offence committed by an individual is a fine of $100,000 or imprisonment for up to one year, or both. The maximum penalty for a corporation is a $200,000 fine.
5.
What is the
difference between an offence under the
MBLAA and an administrative penalty?
An administrative penalty is imposed for less serious contraventions of or failures to comply with the MBLAA, while an offence is considered any contravention of section 48 of the MBLAA. These offences include contravening any one of the following:
· subsection 2.2 or 2.3, Dealing in Mortgages
· subsection 3.2 or 3.3, Trading in Mortgages
· subsection 4.2, Mortgage Lending
· subsection 5.2, Administering mortgages
· section 27, Prohibition re disclosure in advertising
· section 30.6, Inquiries and examinations
· subsection 43.1 or 43.2, Prohibition re false or deceptive information
· subsection 44.1 or 44.2, Prohibition re obstruction
· subsection 45.1 or 45.2, Prohibition re false or misleading information, and
· section 46, Prohibition re reprisals
Individuals are liable to a fine up to $100,000 while corporations are liable to a fine of up to $200,000. It is important to note that directors and officers of a corporation that has committed an offence are also liable. Section 48.2 also dictates that any contraventions of applicable Standards of Practice are an offence under the MBLAA and liable to the fines as previously discussed.
6.
List the
circumstances in which an individual would be deemed unsuitable to be granted a
mortgage broker’s license.
A broker or agent will be deemed unsuitable for a license if:
· the individual’s past conduct affords reasonable grounds for belief that he or she will not deal or trade in mortgage in accordance with the law and with integrity and honesty
· the individual is carrying on activities that contravene or will contravene the MBLAA or its Regulations
· the individual has made a false statement in his or her application for a license
7.
Describe the
complaints policy that a brokerage must have to comply with the
MBLAA and its
Regulations.
A brokerage must have a policy that allows a consumer to complain to the brokerage regarding its activities. The brokerage must first attempt to resolve the complaint with a written response. If resolution cannot be obtained the brokerage must inform the consumer that he or she has the right to escalate the complaint to FSCO if he or she believes the law has not been followed.
8.
What
information must be included in every public relations item?
A brokerage must use its authorized name when conducting any business, and as of January 1, 2009, it must prominently include its authorized name and license number in all of its public relations materials. If the brokerage is a franchise, it must state that it is independently owned and operated. If an individual’s name is included in the material, his or her title (i.e., Broker or Agent) must be included. For example, if Bob Smith is a Mortgage Broker and his name is used in an advertisement, he must include the words, “Mortgage Broker” or “Broker” beside his name, resulting in “Bob Smith, Mortgage Broker,” or “Bob Smith, Broker.” Abbreviations may also be used.
9.
List the
items that must be disclosed to a borrower in a disclosure document.
The answer to this question can be found in Regulation 191/08. There are different requirements based on the type of mortgage being arranged, including a fixed rate mortgage, variable rate mortgage, secured line of credit and secured credit card.
10.
What amount
of errors and omissions insurance must a brokerage have to comply with the
MBLAA?
A brokerage must have at least $1 million of coverage for any 365 day period with coverage of at least $500,000 per occurrence. Coverage must include fraud.
11.
How long
must records of a mortgage transaction be kept by the brokerage?
Records must be retained for at least six years, after
the maturity or expiry of mortgage agreements and mortgage renewals, after
completion or other expiry of a purchase, sale or trade of a mortgage, and
all other records that the
mortgage Bbokerage is required to maintain.
12.
What types
of funds must be deposited into a trust account?
Any funds received from borrowers, lenders or investors not earned by the brokerage, paid to reimburse the brokerage for expenses or payable to the brokerage as a lender
13.
What
information must be provided to a potential private lender before he or she can
commit to funding a new mortgage?
A brokerage is required to provide detailed disclosure to lenders and investors involved in a mortgage transaction, unless that lender or investor is a member of a designated class of lenders and investors. This disclosure must include:
·
a
completed disclosure form, in a form approved by the Superintendent, signed by a
broker
·
if
the investment is in an existing mortgage, a copy of the mortgage instrument
·
if
an appraisal of the applicable property has been done in the preceding 12 months
and is available to the brokerage, a copy of the appraisal
·
if
an appraisal of the applicable property is not available as described in
paragraph 3, documentary evidence of the value of the property, other than an
agreement of purchase and sale
·
if
an agreement of purchase and sale in respect of the property has been entered
into in the preceding 12 months and is available to the brokerage, a copy of the
agreement of purchase and sale
·
documentary evidence of the borrower’s ability to meet the mortgage payments
·
a
copy of the application for the mortgage and of any document submitted in
support of the application
·
if
the mortgage is a new mortgage, documentary evidence of any down payment made by
the borrower for the purchase of the property
·
a
copy of any agreement that the lender or investor may be asked to enter into
with the brokerage
·
all
other information, in writing, that a lender or investor of ordinary prudence
would consider to be material to a decision about whether to lend money on the
security of the property or to invest in the mortgage
14.
What titles
(i.e., broker, agent, etc.) may be used by brokers and agents in advertising
materials?
Only the title “mortgage broker”, “broker”, “mortgage agent” or “agent” (or an abbreviation) may be used.