Mortgage brokers and lenders act nova scotia

Standards of Conduct for Mortgage Brokerages Regulations

made under Section 90 of the

Mortgage Regulation Act

S.N.S. 2012, c. 11

N.S. Reg. 126/2020 (effective November 1, 2021)

amended to N.S. Reg. 218/2022 (effective November 1, 2022)

Table of Contents

Please note: this table of contents is provided for convenience of reference and does not form part of the regulations.
Click here to go to the text of the regulations.

Citation

Definitions

Duties to mortgage lenders and investors in syndicated mortgages

Standards of conduct

Information to be contained in advertisement

Information to be disclosed in correspondence

Duty to provide licence information

Duty to respond to complaint

Entering into unlawful transaction

Restriction on tied selling

Duty to return certain documents

Representing status of payment

Duty to ensure suitability of mortgage for private investor

Duty to verify identity

Duty to disclose information to investors

Duty to provide information about remuneration for referral

Duty to advise respecting borrower’s legal authority

Duty to advise of inaccuracy of mortgage application

Duty to inform if mortgage previously in default

Duties to private investor after completing mortgage transaction

Duties respecting reverse mortgages

Advance payment by borrower

Receiving money from mortgage lender or investor

Duty to establish policies and procedures

Authorizing mortgage brokers

Fees and remuneration paid to unlicensed persons

Duty to act with integrity, independence and competence

Citation

1 These regulations may be cited as the Standards of Conduct for Mortgage Brokerages Regulations.

Definitions

2 In these regulations,

“Act” means the Mortgage Regulation Act;

“Cost of Borrowing Disclosure Regulations” means the Cost of Borrowing Disclosure Regulations made under the Act;

“investment completion date”, in relation to a mortgage, means the earlier of the following dates:

(i) the date that an investor, or a mortgage brokerage on behalf of an investor, enters into an agreement to invest in the mortgage,

(ii) the date that the investment in the mortgage is completed.

Duties to mortgage lenders and investors in syndicated mortgages

3 If there is more than 1 lender under a mortgage or if more than 1 investor invests in a mortgage, a mortgage brokerage owes to each of the mortgage lenders and investors the duties imposed by these regulations in respect of the mortgage or investment.

Standards of conduct

4 The requirements set out in these regulations are prescribed as standards of conduct for every licensed mortgage brokerage.

Information to be contained in advertisement

5 (1) All of the following information is prescribed as the information required by clause 58(2)(b) of the Act to be contained in an advertisement of a mortgage brokerage:

(a) for a mortgage brokerage whose name as set out on its licence is, or includes, a franchise name that the mortgage brokerage is permitted to use under a franchise agreement, a statement clearly indicating that the mortgage brokerage is independently owned and operated;

(b) for an advertisement that identifies a mortgage broker or associate mortgage broker by name, the name set out on the mortgage broker’s or associate mortgage broker’s licence;

(c) for an advertisement that refers to a mortgage broker or associate mortgage broker, at least 1 reference to the mortgage broker or associate mortgage broker that includes 1 of the following titles:

(i) for a mortgage broker, the title “mortgage broker” or “broker” or an abbreviation of either of those titles,

(ii) for an associate mortgage broker, the title “associate mortgage broker”, “mortgage broker associate”, “associate broker”, “mortgage associate” or “associate” or an abbreviation of any of those titles.

(2) In addition to the titles prescribed by clause (1)(c), an advertisement may include an equivalent title in another language.

Information to be disclosed in correspondence

6 (1) All of the following information is prescribed as the information required to be disclosed under subsection 60(1) of the Act by a mortgage brokerage in all correspondence and other written material prepared or used in the course of the business:

(a) the mortgage brokerage’s name as set out on its licence;

(b) the mortgage brokerage’s licence number;

(c) for a mortgage brokerage whose name as set out on its licence is, or includes, a franchise name that the mortgage brokerage is permitted to use under a franchise agreement, a statement clearly indicating that the mortgage brokerage is independently owned and operated.

(2) The name and licence number referred to in clauses (1)(a) and (b) must be clearly and prominently displayed wherever they are required to be disclosed.

Duty to provide licence information

7 (1) When requested, a mortgage brokerage must give a person all of the following information:

(a) the licence number of the mortgage brokerage;

(b) subject to subsection (2), the name and licence number of a mortgage broker or associate mortgage broker who

(i) is authorized to broker mortgages on behalf of the mortgage brokerage, and

(ii) is relevant to the nature of the request.

(2) Clause (1)(b) does not require a mortgage brokerage to give a person the names and licence numbers of all or substantially all of its mortgage brokers or associate mortgage brokers.

Duty to respond to complaint

8 On receiving a written complaint about the mortgage business activities of the mortgage brokerage or of any mortgage broker or associate mortgage broker authorized to broker mortgages on its behalf, a mortgage brokerage must give the complainant a written response that contains all of the following:

(a) the mortgage brokerage’s proposed resolution of the complaint;

(b) a statement that, if the complainant is not satisfied with the proposed resolution and believes that the complaint relates to a contravention of the Act or a regulation made under the Act, the complainant may refer the complaint to the Registrar.

Entering into unlawful transaction

9 A mortgage brokerage must not act as a representative of a borrower, lender or investor in respect of a mortgage if the mortgage brokerage has reasonable grounds to believe that the mortgage, its renewal or the investment in it is unlawful.

Restriction on tied selling

10 (1) A mortgage brokerage must not coerce a borrower, mortgage lender or investor to obtain a product or service from a particular person, including the mortgage brokerage, as a condition for obtaining another service from the mortgage brokerage.

(2) A mortgage brokerage is not coercing a borrower, mortgage lender or investor as prohibited by subsection (1) if it offers the borrower, mortgage lender or investor more favourable terms for a product or service than it would otherwise offer, and the more favourable terms are offered on the condition that the borrower, mortgage lender or investor obtain another product or service from a particular person, including the mortgage brokerage.

Duty to return certain documents

11 A mortgage brokerage must promptly, without charge, return a deed, instrument or other document to its owner.

Representing status of payment

12 (1) Except as provided in subsection (2), a mortgage brokerage must not, directly or indirectly, represent to any person or entity that any amount payable to the mortgage brokerage in connection with carrying on the business of a mortgage brokerage is set or approved by any government authority.

(2) Subsection (1) does not apply with respect to disbursements that may be made by a mortgage brokerage for fees payable to record instruments under the Land Registration Act.

Duty to ensure suitability of mortgage for private investor

13 A mortgage brokerage required to act in the best interests of a private investor must take reasonable steps to ensure that any investment in a mortgage that it presents for the consideration of the private investor is suitable for the private investor having regard to the needs and circumstances of the private investor.

Duty to verify identity

14 (1) A mortgage brokerage must take reasonable steps to verify the identity of each borrower, investor and lender in a mortgage transaction that it offers to a borrower, investor or lender.

(2) To verify the identity of a borrower or investor, a mortgage brokerage may rely on confirmation from

(a) a mortgage lender; or

(b) a mortgage brokerage that represents the borrower or investor.

(3) A mortgage brokerage that is unable to verify the identity of another party to a mortgage transaction that it offers to a borrower must advise the borrower of this before the borrower enters into the mortgage agreement or mortgage renewal agreement with the mortgage lender.

(4) A mortgage brokerage that is unable to verify the identity of another party to a mortgage transaction that it offers to an investor must advise the investor of this before the investment completion date.

(5) A mortgage brokerage that is unable to verify the identity of another party to a mortgage transaction that it offers to a mortgage lender must advise the mortgage lender of this before

(a) submitting the borrower’s mortgage application to the mortgage lender; or

(b) arranging for a mortgage renewal agreement with the mortgage lender.

Duty to disclose information to investors

15 (1) A mortgage brokerage must disclose all of the following to a lender or investor, or a potential lender or investor:

(a) the nature of any relationship between the mortgage brokerage and any other person involved in the mortgage transaction;

(b) any conflicts or potential conflicts of interest in connection with the mortgage transaction;

(c) any material risks of a mortgage or investment in a mortgage.

(2) A mortgage brokerage must disclose to a lender or potential lender the information required by subsection (1) before the lender provides a written commitment to fund the mortgage.

Duty to provide information about remuneration for referral

16 A mortgage brokerage that refers a borrower or private investor or a prospective borrower or private investor to another person for a fee or other remuneration must give all of the following information in writing to the borrower or private investor or prospective borrower or private investor either before or when making the referral:

(a) a description of the nature of the relationship between the mortgage brokerage and the other person;

(b) a statement of whether the mortgage brokerage has received, may receive or will receive a fee or other remuneration, directly or indirectly, for making the referral.

Duty to advise respecting borrower’s legal authority

17 A mortgage brokerage that has reason to doubt a borrower’s legal authority to mortgage a property must advise each prospective lender and investor of this at the earliest opportunity.

Duty to advise of inaccuracy of mortgage application

18 A mortgage brokerage that has reason to doubt the accuracy of information contained in a borrower’s mortgage application, or in a document submitted in support of the application, must advise each prospective lender and investor of this at the earliest opportunity.

Duty to inform if mortgage previously in default

19 A mortgage brokerage must not sell or attempt to sell, or arrange or attempt to arrange the sale of, a mortgage that has been in default at any time in the previous 12 months unless the mortgage brokerage clearly discloses the default and the amount and duration of the default.

Duties to private investor after completing mortgage transaction

20 Promptly after completing a mortgage transaction with a private investor, a mortgage brokerage must ensure that the private investor is provided with a copy of each of the following:

(a) the recorded mortgage;

(b) the printout of the parcel register at the land registration office for the property affected by the mortgage, showing the recording of the mortgage;

(c) the lawyer’s report, if any, with respect to the recording of the mortgage and the effect of the mortgage transaction;

(d) the written disclosure provided to the borrower as required by the Cost of Borrowing Disclosure Regulations.

Duties respecting reverse mortgages

21 (1) In this Section, “reverse mortgage” means a mortgage that satisfies both of the following conditions:

(a) the money that is advanced under the mortgage does not have to be repaid until the occurrence of 1 or more of the following events:

(i) the borrower’s death or, if there is more than 1 borrower, the death of the last surviving borrower,

(ii) the acquisition by the borrower or, if there is more than 1 borrower, the last surviving borrower of another dwelling to use as their principal residence,

(iii) the sale of the mortgaged property,

(iv) the borrower or, if there is more than 1 borrower, the last surviving borrower vacating the mortgaged property to live elsewhere with no reasonable prospect of returning,

(v) an event of default under the conditions of the mortgage;

(b) 1 or more of the following conditions applies while the borrower or, if there is more than 1 borrower, the last surviving borrower continues to occupy the mortgaged property as their principal residence and otherwise complies with the terms of the mortgage:

(i) no instalment repayments of the principal and no payment of interest on the principal are due or capable of becoming due,

(ii) although interest payments may become due, no repayment of all or part of the principal is due or capable of becoming due,

(iii) although interest payments and repayment of part of the principal may become due, repayment of all of the principal is not due or capable of becoming due.

(2) A mortgage brokerage must not arrange a reverse mortgage with a borrower unless the mortgage brokerage receives from the borrower a written statement signed by a lawyer stating that the lawyer has given the borrower independent legal advice about the proposed reverse mortgage.

(3) Each mortgage brokerage that arranges a reverse mortgage must provide written documentation to the borrower that illustrates the annual accumulation of interest under the proposed reverse mortgage and the corresponding effect on the equity of the borrower in the mortgaged property, for the period from the advancing of funds until all of the equity of the borrower in the property is exhausted, with respect to all of the following scenarios:

(a) the interest rate and the value of the property remain the same over the period set out in the illustration;

(b) the interest rate remains the same over the period set out in the illustration and the value of the property increases by 1% per year;

(c) if the interest rate is capable of increasing under the mortgage, the interest rate increases by 2% per year after the 2nd year and remains the same for the remaining period set out in the illustration, and the value of the property increases by 1% per year;

(d) if the interest rate is capable of increasing under the mortgage, the interest rate increases by 2% per year after the 2nd year and remains the same for the remaining period set out in the illustration, and the value of the property remains the same over the period set out in the illustration.

(4) In preparing the written documentation required by subsection (3), a mortgage brokerage must assume that the borrower makes no payments under the mortgage during the period set out in the illustration other than the payments required to be paid under the mortgage.

Advance payment by borrower

22 (1) Except as provided in subsection (2), a mortgage brokerage must not charge, collect or attempt to collect a fee from a borrower in relation to a mortgage to which the Cost of Borrowing Disclosure Regulations apply until all of the following have occurred:

(a) the mortgage lender has provided a written confirmation to fund the mortgage;

(b) the commitment has been accepted by the borrower in writing;

(c) a copy of the signed commitment has been provided to the borrower.

(2) This Section does not apply with respect to actual fees disbursed by a mortgage brokerage to third parties for credit reports, registration fees, courier services or appraisal services if there is an existing written agreement between the mortgage brokerage and the borrower that provides for the borrower to reimburse the mortgage brokerage for these costs.

Receiving money from mortgage lender or investor

23 (1) A mortgage brokerage must not receive money from a lender or enter into an agreement to receive money from a lender for any activity requiring a mortgage brokerage licence unless an application has been made for a mortgage on a specific property.

(2) A mortgage brokerage must not receive money from an investor or enter into an agreement to receive money from an investor in connection with any activity requiring a mortgage brokerage licence unless an existing mortgage is available on a specific property.

Duty to establish policies and procedures

24 (1) A mortgage brokerage must establish and implement policies and procedures that are reasonably designed to ensure that the mortgage brokerage and each mortgage broker and associate mortgage broker who is authorized to broker mortgages on its behalf complies with the requirements of the Act and its regulations, including all of the following:

(a) describing the role of the mortgage brokerage in relation to borrowers, lenders and investors and disclosing to a borrower, lender or investor the mortgage brokerage’s relationship with each party to a transaction;

(b) taking steps to verify the identity of borrowers, lenders and investors;

(c) determining the suitability of a mortgage or investment in a mortgage for a borrower, lender or private investor;

(d) identifying the material risks of a mortgage or investment in a mortgage for a borrower, lender or investor and disclosing the material risks to the borrower, lender or investor;

(e) identifying potential conflicts of interest between the mortgage brokerage or any mortgage broker or associate mortgage broker authorized to broker mortgages on its behalf and a borrower, lender or investor that is represented by the mortgage brokerage, and disclosing a potential conflict of interest to the borrower, lender or investor;

(f) any incentives other than money provided by other persons to its mortgage brokers and associate mortgage brokers for brokering mortgages, if the mortgage brokerage permits any of its mortgage brokers or associate mortgage brokers to receive those incentives;

(g) resolving complaints about its mortgage brokerage activities or those of any mortgage broker or associate mortgage broker authorized to broker mortgages on its behalf.

(2) A mortgage brokerage must establish and implement policies and procedures providing for the adequate supervision of every mortgage broker and associate mortgage broker who is authorized to broker mortgages on its behalf.

Authorizing mortgage brokers

25 (1) A mortgage brokerage must not authorize an individual to broker mortgages on its behalf unless the mortgage brokerage takes reasonable steps to satisfy itself that the individual is eligible to be licensed as a mortgage broker or associate mortgage broker.

(2) A mortgage brokerage must immediately notify the Registrar on becoming aware that there may be reasonable grounds for the Registrar to determine that a mortgage broker or associate mortgage broker is not eligible to be licensed as a mortgage broker or associate mortgage broker.

Fees and remuneration paid to unlicensed persons

26 (1) A mortgage brokerage must not pay a fee or other remuneration to an unlicensed person for any activity requiring a licence unless the other person is exempt from the requirement to hold a licence for that activity under the Exemption Regulations made under the Act.

(2) A mortgage brokerage must not pay a fee or other remuneration to an individual licensed to broker mortgages on behalf of another mortgage brokerage.

Duty to act with integrity, independence and competence

27 A mortgage brokerage must always act with integrity, independence and competence when carrying on the business of brokering mortgages.

Legislative History
Reference Tables

Source Law

The current consolidation of the Standards of Conduct for Mortgage Brokerages Regulations made under the Mortgage Regulation Act includes all of the following regulations:

The following regulations are not yet in force and are not included in the current consolidation:

*See subsection 3(6) of the Regulations Act for rules about in force dates of regulations.

Amendments by Provision