Client Update: Requirement to register as a mortgage brokerage and mortgage administrator in New Brunswick
A mortgage brokerage is a business that on behalf of another person solicits third parties to obtain mortgage loans or to make an investment in a mortgage. Businesses that negotiate mortgage loans or investments on behalf of others, or that provide advice in regards to mortgage loans or investments, also acts as a mortgage brokerages. The individual mortgage brokers and associates who act on behalf of mortgage brokerages must also be licensed.
Mortgage administrators are businesses that receive payments from a borrower and remit those payments to investors, monitor the performance of a borrower or enforce a mortgage.
Licence application process
Licences are granted and administered by New Brunswick’s Financial and Consumer Services Commission. Applications are completed online. The application fee for a mortgage brokerage and mortgage administrator is $600. In addition, there is an annual fee of $600 to maintain either licence. The application fee for a mortgage broker and mortgage associate is $300, with an annual fee of $300 to maintain either licence. Additional financial security may also be required for a licence, which is determined on a case by case basis.
The application for a mortgage administrator licence also requires the following from applicants:
- A trust account maintained in New Brunswick for funds received under administered mortgages;
- A minimum of $25,000 in working capital, or such higher amount determined to be necessary;
- Registration as a New Brunswick corporation or extra-provincial corporation;
- Disclosure forms from its officers and directors concerning previous disciplinary actions, criminal convictions, bankruptcies, judgments and civil proceedings against them;
- A director or officer who has been appointed to serve as principal administrator, responsible for reviewing policies and procedures to ensure compliance with the Mortgage Brokers Act;
- Proof of a policy of errors and omission insurance that provides for extended coverage for losses from fraudulent acts, at a minimum coverage of $500,000 with respect to a single occurrence, and $1,000,000 with respect to all occurrences involving the mortgage administrator in a one year period; and
- Completion of a disclosure as to whether the applicant has been previously licensed or registered anywhere in any capacity to deal with the public, whether any such registration or licencing was refused, restricted, suspended, revoked or cancelled; whether it has been disciplined by a regulatory body or is currently the subject of an investigation conducted by such a body anywhere, and whether or not there are any unsatisfied judgments against it, or any current legal proceedings pending against it.
The application for a mortgage brokerage licence requires all items listed for mortgage administrators plus the following from applicants:
- The individual who will be acting as principal broker:
(a) If the applicant is a corporation, this individual must be a director or officer;(b) If the applicant is a partnership, this individual must be a partner;
(c) If the applicant is a limited partnership, this individual must be a general partner or a director/officer of the corporation that is the
general partner; or
(d) If the applicant is a sole proprietorship, the sole proprietor must act as the principal broker. - Disclosure of the particular business activities the applicant intends to undertake as a mortgage brokerage.
The application for a mortgage broker or associate requires the following:
- The name of the brokerage firm the applicant will be working for;
- Details of prior mortgage related work experience as well as all prior employment history;
- Completion of a disclosure as to whether the applicant has been previously licensed or registered anywhere in any capacity to deal with the public, whether any such registration or licensing was refused, restricted, suspended, revoked or cancelled; and whether the applicant has been disciplined by a regulatory body or is currently the subject of an investigation conducted by such a body anywhere;
- Disclosure of any judgments, civil proceedings, criminal convictions, or bankruptcies against the applicant;
- Disclosure of any dismissals for cause;
- Proof of completion of the educational requirements; and
- A Criminal Records Check report.
Failure to obtain a licence
If a corporation, partnership, or limited partnership acts as a mortgage brokerage without first obtaining a licence it is liable to pay a fine that will not exceed $1,000,000 for each occurrence. Similarly if a corporation were to act as a mortgage administrator without first obtaining a licence it is liable to pay a fine that will not exceed $1,000,000 for each occurrence.
If a sole proprietor acts as a mortgage brokerage without first obtaining a licence they are liable to pay a fine that will not exceed $500,000 or to imprisonment for a term not exceeding one year, for each occurrence. Similarly if an individual were to act as a mortgage broker or mortgage associate without first obtaining a licence, they would liable to pay a fine that will not exceed $500,000 or to imprisonment for a term not exceeding one year, for each occurrence.
It should also be noted that the Mortgage Brokers Act does not provide for any grace period, during which a business could act as a mortgage brokerage or mortgage administrator without a licence. A licence must be obtained prior to acting as a mortgage brokerage or mortgage administrator.
Should you have any questions about this legislation or the application process, please contact James Murphy or Christopher Marr.
Archive
Ruth Trask and John Samms Newfoundland and Labrador employers who continued operations this spring during Alert Levels 4 and 5 of the COVID-19 pandemic should take note of a new program offered by the provincial…
Read MoreChristopher Marr, TEP & Lauren Henderson As defined benefit pension plans (“DB Plans”) throughout Canada continue to face funding challenges due to mounting solvency deficits, the New Brunswick Financial and Consumer Services Commission (“FCNB”) is…
Read MoreJennifer Taylor The Supreme Court of Nova Scotia has acknowledged the ongoing impact of systemic racism against African Nova Scotians in an important decision on the Land Titles Clarification Act (“LTCA”). The case,…
Read MoreEffective July 1, 2020, the North American Free Trade Agreement (“NAFTA”) was officially replaced by the Canada-United States-Mexico Agreement (“CUSMA”). Like NAFTA, CUSMA contains provisions for the temporary entry of foreign “business persons” to Canada…
Read MoreKillian McParland and Jennifer Thompson In a decision released earlier today, Uber Technologies Inc. v. Heller¹, the Supreme Court of Canada determined that an agreement requiring Uber drivers to go to arbitration instead of suing…
Read MoreStephanie Stapleford, Mike Carver, Matthew Craig, Kimberly MacLachlan and Christine Pound Part 2: Electronically-Signed Share Certificates The COVID-19 crisis, and federal, provincial and local government directives for individuals to continue complying with social distancing policies…
Read MoreJoe Thorne and Kara Harrington Vexatious litigants are a category of persons who misuse the court process through repeated improper, abusive, and/or meritless proceedings. Vexatious litigants may take many forms, but ultimately they are a…
Read MoreWe are pleased to present the sixth issue of Discovery, our very own legal publication targeted to educational institutions in Atlantic Canada. During these unprecedented times, universities and colleges are encountering unique challenges of working…
Read MoreTwila Reid and John Samms On Friday, June 12, 2020, the Government of Newfoundland and Labrador announced it has extended the time period under section 50 of the Labour Standards Act (“the Act”) that converts…
Read MoreKathleen Leighton Those who have vacation homes or cottages in Canada may be starting to form their summer plans as temperatures begin to rise. However, the ongoing pandemic has resulted in a host of…
Read More