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
The Editor’s Corner Clarence Bennett This issue focuses on the family and the interaction between employment and family obligations. As 2014 comes to a close, I would like to extend Seasons Greetings to all of…
Read MoreRECENT DEVELOPMENTS: DISABILITY INSURANCE POLICIES & LIMITATION PERIODS IN NOVA SCOTIA Two recent Nova Scotia decisions have clarified the issue of limitation periods in disability insurance policies and “rolling” limitation periods. THORNTON V. RBC…
Read MoreSection 156 of the Excise Tax Act (the “ETA“) provides an election that relieves certain related parties from having to collect Harmonized Sales Tax (“HST“) on the goods and services sold between them. The election deems qualifying…
Read MoreIN THIS ISSUE: More Than Wind – Emergence of Tidal Energy in Atlantic Canada by Sadira Jan Aquaculture and Salmon Farming in Atlantic Canada by Greg Harding The Expanding Atlantic Canada Offshore Industry: Growing Offshore without Going Offside by Stephen Penney and Rebecca…
Read MoreThe Supreme Court of Canada’s unanimous decision in the breach of contract case Bhasin v Hrynew, 2014 SCC 71 was released on November 13, 2014. The case is important in the law of contracts because…
Read MoreOn June 20, 2014, the Government of Canada announced a series of reforms to overhaul the Temporary Foreign Worker Program (“TFWP”). These reforms, many of which are effective immediately, function to: Re-organize the TFWP The…
Read MoreThe Editor’s Corner Clarence Bennett Summer is halfway over, but we know you will want to take this edition along with you while you enjoy more summer weather and time out of the office. Employers…
Read MoreOn June 26, 2014, the Supreme Court of Canada released one of the most significant aboriginal law decisions since Marshall – Tsilhqot’in Nation v. British Columbia, 2014 SCC 44 (also known as the William decision). This decision could have…
Read MoreIn Industrial Alliance Insurance and Financial Services Inc. v. Brine, 2014 NSSC 219, National Life (and later its successor Industrial Alliance) alleged Brine had received undisclosed CPP and Superannuation disability benefits resulting in a substantial overpayment of…
Read MoreAny individual, business or organization that uses email, text messages or social networks to promote their products and services should take note of Canada’s Anti-Spam Legislation and its accompanying regulations. Effective July 1, 2014, the…
Read More