Client Update: Mortgage Regulation Act – the new regime
In May 2012, the Nova Scotia Legislature passed the Mortgage Regulation Act (“MRA”). The MRA has not yet come into force, but, when it does, it will replace the Mortgage Brokers’ and Lenders’ Registration Act and, in conjunction with the regulations that will be passed pursuant to the MRA (the “MRA Regulations”), will establish a new regulatory regime for mortgage brokerages, mortgage brokers, associate mortgage brokers, mortgage lenders and mortgage administrators.
The MRA is expected to come into force before the end of 2018. A draft of the proposed MRA Regulations (the “MRA Draft Regulations”) was released in September 2017. This Client Update is based on the MRA and MRA Draft Regulations, which are subject to change pending promulgation.
General Features of the MRA and the MRA Draft Regulations
Subject to certain exceptions, mortgage brokerages, mortgage brokers, associate mortgage brokers, mortgage lenders, and mortgage administrators will need to be licensed in order to conduct business in Nova Scotia (MRA, s. 12(2)). Under the MRA, there will be different classes of licences for mortgage brokerages, mortgage brokers, associate mortgage brokers, mortgage lenders, and mortgage administrators (MRA, s. 12(1)), and different rules will apply to licensees who hold different classes of licences.
Applicants will need to satisfy the criteria and meet the requirements outlined in the MRA and the MRA Regulations. The proposed Lender, Brokerage, Broker and Administrator Licensing Regulations (the “Licensing Regulations”), which are included in the MRA Draft Regulations, outline the criteria that prospective licensees or licensees will likely be required to satisfy in order to acquire or renew a particular class of licence.
Licences issued pursuant to the MRA will likely need to be renewed annually. The Licensing Regulations provide that licenses will expire on October 31 in the calendar year following the year in which the licenses were acquired or renewed (Licensing Regulations, s. 8).
The MRA will not apply to persons or classes of persons who are exempted from its application by the MRA Regulations (MRA, s. 3(11)).
The proposed Mortgage Regulation Act Exemption Regulations (the “Exemption Regulations”), which are part of the MRA Draft Regulations, list the persons and classes of persons who will likely be exempted from the application of the MRA. These persons and entities include:
- banks and authorized foreign banks (s. 3(a));
- trust and loan companies (s. 3(b));
- cooperative credit associations (s. 3(c));
- insurance companies (s. 3(d));
- provided that certain conditions are met, persons who refer prospective borrowers to mortgage professionals and vice versa (ss. 3(g)-(h), 4); and
- persons who undertake mortgage brokering or mortgage lending activities with respect to mortgages that are each worth more than $1,000,000, provided that:
• the Cost of Borrowing Regulations do not apply to the mortgages;
• the investors in the mortgages are not private investors or, if one or
more of the investors in the mortgages are private investors,
licensees or exempted persons broker the mortgages on their behalf
The Exemption Regulations also suggest that there will be a number of partial exemptions. In certain circumstances, for instance, lawyers, trustees in bankruptcy, and other persons will likely be able to act as mortgage brokers or mortgage administrators without being licensed (Exemption Regulations, s. 5). Individuals or entities will also likely be able to act as mortgage lenders without being licensed provided that they lend their own money and that, in any 12 month period, they undertake mortgage lending activities with respect to four or fewer mortgages that are cumulatively worth less than $1,000,000 (Exemption Regulations, s. 6(a)). Finally, credit unions will likely be able to act as mortgage lenders without being licensed (Exemption Regulations, s. 6(b)). However, as these are partial exemptions, many of the provisions of the MRA and the MRA Regulations will still apply to persons who are partially exempted from the application of the MRA and the MRA Regulations.Disclosure, reporting, record-keeping and standards of conduct
When the MRA comes into force, people and entities that employ mortgage brokers, broker mortgages, provide mortgage loans, or administer mortgages will be required to comply with numerous disclosure, reporting, and record-keeping requirements. While some of these requirements are included in the MRA, many of them are outlined in the MRA Draft Regulations, namely the:
- General Disclosure Regulations;
- Cost of Borrowing Disclosure Regulations;
- Reporting Requirements Regulations; and
- Record-keeping Requirements Regulations.
In addition, licensees will be required to comply with prescribed standards of conduct. The MRA Draft Regulations include standards of conduct for each class of licensee.
After the MRA comes into force, it will be an offence for a person to fail to comply with the MRA, the MRA Regulations, or an order given by the Registrar (MRA, s. 69(1)). Administrative penalties may be imposed by the Registrar in lieu of charging someone with a summary conviction offence (MRA, s. 72(2)).
An individual who is found guilty of a summary conviction offence under the MRA may be ordered to pay a fine of up to $500,000, be imprisoned for up to one year, or be both fined and imprisoned (MRA, s. 69(3)(a)). A corporation that is found guilty of an offence under the MRA may be ordered to pay a fine of up to $1,000,000 (MRA, s. 69(3)(b)). Finally, directors and officers of a corporation may be convicted of an offence if the corporation has violated the MRA or the MRA Regulations (MRA, s. 69(4)).
Bryan Mills and John Morse On May 21, 2019, the New Brunswick Labour and Employment Board (”Board”) dismissed an application by the New Brunswick Union of Public and Private Employees (“Union”) seeking certification as bargaining…Read More
Jonathan Coady and Justin Milne The Ontario Court of Appeal has found that the Greenhouse Gas Pollution Pricing Act¹ is valid federal legislation.² The Act implements national minimum pricing standards to reduce greenhouse gas (“GHG”) emissions.…Read More
Richard Niedermayer, TEP, Jennifer Taylor and Bhreagh Ross, summer student There is a right to testamentary freedom under section 7 of the Charter, according to a recent decision of the Nova Scotia Supreme Court. In…Read More
John Samms Introduction Much ink has been spilled on the controversial 1969 power contract between Hydro-Quebec and CFLCo (the contract) and last week the Quebec Court of Appeal added to the pile with its decision…Read More
Kevin Landry On June 14, 2019, Health Canada announced the release of the final version of amendments to the Cannabis Regulations, which will permit for the production and sale of edibles, extracts and topicals. The…Read More
We are pleased to present the fourth issue of Discovery, our very own legal publication targeted to educational institutions in Atlantic Canada. While springtime for universities and colleges signal the culmination of classes, new graduates…Read More
Grant Machum and Richard Jordan In an earlier article, we considered an employer’s options when an employee departs and takes with them the social media contacts they have obtained during the course of their…Read More
Matthew Jacobs and Daniel Roth (summer student) “… we cannot be a Blockbuster government serving a Netflix society.” – The Hon. Minister Navdeep Bains paraphrasing the Hon. Scott Brison (May 2019, at the Empire…Read More
Tauna Staniland, Andrea Shakespeare, Kimberly Bungay and Alycia Novacefski The federal government has introduced new record keeping requirements for private, federally formed corporations governed by the Canada Business Corporations Act (“CBCA”). The amendments to the…Read More