Client Update: Mortgage Regulation Act – the new regime

Brian Tabor, QC and Simon McCormick

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

Licensing

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).

Exemptions

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;
    and
    • 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
    (s. 3(f)).

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.

Penalties

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)).

SHARE

Archive

Search Archive


Generic filters
Filter by Custom Post Type

 
 

New reporting requirements for beneficial ownership of federal corporations coming this June

May 24, 2019

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

Doctors must provide ‘effective referrals’ for medical services they oppose on religious grounds: Christian Medical and Dental Society of Canada v. College of Physicians and Surgeons of Ontario, 2019 ONCA 393

May 17, 2019

Health Group, Christopher Goodridge, Matthew Jacobs The Ontario Court of Appeal confirmed in a decision released on May 15, 2019 that doctors must provide an ‘effective referral’ where they are unwilling to provide care on…

Read More

The road forward: Nova Scotia government announces and seeks input on further regulatory changes regarding funding of defined benefit pension plans

May 14, 2019

Level Chan and Dante Manna The Province of Nova Scotia is soliciting stakeholder input on significant regulatory changes to the Pension Benefits Act (“PBA”) and Pension Benefits Regulations (“PBR”).  The solicitation is accompanied by a…

Read More

Protecting IP on the high seas – Innovation Supercluster Initiative, requires Intellectual Property Strategy

May 14, 2019

Andrea Shakespeare, Kevin Landry, Divya Subramanian and Matthew Jacobs The main asset of innovation is Intellectual Property. Applicants looking to participate in the Innovation Superclusters Initiative must be vigilant of their Intellectual Property. This article…

Read More

Changes to Canadian cannabis licensing application process

May 9, 2019

Kevin Landry Health Canada has announced changes to the cannabis licensing regime. These changes come ahead of the release of the cannabis edibles, extracts, and topicals amendments to the Cannabis Regulations expected to be released…

Read More

Managing change in the workplace – constructive dismissal and the duty to mitigate

May 3, 2019

Grant Machum Last week’s Nova Scotia Court of Appeal’s decision in Halifax Herald Limited v. Clarke, 2019 NSCA 31, is good news for employers. The Court overturned the trial judge’s determinations that an employee had…

Read More

New Trade Union Act General Regulations addresses (in part) *snapshot* approach to construction industry unionization

May 2, 2019

Rick Dunlop On April 24, 2019, the Nova Scotia Government created the Trade Union Act General Regulations so that the Labour Board will no longer consider a Saturday, Sunday, or holiday as the date of…

Read More

Caution – Reform ahead for Newfoundland and Labrador automobile insurance

April 18, 2019

Rodney Zdebiak and Anthony Granville On Monday, April 15, 2019, the Newfoundland and Labrador legislature passed a number of changes to the Automobile Insurance Act (“Act”) stating that the intent is to help stabilize insurance rates,…

Read More

The Ocean Supercluster – Navigating Innovation Together

April 12, 2019

Andrea Shakespeare, Kevin Landry and Matthew Jacobs The Canadian government has placed itself in the “global innovation race”. In response to the demands for innovation, the Canadian government has established the Innovation Superclusters Initiative which…

Read More

No Compass Needed – Ocean Supercluster Activities Explained

April 12, 2019

Andrea Shakespeare, Kevin Landry and Matthew Jacobs Canada’s Ocean Supercluster is a co-investment initiative between Canada’s federal government and the private sector that is part of the Innovation Superclusters Initiative. As we wrote about in…

Read More

Search Archive


Generic filters
Filter by Custom Post Type