On April 1, 2016 New Brunswick’s Mortgage Brokers Act came into force, requiring businesses acting as mortgage brokerages or as mortgage administrators in New Brunswick to be licensed.

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:

1. A trust account maintained in New Brunswick for funds received under administered mortgages;
2. A minimum of $25,000 in working capital, or such higher amount determined to be necessary;
3. Registration as a New Brunswick corporation or extra-provincial corporation;
4. Disclosure forms from its officers and directors concerning previous disciplinary actions, criminal convictions, bankruptcies, judgments and civil proceedings against them;
5. 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;
6. 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
7. 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:

1. 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.
2. 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:

1. The name of the brokerage firm the applicant will be working for;
2. Details of prior mortgage related work experience as well as all prior employment history;
3. 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;
4. Disclosure of any judgments, civil proceedings, criminal convictions, or bankruptcies against the applicant;
5. Disclosure of any dismissals for cause;
6. Proof of completion of the educational requirements; and
7. 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.