Regulating Mortgage Brokers and Mortgage Brokerages
The Newfoundland and Labrador Regulation 2024 (Regulation 66/24) governs mortgage brokerages and brokers under the Mortgage Brokerages and Brokers Act establishes comprehensive guidelines for the operation, licensing, and accountability of mortgage brokers and brokerages in the province.
Key sections of the regulation include a short title and definitions, where the regulation is referred to as the Mortgage Brokerages and Brokers Regulations, defining essential terms such as “mortgage lender,” “register,” and “written assessment.” Certain individuals, including lawyers and licensed real estate brokers, are exempt from licensing requirements if they operate within their professional scope. The regulation mandates a detailed public register of licensed brokers and brokerages, which includes information on license categories, effective dates of suspensions or cancellations, and any imposed conditions.
Applicants for a mortgage brokerage or broker license must submit letters of good standing from previous jurisdictions and meet specific educational qualifications, including the completion of approved mortgage management courses. The regulation emphasizes the importance of current knowledge and training in mortgage brokerage practices, with additional training requirements for sole proprietorships. Brokers are also required to maintain a minimum liability insurance coverage of $500,000 per occurrence and $1 million per year to safeguard against errors and omissions in their practice.
Moreover, mortgage brokerages must provide potential borrowers with comprehensive written information, including mortgage options, lender affiliations, and associated fees, at least two business days before any obligation or payment. They are also required to conduct thorough assessments to determine the suitability of mortgage options for borrowers, providing a written justification for the chosen mortgage. The regulation specifies extensive record-keeping requirements, mandating that brokerages maintain detailed records of transactions, agreements, and client interactions for at least seven years.
Proper handling of trust money received from borrowers is outlined, prohibiting withdrawals that result in a negative balance and ensuring meticulous maintenance of all trust account records. Any advertising by brokerages or brokers must clearly indicate their roles and affiliations to avoid misleading consumers. The superintendent has the authority to impose administrative penalties of up to $2,000 for violations of the Act or regulations, considering the severity and context of the infraction.
The new regulations repeal the previous Mortgage Brokers Regulations (Consolidated Newfoundland and Labrador Regulation 1006/96. By establishing clear licensing procedures, educational standards, disclosure requirements, and accountability measures, the regulations aim to protect consumers and maintain the integrity of the mortgage brokerage profession, fostering a transparent and fair mortgage market for both brokers and borrowers in the province.
Newfoundland and Labrador (66/24) October 10, 2024