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SNL2023 CHAPTER M-17.1 CHAPTER M-17.1 AN ACT RESPECTING THE REGULATION OF MORTGAGE BROKERAGES AND MORTGAGE BROKERS IN THE PROVINCE (Assented to May 25, 2023)
Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows: Short title 1.
This Act may be cited as the Mortgage Brokerages and Brokers Act. Interpretation 2. (1) In this Act
(a)
"borrower" means a person who applies for a mortgage through a mortgage brokerage or a mortgage broker; (b) "business day" means a day that is not a Saturday, Sunday or holiday; (c) "department" means the department presided over by the minister; (d) "deputy superintendent" means the Deputy Superintendent of Mortgage Brokerages and Mortgage Brokers appointed under subsection 4(2); (e) "former Act" means the Mortgage Brokers Act ; (f) "licence" means a licence issued under section 7; (g) "licensee" means a person who holds a licence issued under section 7; (h) "minister" means the minister appointed under the Executive Council Act to administer this Act;
(i)
"mortgage" means any charge on real property or both real property and personal property for the purpose of securing money or money's worth; (j) "mortgage broker" means an individual who (i) holds a mortgage broker licence, and (ii) brokers mortgages on behalf of a mortgage brokerage;
(k)
"mortgage brokerage" means a corporation, partnership or sole proprietorship that holds a mortgage brokerage licence; (l) "mortgage brokerage licence" means a licence issued under paragraph 7(1)(a); (m) "mortgage broker licence" means a licence issued under paragraph 7(1)(b); (n) "principal broker" means an individual designated in accordance with subsection 9(1); (o) "superintendent" means the Superintendent of Mortgage Brokerages and Mortgage Brokers appointed under subsection 4(1);
(p)
"trade" means a trade as defined in the Real Estate Trading Act, 2019
; and (q) "trust money" means money received by a mortgage brokerage but does not include money that is clearly received as payment to the mortgage brokerage for fees or other remuneration earned by the mortgage brokerage. (2) For the purposes of this Act, a person brokers mortgages if the person engages in one or more of the following activities: (a) soliciting another person to obtain a mortgage, where the solicitation is on behalf of another person; (b) negotiating or arranging a mortgage on behalf of another person; (c) providing advice to a person with respect to the appropriateness of obtaining a particular mortgage; and (d) any other activity prescribed in the regulations. Non-application of Act 3. This Act or a part of it does not apply to a person or class of persons exempted from the application of this Act or a part of it by the regulations. Superintendent and deputy superintendent
4.
(1) The minister shall appoint a Superintendent of Mortgage Brokerages and Mortgage Brokers to administer and enforce this Act and the regulations.
(2)
The minister may appoint a Deputy Superintendent of Mortgage Brokerages and Mortgage Brokers who shall perform the duties and exercise the powers of the superintendent where
(a)
the superintendent is absent or unable to act;
(b)
the superintendent considers it necessary to delegate the superintendent's authority; or
(c)
the office of the superintendent is vacant. Powers and duties of superintendent 5. The superintendent may
(a)
establish a code of conduct;
(b)
set continuing education requirements; and
(c)
perform the other duties and exercise the powers conferred by this Act. Register 6. The superintendent shall maintain a register of mortgage brokerages and mortgage brokers on the department's website which shall include (a) the name of all mortgage brokerages and mortgage brokers licensed under the Act; and (b) any other information prescribed in the regulations. Types of licences
7.
(1) The superintendent may issue the following licences: (a) a mortgage brokerage licence which authorizes the holder of the licence to carry on the business of brokering mortgages; and (b) a mortgage broker licence which authorizes the holder of the licence to broker mortgages on behalf of a mortgage brokerage.
(2)
The superintendent may issue a licence or refuse to issue a licence. (3) Where the superintendent refuses to issue a licence, the superintendent shall provide the applicant with written reasons for the refusal.
(4)
A licence issued under paragraph (1)(b) shall state the name of the mortgage brokerage with whom the mortgage broker is employed.
(5)
The superintendent may impose terms and conditions on a licence.
(6)
A licence is not transferrable or assignable. (7) A licence remains in effect until it is suspended or cancelled under this Act. Application for licence 8. (1) A person applying for a licence under paragraph 7(1)(a) shall submit to the superintendent
(a)
an application in the form set by the superintendent;
(b)
the fee set by the minister;
(c)
a certified criminal records check satisfactory to the superintendent from the Royal Newfoundland Constabulary, the Royal Canadian Mounted Police or another organization approved by the minister for (i) the principal broker, where the applicant is a corporation,
(ii)
each partner in the partnership,
where the applicant is a partnership, or (iii) the sole proprietor, where the applicant is a sole proprietorship; (d) proof, satisfactory to the superintendent, that the principal broker has successfully completed the education requirements prescribed in the regulations;
(e)
proof of errors and omissions liability insurance in the amount prescribed in the regulations; and
(f)
other information or documentation prescribed in the regulations. (2) An individual applying for a licence under paragraph 7(1)(b) shall submit to the superintendent
(a)
an application in the form set by the superintendent;
(b)
the fee set by the minister;
(c)
a certified criminal records check satisfactory to the superintendent from the Royal Newfoundland Constabulary, the Royal Canadian Mounted Police or another organization approved by the minister;
(d)
proof, satisfactory to the superintendent, of successful completion of the education requirements prescribed in the regulations;
(e)
a statement made by or on behalf of the mortgage brokerage for whom the applicant proposes to work
(i)
recommending the applicant as an appropriate individual to receive a mortgage broker licence, and
(ii)
declaring that, where the applicant is granted a licence, the applicant shall act as a mortgage broker employed by and representing the mortgage brokerage; and
(f)
other information or documentation prescribed in the regulations.
(3)
Paragraph (2)(e) does not apply to an individual who is also applying for a mortgage brokerage licence as a sole proprietor.
(4)
Where the superintendent requires further information in order to assess an application under subsection (1) or (2), the superintendent shall request further information from the applicant and the applicant shall provide that information in the time set by the superintendent. Principal broker 9. (1) Where a corporation or partnership applies for a mortgage brokerage licence, it shall designate an individual to act on its behalf for the purposes of the licence.
(2)
The principal broker for a corporation or partnership shall be an individual who
(a)
is a director of the corporation or a partner in the partnership;
(b)
is active in the day to day operations of the corporation or partnership and knowledgeable of the business of the corporation or partnership; and
(c)
holds a valid mortgage broker licence. (3) The principal broker for a sole proprietorship is the sole proprietor.
(4)
A mortgage brokerage licence issued under this Act shall be in the name of the corporation, partnership or sole proprietorship and shall state on the licence the name of the principal broker.
(5)
Notwithstanding subsections (1), (2) and (4), a corporation or partnership may designate another individual who satisfies the requirements in subsection (6) to act as the principal broker in the absence or incapacity of the principal broker. (6) An individual may be designated under subsection (5) where the individual
(a)
has successfully completed the education requirements referred to in paragraph 8(1)(d); and (b) satisfies the requirements in paragraphs (2)(b) and (c).
(7)
Where a corporation or partnership designates an individual under subsection (5), it shall provide the name of that individual to the superintendent.
(8)
Where a principal broker for a corporation or partnership dies or becomes incapacitated or the principal broker's employment with the mortgage brokerage is terminated and the mortgage brokerage does not have an alternate principal broker, the superintendent may
(a)
allow the mortgage brokerage to appoint a principal broker that does not meet the requirements in subsection (2) or (6) for a term of not more than 6 months; and
(b)
allow the mortgage brokerage to carry on business during that time. Duties of licensees
10.
(1) A licensee shall
(a)
pay the annual fee set by the minister;
(b)
comply with this Act, the regulations, the code of conduct and the terms and conditions of the licence;
(c)
complete the continuing education requirements set by the superintendent; and
(d)
provide information or documentation to the superintendent where requested. (2) In addition to the requirements in subsection (1), a mortgage brokerage shall
(a)
file an annual report in the form set by the superintendent;
and (b) maintain errors and omissions liability insurance in the amount prescribed in the regulations. (3) For the purposes of paragraph (1)(c), where the licensee is a mortgage brokerage the principal broker shall complete the continuing education requirements set by the superintendent.
(4)
The superintendent may require mortgage brokers to file an annual report in the form set by the superintendent. Notice of changes
11.
A licensee shall notify the superintendent in writing of the following changes within 10 business days of the change:
(a)
a change in the address for service;
(b)
a change in email address;
(c)
a change in the partners where the licensee is a partnership or a change in the directors where the licensee is a corporation;
(d)
a change in the account number, branch or location of the licensee's trust account, where the licensee holds a mortgage brokerage licence;
(e)
the commencement and termination of employment of a mortgage broker;
(f)
a change in any information submitted in the licensee's application for a licence; and
(g)
a change in any information in the most recent annual report submitted by the licensee. Temporary licence
12.
(1) Notwithstanding section 7, where a sole proprietor who operates a mortgage brokerage dies or becomes incapacitated, the superintendent may issue a temporary mortgage brokerage licence and a temporary mortgage broker licence to the executor or administrator of the deceased sole proprietor's estate or the incapacitated sole proprietor's power of attorney.
(2)
Licences issued under subsection (1) shall be for a term of not more than 6 months and shall authorize the holder of the licences to
(a)
carry on the business of a mortgage brokerage on behalf of the deceased or incapacitated sole proprietor; and
(b)
act as a mortgage broker for clients of the sole proprietor that existed at the time of death or incapacitation. Variation, suspension or cancellation of licence 13. (1) The superintendent may vary, suspend or cancel a licence where (a) the superintendent is satisfied that the licensee contravened
(i)
this Act or the regulations,
(ii)
a term or condition of the licence,
(iii)
an order issued under this Act, or (iv) the code of conduct;
(b)
the superintendent is satisfied that the licensee made one or more false or misleading statements in the application for a licence, the information provided in support of the application or an annual report;
(c)
in the case of a corporation, the corporation has been dissolved or has been struck off the register of companies under the Corporations Act
; (d) in the case of a partnership, the partnership has been dissolved; (e) a mortgage brokerage has become bankrupt;
(f)
the licensee failed to file an annual report, where required; (g) the licensee failed to pay the annual fee;
(h)
the licensee did not satisfy the continuing education requirements; or
(i)
the superintendent is satisfied that it is in the public interest to vary, suspend or cancel the licence.
(2)
Where a mortgage broker's employment with a mortgage brokerage is terminated, the mortgage broker's licence is cancelled.
(3)
Where a mortgage brokerage closes or winds up, the licences of all mortgage brokers employed with the mortgage brokerage are cancelled. (4) Where a mortgage brokerage ceases to employ at least one mortgage broker authorized to broker mortgages on its behalf, the mortgage brokerage licence is cancelled. Licence required 14. A person shall not (a) carry on the business of brokering mortgages, or represent to be doing so, unless that person holds a valid mortgage brokerage licence or is exempted from the requirement to have a licence by the regulations; or (b) broker mortgages, or represent to be a mortgage broker, unless the person holds a mortgage broker licence or is exempted from the requirement to have a licence by the regulations. Duties owed to a borrower 15. A licensee is required to act in the best interests of a borrower and shall (a) provide to the borrower the information prescribed in the regulations within the time and in the manner prescribed in the regulations; (b) determine the mortgage that is most suitable for the borrower in accordance with the regulations; (c) provide to the borrower, within the time and in the manner prescribed in the regulations, a written assessment of the determination made under paragraph (b) that contains the information prescribed in the regulations; and (d) retain written evidence that the assessment referred to in paragraph (c) was provided to the borrower. Records 16. (1) A licensee shall keep records of the following: (a) all information to be disclosed and documentation to be provided to a borrower under this Act; and (b) any other information or documentation prescribed in the regulations. (2) A licensee shall keep and maintain the records referred to in subsection (1) for the time, in the manner and at the location prescribed in the regulations. Trust accounts 17. (1) A licensee shall not receive or hold trust money unless the licensee (a) holds a valid mortgage brokerage licence; and
(b)
maintains a trust account of a type approved by the superintendent in a financial institution that is authorized to receive money on deposit.
(2)
A mortgage brokerage that receives or holds trust money shall keep all trust money separate and apart from all other money belonging to the mortgage brokerage or those acting on its behalf.
(3)
A mortgage brokerage that receives trust money shall deposit the trust money into a trust account. (4) A mortgage brokerage shall keep records of all transactions involving trust money received or held under this section. (5) A mortgage brokerage that receives or holds trust money shall administer the trust account and maintain records in relation to the trust account in accordance with the regulations. Advertising 18. (1) A licensee shall not advertise or otherwise indicate that the licensee is a mortgage brokerage or mortgage broker using a name other than the name set out on the licence. (2) A mortgage brokerage shall not advertise the business or any products or services offered by that business unless the advertisement (a) indicates the name of the business as set out on its licence; and (b) contains other information that may be prescribed in the regulations. (3) A mortgage broker shall not advertise the business or any products or services offered by the mortgage broker unless the advertisement (a) indicates the name of the mortgage brokerage for which the mortgage broker is authorized to act; and (b) contains other information that may be prescribed in the regulations. (4) A licensee shall not make any false, misleading or deceptive statements in an advertisement.
(5)
Where, in the opinion of the superintendent, a licensee has made a false, misleading or deceptive statement in an advertisement the superintendent may order that licensee to stop using that advertisement immediately. Limitation of liability of borrower
19.
A borrower is not liable to pay a mortgage broker an amount that exceeds that set out in the disclosure statement required under the Consumer Protection and Business Practices Act
and the regulations under that Act. Prohibition
20.
A person who is licensed under this Act and licensed under the Real Estate Trading Act, 2019
shall not provide services under the authority of this Act and the Real Estate Trading Act, 2019
to a person in relation to a trade. Administrative penalty
21.
(1) Where the superintendent is of the opinion that a person has committed, as specified by regulation, a contravention of this Act or the regulations for which an administrative penalty applies, the superintendent or a person authorized by the superintendent may, in writing, notify that person that the person is to pay to the government of the province an administrative penalty in the amount set out in the notice for each day or part of a day the contravention occurs or continues to occur.
(2)
A person who pays an administrative penalty with respect to a contravention may not be charged with an offence under this Act with respect to that contravention.
(3)
Where a person fails to pay an administrative penalty in accordance with a notification under subsection (1), the government of the province may recover the amount owing in respect of the penalty as a debt due the Crown.
(4)
For the purpose of this section, an administrative penalty is a monetary penalty imposed in accordance with the regulations for a contravention of this Act or the regulations. Order of superintendent 22. (1) Where the superintendent determines that a licensee contravened this Act, the regulations, the code of conduct or an order of the superintendent, the superintendent may make one or more of the following orders:
(a)
an order suspending or cancelling the licensee's licence;
(b)
an order imposing conditions or restrictions on the licensee; or
(c)
another order prescribed in the regulations.
(2)
The superintendent may publish a summary of an order issued under this section in accordance with the regulations. Inspectors
23.
(1)
The superintendent may designate persons or classes of persons to act as inspectors for the purpose of this Act and the regulations. (2) The superintendent and the deputy superintendent are inspectors for the purpose of this Act and the regulations. (3) A person shall not knowingly make a false or misleading statement, either orally or in writing, to an inspector while the inspector is exercising powers or carrying out duties or functions under this Act or the regulations. Powers of inspectors
24.
(1)
An inspector has the same power to summon and enforce the attendance of a person and to compel the person to testify on oath or otherwise, and to summon and compel a person to produce documents and other things, that is vested in a judge of the Supreme Court, and the refusal of the person to attend or to answer questions or of a person to produce documents or other things that are in the person's custody or possession makes the person liable to be committed for contempt by a judge of the Supreme Court as if in breach of an order of that court.
(2) An inspector may, at all reasonable times, for purposes related to the administration or enforcement of this Act or the regulations, inspect or examine the premises, processes, books and records of a person that the inspector may consider relevant for the purpose of determining compliance with this Act or the regulations, and the inspector may, without a warrant,
(a)
enter any premises where
(i)
any property, books or records are or may be kept, or
(ii)
anything is done or is suspected by the inspector of being done in connection with a requirement of this Act or the regulations;
(b)
make copies, extracts, photographs or videos the inspector considers necessary;
(c)
require the owner or person in charge of a premises to give the inspector all reasonable assistance, including the production of books and records as requested by the inspector, and to answer all proper questions relating to the administration or enforcement of this Act or the regulations and, for that purpose, require the owner or person in charge to attend at the premises with the inspector; and
(d)
require the owner or person in charge to make available the means to generate and manipulate books and records that are in machine readable or electronic form and any other means or information necessary for the inspector to assess the books and records.
(3)
Notwithstanding subsection (2), an inspector shall not enter a dwelling-house without the consent of the occupant except under the authority of a warrant issued under section 25 or 26. Contravention of Act suspected
25.
(1) Where during the course of an inspection under section 24 or otherwise an inspector believes on reasonable grounds that there has been a contravention of this Act or the regulations, the inspector may, with a warrant issued under subsection (2) or section 26, seize and take away any of the books or records that may be required as evidence of a contravention and may retain those documents until the time they are required in a court proceeding.
(2)
A Provincial Court judge who is satisfied upon oath or affirmation there are reasonable grounds for believing there is in or on a premises anything that may provide evidence with respect to a suspected offence under this Act or the regulations, may issue a warrant authorizing an inspector to enter the premises and to
(a)
search;
(b)
examine the contents of the premises and make those inquiries that the inspector considers necessary; and
(c)
copy, extract, photograph, video, seize and take away evidence, books and records, for the purpose of investigating the suspected offence.
(3)
The owner or person in charge of a premises referred to in this section or a person there shall not obstruct an inspector in the carrying out of the inspector's duties under this section as authorized by the warrant.
(4)
A copy of a document obtained under this section, on proof by affidavit that it is a true copy, is admissible in evidence in proceedings under this Act and has the same probative force as the original document would have if it had been proved in the ordinary way.
(5)
Copies of documents obtained under this section are not required to be returned to the person who provided them. Telewarrant
26.
(1) Where, in the opinion of an inspector it would not be practical to appear before a Provincial Court judge to apply for a warrant, the inspector may make the application by telephone or other means of telecommunication.
(2)
Where an inspector acts under the authority of a warrant obtained under this section, the inspector shall provide a facsimile of the warrant to the owner or person in charge of a premises present at the time the warrant is carried out.
(3)
In subsection (2), "facsimile" includes a record produced by electronic means or a written record of a telephone conversation made by both parties to the conversation while it is in progress and which the parties have confirmed as to its accuracy by reading their record of the conversation to one another at the end of the conversation. Report by inspector 27. When directed by the superintendent, an inspector shall prepare a report and provide a copy to the superintendent. Protection order
28.
(1) Where the superintendent considers it necessary for the administration of this Act, the superintendent may direct a person, having on deposit or under the person's control or for safekeeping funds of a person, to retain those funds and to hold them until the superintendent in writing revokes the direction or consents to release a particular fund from the direction, or until a judge of the Supreme Court orders otherwise.
(2)
A direction under subsection (1) that names a bank or other financial institution shall apply only to a branch of the bank or other financial institution identified in the direction.
(3)
As soon as practicable, and not later than 7 days after a direction is issued under subsection (1), the superintendent shall apply to a judge of the Supreme Court to continue the direction or for another order that the judge considers appropriate.
(4)
A direction under subsection (1) may be made without notice but, in that event, copies of the direction shall be sent immediately by means that the superintendent may determine to all persons named in the direction. Protection from liability
29.
The superintendent, deputy superintendent, an inspector or a person acting on behalf of the superintendent or deputy superintendent shall not be liable for anything done in good faith in the exercise or performance of a power, duty or function conferred or imposed on the superintendent, deputy superintendent, inspector or person under this Act or the regulations. Appeal
30.
A person may appeal a decision or order of the superintendent or the deputy superintendent made under this Act to the Financial Services Appeal Board in accordance with the Financial Services Appeal Board Act
. Notice
31.
(1) A notice given under this Act or the regulations shall be considered sufficiently served where it is
(a)
delivered or sent by prepaid registered mail to the address for service provided by the person; or
(b)
sent electronically to the email address provided by the person.
(2)
For the purpose of this section, where a notice or document is sent by registered mail, it shall be considered to have been served on the fifth business day after mailing, and the service may be proved by providing evidence that the notice or document was prepaid and properly addressed and sent.
(3)
For the purpose of this section, where a notice or document is sent electronically, it shall be considered to have been served on
(a)
the day it is sent, if the document is sent on or before 4 p.m. on a business day; or
(b)
the next business day, if the document is sent after 4 p.m. Offences
32.
(1) A person who contravenes this Act, the regulations or an order under this Act is guilty of an offence and is liable on summary conviction
(a)
in the case of an individual, to a fine not exceeding $50,000, and in default of payment or in addition to that fine, to imprisonment for a term not exceeding 2 years; or (b) in the case of a corporation or a partnership, to a fine not exceeding $100,000.
(2)
Each contravention of this Act, the regulations or an order under this Act constitutes a new and separate offence.
(3)
Where an offence under this Act or the regulations is committed or continued on more than one day, the person who committed the offence is liable to be convicted for a separate offence for each day on which the offence is committed or continued. Limitation period
33.
A prosecution under this Act or the regulations shall be started within 2 years of the date on which the superintendent becomes aware of the alleged offence. Regulations
34.
The Lieutenant-Governor in Council may make regulations
(a)
prescribing activities for the purpose of subsection 2(2);
(b)
exempting persons or classes of persons from the application of this Act or a part of it; (c) prescribing information to be included on a register of mortgage brokerages and mortgage brokers; (d) prescribing education requirements for licensees; (e) prescribing the amount of errors and omissions liability insurance;
(f)
respecting information and documentation to be provided with an application for a licence; (g) prescribing the information that a licensee is required to provide to a borrower and the time and manner in which that information is to be provided; (h) prescribing the process by which a licensee is to determine the mortgage that is most suitable for a borrower; (i) prescribing the information that shall be contained in a written assessment for the purposes of paragraph 15(c) and the time and manner in which the written assessment is to be provided;
(j)
prescribing other information and documentation to be kept by a licensee; (k) prescribing the time for, manner in and location at which records are required to be kept and maintained;
(l)
respecting the administration of trust accounts and the records to be maintained by mortgage brokerages with respect to those trust accounts; (m) prescribing information that is required in an advertisement;
(n)
respecting the contravention of sections of this Act and the regulations for which an administrative penalty may be imposed and the time, amount and manner in which those penalties may be imposed and collected; (o) respecting orders of the superintendent; (p) respecting the publication of orders of the superintendent; (q) defining a word or phrase used but not defined in this Act; and
(r)
generally, to give effect to this Act. Fees and forms
35.
The minister may set fees and establish forms for the purpose and administration of this Act and the regulations. Transitional 36. (1) A person who is the Registrar of Mortgage Brokers immediately before the coming into force of this Act shall be the superintendent. (2) A person who is the Deputy Registrar of Mortgage Brokers immediately before the coming into force of this Act shall be the deputy superintendent.
(3)
A valid registration of a person under the former Act shall continue to be valid as if the former Act were still in force until the earlier of
(a)
3 months after the coming into force of this Act; or (b) the date a mortgage brokerage licence is issued to the person. (4) Where a complaint proceeding was started under the former Act but not concluded before the coming into force of this Act, the proceeding shall be concluded under the former Act as if the former Act were still in force.
(5)
A decision under the former Act shall continue to be in force and shall be considered to be a decision under this Act. SNL2019 cR-2.1 Amdt. 37. Section 28 of the Real Estate Trading Act, 2019 is repealed and the following substituted: Prohibition
28.
A person who is licensed under this Act and licensed under the Mortgage Brokerages and Brokers Act
shall not provide services under the authority of this Act and the Mortgage Brokerages and Brokers Act
to a person in relation to a trade. RSNL1990 cS-13 Amdt.
38.
Paragraph 36(2)(e) of the Securities Act
is amended by deleting the words "registered or exempted from registration under the Mortgage Brokers Act
" and substituting the words "licensed or exempted from the requirement to be licensed under the Mortgage Brokerages and Brokers Act
". RSNL1990 cM-18 Rep.
39.
The
Mortgage Brokers Act
is repealed. Commencement
40.
This Act, or a section, subsection, paragraph or subparagraph of this Act, comes into force on a day or days to be proclaimed by the Lieutenant-Governor in Council. ©King's Printer |