Standards of Conduct for Mortgage Brokerages Regulations
made under Section 90 of the
Mortgage Regulation Act
S.N.S. 2012, c. 11
N.S. Reg. 126/2020 (effective November 1, 2021)
amended to N.S. Reg. 218/2022 (effective November 1, 2022)
Table of Contents
Please note: this table of contents is provided for convenience of reference and does not form part of the regulations.
Click here to go to the text of the regulations.
Citation
Definitions
Duties to mortgage lenders and investors in syndicated mortgages
Standards of conduct
Information to be contained in advertisement
Information to be disclosed in correspondence
Duty to provide licence information
Duty to respond to complaint
Entering into unlawful transaction
Restriction on tied selling
Duty to return certain documents
Representing status of payment
Duty to ensure suitability of mortgage for private investor
Duty to verify identity
Duty to disclose information to investors
Duty to provide information about remuneration for referral
Duty to advise respecting borrower’s legal authority
Duty to advise of inaccuracy of mortgage application
Duty to inform if mortgage previously in default
Duties to private investor after completing mortgage transaction
Duties respecting reverse mortgages
Advance payment by borrower
Receiving money from mortgage lender or investor
Duty to establish policies and procedures
Authorizing mortgage brokers
Fees and remuneration paid to unlicensed persons
Duty to act with integrity, independence and competence
Citation
1 These regulations may be cited as the Standards of Conduct for Mortgage Brokerages
Regulations.
Definitions
2 In these regulations,
“Act” means the Mortgage Regulation Act;
“Cost of Borrowing Disclosure Regulations” means the Cost of Borrowing
Disclosure Regulations made under the Act;
“investment completion date”, in relation to a mortgage, means the earlier of the
following dates:
(i) the date that an investor, or a mortgage brokerage on behalf of an
investor, enters into an agreement to invest in the mortgage,
(ii) the date that the investment in the mortgage is completed.
Duties to mortgage lenders and investors in syndicated mortgages
3 If there is more than 1 lender under a mortgage or if more than 1 investor invests in a
mortgage, a mortgage brokerage owes to each of the mortgage lenders and investors the
duties imposed by these regulations in respect of the mortgage or investment.
Standards of conduct
4 The requirements set out in these regulations are prescribed as standards of conduct for
every licensed mortgage brokerage.
Information to be contained in advertisement
5 (1) All of the following information is prescribed as the information required by clause
58(2)(b) of the Act to be contained in an advertisement of a mortgage brokerage:
(a) for a mortgage brokerage whose name as set out on its licence is, or
includes, a franchise name that the mortgage brokerage is permitted to use
under a franchise agreement, a statement clearly indicating that the
mortgage brokerage is independently owned and operated;
(b) for an advertisement that identifies a mortgage broker or associate mortgage
broker by name, the name set out on the mortgage broker’s or associate
mortgage broker’s licence;
(c) for an advertisement that refers to a mortgage broker or associate mortgage
broker, at least 1 reference to the mortgage broker or associate mortgage
broker that includes 1 of the following titles:
(i) for a mortgage broker, the title “mortgage broker” or “broker” or an
abbreviation of either of those titles,
(ii) for an associate mortgage broker, the title “associate mortgage
broker”, “mortgage broker associate”, “associate broker”, “mortgage
associate” or “associate” or an abbreviation of any of those titles.
(2) In addition to the titles prescribed by clause (1)(c), an advertisement may include
an equivalent title in another language.
Information to be disclosed in correspondence
6 (1) All of the following information is prescribed as the information required to be
disclosed under subsection 60(1) of the Act by a mortgage brokerage in all
correspondence and other written material prepared or used in the course of the
business:
(a) the mortgage brokerage’s name as set out on its licence;
(b) the mortgage brokerage’s licence number;
(c) for a mortgage brokerage whose name as set out on its licence is, or
includes, a franchise name that the mortgage brokerage is permitted to use
under a franchise agreement, a statement clearly indicating that the
mortgage brokerage is independently owned and operated.
(2) The name and licence number referred to in clauses (1)(a) and (b) must be clearly
and prominently displayed wherever they are required to be disclosed.
Duty to provide licence information
7 (1) When requested, a mortgage brokerage must give a person all of the following
information:
(a) the licence number of the mortgage brokerage;
(b) subject to subsection (2), the name and licence number of a mortgage broker
or associate mortgage broker who
(i) is authorized to broker mortgages on behalf of the mortgage
brokerage, and
(ii) is relevant to the nature of the request.
(2) Clause (1)(b) does not require a mortgage brokerage to give a person the names
and licence numbers of all or substantially all of its mortgage brokers or associate
mortgage brokers.
Duty to respond to complaint
8 On receiving a written complaint about the mortgage business activities of the mortgage
brokerage or of any mortgage broker or associate mortgage broker authorized to broker
mortgages on its behalf, a mortgage brokerage must give the complainant a written
response that contains all of the following:
(a) the mortgage brokerage’s proposed resolution of the complaint;
(b) a statement that, if the complainant is not satisfied with the proposed
resolution and believes that the complaint relates to a contravention of the
Act or a regulation made under the Act, the complainant may refer the
complaint to the Registrar.
Entering into unlawful transaction
9 A mortgage brokerage must not act as a representative of a borrower, lender or investor
in respect of a mortgage if the mortgage brokerage has reasonable grounds to believe that
the mortgage, its renewal or the investment in it is unlawful.
Restriction on tied selling
10 (1) A mortgage brokerage must not coerce a borrower, mortgage lender or investor to
obtain a product or service from a particular person, including the mortgage
brokerage, as a condition for obtaining another service from the mortgage
brokerage.
(2) A mortgage brokerage is not coercing a borrower, mortgage lender or investor as
prohibited by subsection (1) if it offers the borrower, mortgage lender or investor
more favourable terms for a product or service than it would otherwise offer, and
the more favourable terms are offered on the condition that the borrower, mortgage
lender or investor obtain another product or service from a particular person,
including the mortgage brokerage.
Duty to return certain documents
11 A mortgage brokerage must promptly, without charge, return a deed, instrument or other
document to its owner.
Representing status of payment
12 (1) Except as provided in subsection (2), a mortgage brokerage must not, directly or
indirectly, represent to any person or entity that any amount payable to the
mortgage brokerage in connection with carrying on the business of a mortgage
brokerage is set or approved by any government authority.
(2) Subsection (1) does not apply with respect to disbursements that may be made by a
mortgage brokerage for fees payable to record instruments under the Land
Registration Act.
Duty to ensure suitability of mortgage for private investor
13 A mortgage brokerage required to act in the best interests of a private investor must take
reasonable steps to ensure that any investment in a mortgage that it presents for the
consideration of the private investor is suitable for the private investor having regard to
the needs and circumstances of the private investor.
Duty to verify identity
14 (1) A mortgage brokerage must take reasonable steps to verify the identity of each
borrower, investor and lender in a mortgage transaction that it offers to a borrower,
investor or lender.
(2) To verify the identity of a borrower or investor, a mortgage brokerage may rely on
confirmation from
(a) a mortgage lender; or
(b) a mortgage brokerage that represents the borrower or investor.
(3) A mortgage brokerage that is unable to verify the identity of another party to a
mortgage transaction that it offers to a borrower must advise the borrower of this
before the borrower enters into the mortgage agreement or mortgage renewal
agreement with the mortgage lender.
(4) A mortgage brokerage that is unable to verify the identity of another party to a
mortgage transaction that it offers to an investor must advise the investor of this
before the investment completion date.
(5) A mortgage brokerage that is unable to verify the identity of another party to a
mortgage transaction that it offers to a mortgage lender must advise the mortgage
lender of this before
(a) submitting the borrower’s mortgage application to the mortgage lender; or
(b) arranging for a mortgage renewal agreement with the mortgage lender.
Duty to disclose information to investors
15 (1) A mortgage brokerage must disclose all of the following to a lender or investor, or
a potential lender or investor:
(a) the nature of any relationship between the mortgage brokerage and any
other person involved in the mortgage transaction;
(b) any conflicts or potential conflicts of interest in connection with the
mortgage transaction;
(c) any material risks of a mortgage or investment in a mortgage.
(2) A mortgage brokerage must disclose to a lender or potential lender the information
required by subsection (1) before the lender provides a written commitment to fund
the mortgage.
Duty to provide information about remuneration for referral
16 A mortgage brokerage that refers a borrower or private investor or a prospective
borrower or private investor to another person for a fee or other remuneration must give
all of the following information in writing to the borrower or private investor or
prospective borrower or private investor either before or when making the referral:
(a) a description of the nature of the relationship between the mortgage
brokerage and the other person;
(b) a statement of whether the mortgage brokerage has received, may receive or
will receive a fee or other remuneration, directly or indirectly, for making
the referral.
Duty to advise respecting borrower’s legal authority
17 A mortgage brokerage that has reason to doubt a borrower’s legal authority to mortgage
a property must advise each prospective lender and investor of this at the earliest
opportunity.
Duty to advise of inaccuracy of mortgage application
18 A mortgage brokerage that has reason to doubt the accuracy of information contained in
a borrower’s mortgage application, or in a document submitted in support of the
application, must advise each prospective lender and investor of this at the earliest
opportunity.
Duty to inform if mortgage previously in default
19 A mortgage brokerage must not sell or attempt to sell, or arrange or attempt to arrange
the sale of, a mortgage that has been in default at any time in the previous 12 months
unless the mortgage brokerage clearly discloses the default and the amount and duration
of the default.
Duties to private investor after completing mortgage transaction
20 Promptly after completing a mortgage transaction with a private investor, a mortgage
brokerage must ensure that the private investor is provided with a copy of each of the
following:
(a) the recorded mortgage;
(b) the printout of the parcel register at the land registration office for the
property affected by the mortgage, showing the recording of the mortgage;
(c) the lawyer’s report, if any, with respect to the recording of the mortgage and
the effect of the mortgage transaction;
(d) the written disclosure provided to the borrower as required by the Cost of
Borrowing Disclosure Regulations.
Duties respecting reverse mortgages
21 (1) In this Section, “reverse mortgage” means a mortgage that satisfies both of the
following conditions:
(a) the money that is advanced under the mortgage does not have to be repaid
until the occurrence of 1 or more of the following events:
(i) the borrower’s death or, if there is more than 1 borrower, the death of
the last surviving borrower,
(ii) the acquisition by the borrower or, if there is more than 1 borrower,
the last surviving borrower of another dwelling to use as their
principal residence,
(iii) the sale of the mortgaged property,
(iv) the borrower or, if there is more than 1 borrower, the last surviving
borrower vacating the mortgaged property to live elsewhere with no
reasonable prospect of returning,
(v) an event of default under the conditions of the mortgage;
(b) 1 or more of the following conditions applies while the borrower or, if there
is more than 1 borrower, the last surviving borrower continues to occupy the
mortgaged property as their principal residence and otherwise complies with
the terms of the mortgage:
(i) no instalment repayments of the principal and no payment of interest
on the principal are due or capable of becoming due,
(ii) although interest payments may become due, no repayment of all or
part of the principal is due or capable of becoming due,
(iii) although interest payments and repayment of part of the principal
may become due, repayment of all of the principal is not due or
capable of becoming due.
(2) A mortgage brokerage must not arrange a reverse mortgage with a borrower unless
the mortgage brokerage receives from the borrower a written statement signed by a
lawyer stating that the lawyer has given the borrower independent legal advice
about the proposed reverse mortgage.
(3) Each mortgage brokerage that arranges a reverse mortgage must provide written
documentation to the borrower that illustrates the annual accumulation of interest
under the proposed reverse mortgage and the corresponding effect on the equity of
the borrower in the mortgaged property, for the period from the advancing of funds
until all of the equity of the borrower in the property is exhausted, with respect to
all of the following scenarios:
(a) the interest rate and the value of the property remain the same over the
period set out in the illustration;
(b) the interest rate remains the same over the period set out in the illustration
and the value of the property increases by 1% per year;
(c) if the interest rate is capable of increasing under the mortgage, the interest
rate increases by 2% per year after the 2nd year and remains the same for
the remaining period set out in the illustration, and the value of the property
increases by 1% per year;
(d) if the interest rate is capable of increasing under the mortgage, the interest
rate increases by 2% per year after the 2nd year and remains the same for
the remaining period set out in the illustration, and the value of the property
remains the same over the period set out in the illustration.
(4) In preparing the written documentation required by subsection (3), a mortgage
brokerage must assume that the borrower makes no payments under the mortgage
during the period set out in the illustration other than the payments required to be
paid under the mortgage.
Advance payment by borrower
22 (1) Except as provided in subsection (2), a mortgage brokerage must not charge,
collect or attempt to collect a fee from a borrower in relation to a mortgage to
which the Cost of Borrowing Disclosure Regulations apply until all of the
following have occurred:
(a) the mortgage lender has provided a written confirmation to fund the
mortgage;
(b) the commitment has been accepted by the borrower in writing;
(c) a copy of the signed commitment has been provided to the borrower.
(2) This Section does not apply with respect to actual fees disbursed by a mortgage
brokerage to third parties for credit reports, registration fees, courier services or
appraisal services if there is an existing written agreement between the mortgage
brokerage and the borrower that provides for the borrower to reimburse the
mortgage brokerage for these costs.
Receiving money from mortgage lender or investor
23 (1) A mortgage brokerage must not receive money from a lender or enter into an
agreement to receive money from a lender for any activity requiring a mortgage
brokerage licence unless an application has been made for a mortgage on a specific
property.
(2) A mortgage brokerage must not receive money from an investor or enter into an
agreement to receive money from an investor in connection with any activity
requiring a mortgage brokerage licence unless an existing mortgage is available on
a specific property.
Duty to establish policies and procedures
24 (1) A mortgage brokerage must establish and implement policies and procedures that
are reasonably designed to ensure that the mortgage brokerage and each mortgage
broker and associate mortgage broker who is authorized to broker mortgages on its
behalf complies with the requirements of the Act and its regulations, including all
of the following:
(a) describing the role of the mortgage brokerage in relation to borrowers,
lenders and investors and disclosing to a borrower, lender or investor the
mortgage brokerage’s relationship with each party to a transaction;
(b) taking steps to verify the identity of borrowers, lenders and investors;
(c) determining the suitability of a mortgage or investment in a mortgage for a
borrower, lender or private investor;
(d) identifying the material risks of a mortgage or investment in a mortgage for
a borrower, lender or investor and disclosing the material risks to the
borrower, lender or investor;
(e) identifying potential conflicts of interest between the mortgage brokerage or
any mortgage broker or associate mortgage broker authorized to broker
mortgages on its behalf and a borrower, lender or investor that is
represented by the mortgage brokerage, and disclosing a potential conflict of
interest to the borrower, lender or investor;
(f) any incentives other than money provided by other persons to its mortgage
brokers and associate mortgage brokers for brokering mortgages, if the
mortgage brokerage permits any of its mortgage brokers or associate
mortgage brokers to receive those incentives;
(g) resolving complaints about its mortgage brokerage activities or those of any
mortgage broker or associate mortgage broker authorized to broker
mortgages on its behalf.
(2) A mortgage brokerage must establish and implement policies and procedures
providing for the adequate supervision of every mortgage broker and associate
mortgage broker who is authorized to broker mortgages on its behalf.
Authorizing mortgage brokers
25 (1) A mortgage brokerage must not authorize an individual to broker mortgages on its
behalf unless the mortgage brokerage takes reasonable steps to satisfy itself that the
individual is eligible to be licensed as a mortgage broker or associate mortgage
broker.
(2) A mortgage brokerage must immediately notify the Registrar on becoming aware
that there may be reasonable grounds for the Registrar to determine that a
mortgage broker or associate mortgage broker is not eligible to be licensed as a
mortgage broker or associate mortgage broker.
Fees and remuneration paid to unlicensed persons
26 (1) A mortgage brokerage must not pay a fee or other remuneration to an unlicensed
person for any activity requiring a licence unless the other person is exempt from
the requirement to hold a licence for that activity under the Exemption Regulations
made under the Act.
(2) A mortgage brokerage must not pay a fee or other remuneration to an individual
licensed to broker mortgages on behalf of another mortgage brokerage.
Duty to act with integrity, independence and competence
27 A mortgage brokerage must always act with integrity, independence and competence
when carrying on the business of brokering mortgages.
The following regulations are not
yet in force and are not included in the current consolidation: