Standards of Conduct for Mortgage Lenders Regulations

made under Section 90 of the

Mortgage Regulation Act

S.N.S. 2012, c. 11

N.S. Reg. 128/2020 (effective November 1, 2021)

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 multiple investors in a mortgage

Standards of conduct

Information to be contained in advertisement

Information to be disclosed in correspondence

Duty to provide licence number

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 borrower or private investor

Duty to verify identity

Duty to disclose information

Duty to provide information about remuneration for referral

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 investor

Duty to establish policies and procedures

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 Lenders 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 multiple investors in a mortgage

3 If more than 1 investor invests in a mortgage, the mortgage lender owes to each of the investors the duties to investors imposed by these regulations in respect of the investment.

Standards of conduct

4 The requirements set out in these regulations are prescribed as standards of conduct for every licensed mortgage lender.

Information to be contained in advertisement

5 For a mortgage lender whose name as set out on its license is, or includes, a franchise name that the mortgage lender is permitted to use under a franchise agreement, a statement clearly indicating that the mortgage lender is independently owned and operated is prescribed as the information required to be contained in an advertisement by clause 58(2)(b) of the Act.

Information to be disclosed in correspondence

6 (1) All of the following is prescribed as the information required to be disclosed under subsection 60(1) of the Act by a mortgage lender in all correspondence and other written material prepared or used in the course of the business:

(a) the mortgage lender’s name as set out on its licence;

(b) the mortgage lender’s licence number;

(c) for a mortgage lender whose name as set out on its licence is, or includes, a franchise name that the mortgage lender is permitted to use under a franchise agreement, a statement clearly indicating that the mortgage lender 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 number

7 When requested, a mortgage lender must give a person its licence number.

Duty to respond to complaint

8 On receiving a written complaint about its mortgage lender activities, a mortgage lender must give the complainant a written response that contains all of the following:

(a) the mortgage lender’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 lender must not lend money on the security of a mortgage if the mortgage lender 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 lender must not coerce a borrower or investor to obtain a product or service from a particular person, including the mortgage lender, as a condition for obtaining another product or service from the mortgage lender.

(2) A mortgage lender is not coercing a borrower or investor as prohibited by subsection (1) if it offers the borrower 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 or investor obtain another product or service from a particular person, including the mortgage lender.

Duty to return certain documents

11 A mortgage lender 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 lender must not, directly or indirectly, represent to any person that any amount payable to the mortgage lender in connection with mortgage lending 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 lender for fees payable to record instruments under the Land Registration Act.

Duty to ensure suitability of mortgage for borrower or private investor

13 (1) A mortgage lender must take reasonable steps to ensure that any mortgage that it presents for the consideration of a borrower is suitable for the borrower having regard to the needs and circumstances of the borrower.

(2) A mortgage lender must take reasonable steps to ensure that any investment in a mortgage that it presents for the consideration of a 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 lender must take reasonable steps to verify the identity of each borrower and investor in a mortgage transaction that it offers to a borrower or investor.

(2) To verify the identity of a borrower or investor, a mortgage lender may rely on confirmation from a mortgage brokerage that represents the borrower or investor.

(3) A mortgage lender 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 lender 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.

Duty to disclose information

15 (1) A mortgage lender must disclose all of the following to a borrower or investor, or a potential borrower or investor:

(a) the nature of any relationship between the mortgage lender and any other person involved in the mortgage transaction;

(b) any conflicts or potential conflicts of interest in connection with the mortgage transaction;

(2) A mortgage lender must disclose to a borrower or potential borrower the information required by subsection (1) before the borrower signs the mortgage.

Duty to provide information about remuneration for referral

16 A mortgage lender 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 lender and the other person;

(b) a statement of whether the mortgage lender has received, may receive or will receive a fee or other remuneration, directly or indirectly, for making the referral.

Duty to inform if mortgage previously in default

17 A mortgage lender 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 lender clearly discloses the default and the amount and duration of the default.

Duties to private investor after completing mortgage transaction

18 Promptly after completing a mortgage transaction with a private investor, a mortgage lender 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

19 (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 lender must not enter into a reverse mortgage with a borrower unless the mortgage lender 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 lender that enters into 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, in each 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 lender 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

20 (1) Except as provided in subsection (2), a mortgage lender 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 commitment to fund the mortgage;

(b) the commitment has been accepted by the borrower in writing;

(2) This Section does not apply with respect to actual fees disbursed by a mortgage lender to third parties for credit reports, registration fees, courier services or appraisal services if there is an existing written agreement between the mortgage lender and the borrower that provides for the borrower to reimburse the mortgage lender for these costs.

Receiving money from investor

21 A mortgage lender must not receive money from an investor or enter into an agreement to receive money from an investor for any investment in mortgages unless an existing mortgage is available on a specific property.

Duty to establish policies and procedures

22 (1) A mortgage lender must establish and implement policies and procedures that are reasonably designed to ensure that the mortgage lender and each person acting on its behalf in the business of mortgage lending complies with the requirements of the Act and its regulations, including all of the following:

(a) disclosing the mortgage lender’s relationship to each party in a transaction;

(b) taking steps to verify the identity of borrowers and investors;

(d) resolving complaints about its mortgage lending activities;

(e) identifying the material risks of a mortgage or investment in a mortgage for a borrower or investor and disclosing the material risks to the borrower or investor;

(f) identifying potential conflicts of interest between the mortgage lender and any other person involved in a mortgage transaction and disclosing any potential conflict of interest to the borrower or investor.

(2) A mortgage lender must establish and implement policies and procedures providing for the adequate supervision of each person acting on its behalf in the business of mortgage lending.

Fees and remuneration paid to unlicensed persons

23 A mortgage lender 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.

Duty to act with integrity, independence and competence

24 A mortgage lender must always act with integrity, independence and competence when carrying on the business of mortgage lending.

The current consolidation of the Standards of Conduct for Mortgage Lenders Regulations made under the Mortgage Regulation Act includes all of the following regulations:

The following regulations are not yet in force and are not included in the current consolidation:

*See subsection 3(6) of the Regulations Act for rules about in force dates of regulations.

Note: Only regulations that are specifically repealed and replaced appear in this table. It may not reflect the entire history of regulations on this subject matter.

N.S. Regulation	In force date*	How in force	Royal Gazette Part II Issue
128/2020	Nov 1, 2021	date specified (date that Act comes into force on proclamation)	Oct 9, 2020

N.S. Regulation	In force date*	How in force	Royal Gazette Part II Issue

ad. = added am. = amended	fc. = fee change ra. = reassigned		rep. = repealed rs. = repealed and substituted
Provision affected		How affected
..........................................................

N.S. Regulation	Title	In force date	Repealed date

Standards of Conduct for Mortgage Lenders Regulations	N.S. Reg. 128/2020
Mortgage Regulation Act
Note: The information in these tables does not form part of the regulations and is compiled by the Office of the Registrar of Regulations for reference only.

	Note	Effective date