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Mortgage Brokering in Ontario > Chapter 5: Licensing > Flashcards

Chapter 5: Licensing Flashcards

1
Q

True or False Questions

A brokerage must disclose to a borrower if one of its Agents will receive a fee from a lender in connection with the mortgage renewal.

A

True

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2
Q

True or False Questions

Borrowers are entitled to the following information, only if they ask: brokerage name and license number.

A

False – this information must be provided in all circumstances.

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3
Q

True or False Questions

It is a good idea for a brokerage to have a complaints process but this is not required by law.

A

False – the MBLAA requires that every brokerage have a complaints process.

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4
Q

True or False Questions

FSRA has the authority to refuse to grant a license to a brokerage if it thinks the name might confuse the public with another existing brokerage

A

True

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5
Q

True or False Questions

A sole proprietorship must establish its eligibility for licensure as a mortgage brokerage whereas a corporation does not.

A

False – every entity applying for a brokerage license must establish its eligibility

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6
Q

True or False Questions

Under certain circumstances, FSRA may suspend a broker’s license without warning.

A

True

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7
Q

True or False Questions

No changes may be made to the Regulations without going through the formal process of receiving Royal Assent.

A

False – The Regulations may be amended without going through that process which is required for Bills.

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8
Q

True or False Questions

FSRA is only concerned with one sector, the mortgage brokerage industry.

A

False – it regulates several other financial services industries, including the insurance industry.

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9
Q

True or False Questions

Standards of Practice are guiding principles that businesses are encouraged to implement.

A

False – these are principles that a brokerage is required to implement. Failure to meet the standards of practice is deemed a contravention of the MBLAA and subjects the brokerage to fines or other penalties.

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10
Q

True or False Questions

Regulatory decisions by FSRA are final, based on the powers conferred upon the position.

A

False – Decisions may be appealed to the Tribunal and to civil court.

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11
Q

True or False Questions

As per the MBLAA, there are currently three different licenses in the mortgage brokerage industry.

A

False – there are currently four: brokerage, broker, agent and administrator.

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12
Q

True or False Questions

The principal broker designation was created by the MBLAA to address compliance issues within the brokerage.

A

True

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13
Q

True or False Questions

FSRA staff may visit a brokerage within the FSRA registry to examine documents and records.

A

True

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14
Q

True or False Questions

The role of the brokerage may be defined as “taking steps, on behalf of another person or entity, to enforce payment by a borrower under a mortgage.”

A

False – this is the definition of a mortgage administrator

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15
Q

True or False Questions

A Mortgage broker may work only for one brokerage whereas a Mortgage agent may be employed by several brokerages at the same time.

A

False – Both a Broker and an Agent can only work for one brokerage at a time.

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16
Q

What are the educational requirements to obtain a mortgage agent’s license?

A

An individual must take and pass a licensing course approved by FSRA, such as REMIC’s RMAC course.

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17
Q

What is/are the difference(s) between getting a mortgage agent’s license and a mortgage broker’s license?

A

A mortgage broker has taken an additional course and has been a licensed mortgage agent for at least two years.

18
Q

Describe the duties and responsibilities of the principal broker.

A

This individual is responsible for all aspects of the brokerage’s compliance.

19
Q

What administrative penalties may be imposed on a brokerage, broker or agent?

(3)

A

As of February 1, 2022, there are three separate penalties that may be imposed.
Mortgage brokerage or Administrator, up to a maximum of $500,000
Broker or agent, up to a maximum of $100,000, and
Anyone else not licensed, up to a maximum of $500,000

20
Q

What is the difference between an offence under the MBLAA and an administrative penalty?

A

An offence is a serious charge under the MBLAA, while an administrative penalty is a more minor contravention of the legislation.

21
Q

List the circumstances in which an individual would be deemed unsuitable to be granted a mortgage broker’s license.

(3)

A
  • the individual’s past conduct affords reasonable grounds for belief that he or she will not deal or trade in mortgage in accordance with the law and with integrity and honesty
  • the individual is carrying on activities that contravene or will contravene the MBLAA or its Regulations
  • the individual has made a false statement in his or her application for a license
22
Q

Describe the complaints policy that a brokerage must have to comply with the MBLAA and its Regulations.

A

The brokerage must have a complaints process so that if an individual makes a complaint to the brokerage in writing, the brokerage must respond in writing, also indicating that if the complainant believes that the brokerage has contravened the MBLAA he or she may refer the complaint to the Superintendent. All complaints must be documented and handled by one or more authorized individuals.

23
Q

What information must be included in every public relations item?

A

A brokerage must use its authorized name when conducting any business, and it must prominently include its authorized name and license number in all of its public relations materials. If the brokerage is a franchise, it must state that it is independently owned and operated.

24
Q

List the items that must be disclosed to a borrower in a disclosure document.

A

The brokerage must inform the borrower, lender or investor, in writing, as to the “material risks of each mortgage or investment in a mortgage that the brokerage presents for the consideration of the borrower, lender or investor,” and obtain written acknowledgment that this disclosure has been made. Other disclosure obligations include disclosure of the brokerage’s relationships, potential conflicts of interest, mortgages previously in default and of the cost of borrowing, the latter disclosure being very explicit

25
Q

What amount of errors and omissions insurance must a brokerage have to comply with the MBLAA?

A

Errors and Omissions insurance must be a minimum of $1 million of coverage per year, and a minimum of $500,000 of coverage per occurrence. It must also include a provision for loss resulting from fraudulent acts.

26
Q

What is the amount of time that records of a mortgage transaction are required to be kept by the brokerage?

(1)

A
  • A brokerage must retain all records as follows:
    1. that relate to a mortgage or mortgage renewal agreement, as the case may be, for at least six years after the expiry of the term of the mortgage or renewal or other expiry of the mortgage transaction
    2. all records that relate to a purchase, sale or trade in a mortgage for at least six years after the trade completion date or other expiry of the transaction O. Reg. 188/08, s. 48 (2)
    3. for at least six years all other records that are required by subsection 46 (1) or that the brokerage is otherwise required to create or maintain under the Act. O. Reg. 188/08, s. 48 (3)
27
Q

What types of funds must be deposited into a trust account?

A

Any funds payable to another party in the transaction or that are a deposit against a broker fee.

28
Q

What information must be provided to a potential private lender before they can commit to funding a mortgage?

A

All information that is necessary to ensure that the proposed mortgage is suitable for the investor having regard to the needs and circumstances of the investor

29
Q

What titles (e.g., broker, agent, etc.) must/can be used by brokers and agents in advertising materials?

A

The MBLAA restricts the use of the titles “mortgage brokerage,” “mortgage broker,” “mortgage agent,” “Mortgage Administrator” and their French equivalents to persons and entities licensed as such under the MBLAA. This prohibition includes using abbreviations such as mtg. broker, or their equivalents in another language. Therefore, if an individual is licensed, he or she must use either broker or agent as his or her title (or the other options previously listed, including abbreviations). Unlicensed individuals cannot use those titles.

30
Q

What is the purpose of the MBRCC?

A

It is a forum for Canadian mortgage broker regulators to collaborate and promote regulatory consistency to serve the public interest.

31
Q

Define disclosure

A

act of revealing something or making something evident

32
Q

Define regulate

A

to govern or direct according to rule, to make regulations for or concerning an industry

33
Q

MBLAA regulates the following activities

(4)

A
  • dealing in mortgages
  • trading in mortgages
  • carry on business as a lender
  • carry on business of administering mortgages
34
Q

How do you regulate dealing in mortgages

(4)

A
  • soliciting another person to borrow or lend money on real property
  • providing information about prospective borrower to a prospective mortgage lender
  • assessing a prospective borrower on behalf of the mortgage lender
  • negotiation or arranging a mortgage
35
Q

How do you regulate trading in mortgages

(3)

A
  • soliciting another person or entity to buy, sell, or exchange
  • buying, selling, or exchanging mortgage on behalf of another person
  • buying, selling, or exchanging mortgages on the person entity on behald
36
Q

Define Licensure

A

permission granted by an agency of government to an individual or entity to engage in a given profession or occupation

37
Q

Four licenses in mortgages are

(4)

A
  • mortgage brokerage license
  • mortgage broker license
  • mortgage agent license
  • mortgage administrator license
38
Q

Exemption of licenses

(5)

A
  • simple referral
  • lawyers
  • lenders
  • vendor take back
  • securities act
39
Q

Error and omission insurance

A

insurance that provides coverage for error by a brokerage, broker, or agent

40
Q

Managing the mortgage brokerage

(7)

A
  • establishing and implementing policies and procedures to supervise and ensure the mortgage brokerage and its mortgage brokers and agents comply with the law
  • screen and monitor all your mortgage brokers/agents
  • establish a complaints process for resolving complaints from the public
  • maintain error and omission insurance
  • file an annual information return
  • maintain a mailing address in Ontario that is suitable for service by registered mail
  • notify FSRA witin 5 days of any changes
41
Q

How to keep records

(4)

A
  • maintain complete and accurate records
  • take adequate precautions to guard against falsification of records or improper access to clients personal information
  • retain all records that the mortgage brokerage is require to amintain for at least six years
  • store all records in the main office
42
Q

administrative penalties

A

penalty assessed by FSRA for less serious contraventions of or failure to comply with MBLAA

Mortgage Brokering in Ontario (24 decks)

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