Chapter 5: Licensing Flashcards
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.
True
True or False Questions
Borrowers are entitled to the following information, only if they ask: brokerage name and license number.
False – this information must be provided in all circumstances.
True or False Questions
It is a good idea for a brokerage to have a complaints process but this is not required by law.
False – the MBLAA requires that every brokerage have a complaints process.
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
True
True or False Questions
A sole proprietorship must establish its eligibility for licensure as a mortgage brokerage whereas a corporation does not.
False – every entity applying for a brokerage license must establish its eligibility
True or False Questions
Under certain circumstances, FSRA may suspend a broker’s license without warning.
True
True or False Questions
No changes may be made to the Regulations without going through the formal process of receiving Royal Assent.
False – The Regulations may be amended without going through that process which is required for Bills.
True or False Questions
FSRA is only concerned with one sector, the mortgage brokerage industry.
False – it regulates several other financial services industries, including the insurance industry.
True or False Questions
Standards of Practice are guiding principles that businesses are encouraged to implement.
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.
True or False Questions
Regulatory decisions by FSRA are final, based on the powers conferred upon the position.
False – Decisions may be appealed to the Tribunal and to civil court.
True or False Questions
As per the MBLAA, there are currently three different licenses in the mortgage brokerage industry.
False – there are currently four: brokerage, broker, agent and administrator.
True or False Questions
The principal broker designation was created by the MBLAA to address compliance issues within the brokerage.
True
True or False Questions
FSRA staff may visit a brokerage within the FSRA registry to examine documents and records.
True
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.”
False – this is the definition of a mortgage administrator
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.
False – Both a Broker and an Agent can only work for one brokerage at a time.
What are the educational requirements to obtain a mortgage agent’s license?
An individual must take and pass a licensing course approved by FSRA, such as REMIC’s RMAC course.
What is/are the difference(s) between getting a mortgage agent’s license and a mortgage broker’s license?
A mortgage broker has taken an additional course and has been a licensed mortgage agent for at least two years.
Describe the duties and responsibilities of the principal broker.
This individual is responsible for all aspects of the brokerage’s compliance.
What administrative penalties may be imposed on a brokerage, broker or agent?
(3)
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
What is the difference between an offence under the MBLAA and an administrative penalty?
An offence is a serious charge under the MBLAA, while an administrative penalty is a more minor contravention of the legislation.
List the circumstances in which an individual would be deemed unsuitable to be granted a mortgage broker’s license.
(3)
- 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
Describe the complaints policy that a brokerage must have to comply with the MBLAA and its Regulations.
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.
What information must be included in every public relations item?
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.
List the items that must be disclosed to a borrower in a disclosure document.
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
