Chapter 5 - Regulation and Legislation (Short Answer)

Question 1

What are the educational requirements to obtain a Mortgage Agent’s license?

Answer 1

Pass a licensing course approved by FSCO

Question 2

Name 3 characteristics of a mortgage broker

Answer 2

Mortgage Broker:

1) taken additional education
2) has been a licensed Agent for at least two years
3) a Mortgage Broker can be a Principal Broker and manage Agents

Question 3

Describe the main duty and responsibility of the principal broker

Answer 3

Responsible for compliance of the brokerage

Question 4

What administrative penalties may be imposed on a brokerage, Broker or Agent?

Answer 4

• up to $25,000 for a brokerage or Administrator

- up to $10,000 for a Broker or Agent

Question 5

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

Answer 5

1) their past conduct gives grounds for belief that he or she will not deal or trade in mortgage according to the law
2) the individual is carrying on activities that contravene or will contravene the MBLAA or its Regulations
3) made a false statement in their license application

Question 6

Describe the complaints policy that a brokerage must have to comply with the MBLAA and its Regulations (2)

Answer 6

1) The brokerage must respond in writing AND be documented

2) Refer the complaint to the Superintendent

Question 7

What information must be included in every public relations item?

Answer 7

1) Brokerage Name and License Number
If the brokerage is a franchise, it must state that it is independently owned and operated.

2) Title
“i.e., John Smith, Mortgage Broker” or “Broker”

Question 8

List the items that must be disclosed to a borrower in a disclosure document (MC RPD)

Answer 8

• Mortgages previously in default
• Cost of borrowing
• Risks
• Potential conflicts of interest (i.e., giving the borrower a higher rate in exchange for a higher commission)
• Disclosure of the brokerage’s relationships

Question 9

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

Answer 9

$1 million of coverage per year

and a minimum of $500,000 of coverage per occurrence

Question 10

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

Answer 10

6 years

Question 11

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

Answer 11

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

Question 12

What is the MBLAA stand for? What is it?

Answer 12

MBLAA = Mortgage Brokerages, Lenders and Administrators Act.

It is the principal legislation governing the MTG industry

Question 13

What are the 3 things the FSRA is empowered to do?

Answer 13

1) issue or refuse to issue a license
2) Impose or amend conditions on a license
3) renew or refuse to renew a license

Question 14

If the FSRA were to impose administrative penalties, how many days would you have to request a hearing before the Financial Services Tribunal?

Answer 14

15 days

Question 15

According to the MBLAA’s Standards of Practice, what 2 things must an agent/broker provide on all advertising and PR materials?

Answer 15

1) Their licensee Name
2) Their Brokerage’s name and license number

A broker/Agent MUST provide this info to anyone who asks for it

Question 16

A broker or agent must be paid directly by_____ for any activity related to dealing or trading in mortgages

Answer 16

the brokerage

Question 17

The regulation state that a broker/agent must maintain a ______ and ____ for all communications

Answer 17

mailing address and email address

Question 18

Who is the chief compliance officer within a brokerage?

Answer 18

The Principal Broker