Mortgage Brokers Act Flashcards
Identify two types of penalties that a professional organization’s disciplinary committee could impose on its members.
- Reprimand
- Monetary Fine
- Suspension of Membership Privileges
- Expulsion from Membership Board
- Completion of certain courses
The statute that prescribes disclosure to borrowers in the form of a Disclosure Statement, Notice or Statement of Account is the…
Business Practices and Consumer Protection Act
TRUE OR FALSE? A situation in which a mortgage broker’s advice to one party may be influenced by the interests of another party is a conflict of interest
TRUE
Ethical codes of conduct have the same force of law as statutes.
False. Ethics do not substitute the law
The duty of professional courtesy and good faith is a part of the general duty to the ______ .
The Profession
Most ethical codes of conduct are passed by government agencies.
(1) True
(2) False
FALSE
Performing multiple roles in the same transaction or arranging a mortgage for a borrower and funding the same mortgage as a lender are examples of when a mortgage broker is in a ______ ______ ______.
Conflict of Interest
A mortgage _________ collects mortgage payments and forwards them to the lender
Administrator
A representation by a supplier, or any other conduct by a supplier, that has the capability, tendency, or effect of deceiving or misleading a consumer or guarantor is known as:
A deceptive act or practice
What is the largest voluntary professional organization of mortgage brokers in British Columbia?
Mortgage Brokers Association of BC
(MBABC)
The provincial agency with the authority to administer the Mortgage Brokers Act and Regulations is the _______ _______ _______.
BC Financial Services Authority
(BCFSA)
TRUE or FALSE? Only individuals may be registered as submortgage brokers.
TRUE
The two levels of activity requiring registration under the Mortgage Brokers Act are _______ _______ and _______ _______.
- Mortgage Broker
- Submortgage Broker
Who can register as a Mortgage Broker?
- Individual
- corporation
- firm
- partnership
- association
- syndicate
- unincorporated organizations
Define Submortgage Broker
any person who engages in the activities of a mortgage broker, and is employed by a director, or partner, of a mortg broker
Define who a Mortgage Broker is
Person who…
1. Carries on a business of lending money secured by mortgages whether it is of its own or someone elses
2. Uses advertisements, signs that indicate he/she is a mortgage broker
3. Carries on business of buying/selling mortgs for sale.
4. receives fees of $1000 or more or other consideration
5. lends money on security of 10 or more mortgs.
6. Carries on a business of collecting money secured by mortgs.
List the offences under section 21 and 22 of the MBA
- Does business as a Mortg broker or submortg broker unless registered under the act
- employs as a submortg broker any person not registered under act
List the penalties under section 21 and 22 of the MBA
- First Conviction: Fine of $100,000 or prison time up to 2 years or both.
- Each conviction after that: Fine of up to $200,000 or prison time up to 2 years, or both.
Corps: First conviction, fine of up to $100,000 and fine of $200,000 every conviction after that
Explain Mortgs. Not Voided by Failure to Register
Section 13 States…
1. no mortgage rendered void/unenforceable due to failure of person to register properly under act
2. Effect of this retroactive to Jan.1, 1972
3. Designed to give certainty to lenders and borrowers that a mortg transac. will not collapse
Who is exempt from Registration under the MBA
- Insurance Companies licensed under Financial Institutions Act
- Banks under Bank Act
- Credit Unions
- Extra Provincial Trust Companies
- Lawyer, if transac. is made during their practice
- Any person acting for govt/govt agency
- liquidator, reciever, trustee in bankruptcy
- person or employee of person lending money on security of land to provide housing for persons employee
- Any other person exempt by registrar
Explain Registrars powers of Investigation
Section 5 and 6 States under its own claim, or response to a claim can…
1. Investigate any matter arising out of the Act or Regulations
2. enter brokerage offices
3. inspect all books
4. seize all relevant information
5. Convict you for contempt of court for refusal of comply with registrar.
Registrar has same power as a court to enforce attendance of witnesses, and compel them to give evidence.
When can registrar enforce disciplinary action?
- Person not suitable for reg. or continued reg is objectionable
- person breaches act, regs. or conditions
- Provide false, or misleading statement of facts, or omitted important info
- conducts business that is against the public interest
- Person breached BPCPA that are incorp. in MBA
What is the extent of the administrative penalty when someone has breached the act, regulations
Penalty of up to $50,000
Explain Right of Appeal
Section 9 states…
A person affected by a decision of the Registrar may appeal to Financial Services Tribunal. (Governed by F.I.A)
When is the Disclosure to Borrower required?
Part 5 of BPCPA…
- Came into effect July 1, 2006
- Disclosure given to people who borrow for personal, family, house hold purposes.
- Must be submitted regardless of additional charges of fees or expenses.
What is the purpose of Disclosure to Borrower
- Protection of Mortgage consumers
- Ensure that mortgage borrowers understand their mortg. transactions
When is Disclosure to Investors/Lenders Required?
Section 17.1 of form 9 states a disclosure must be given when…
1. Broker arranges mortg. for mortgagee
2. Arranges mortgagees interest in mortg. to another person
3. Broker sells interest in mortgagee to another person
NOTE: Written disclosure must be provided to other person
Purpose of Disclosure to Investors/Lenders
Purpose of Section 17.1 is…
1. Ensure those lending money, investing in mortg. get basic info about transac.
2. May owe duty to lender, to ensure investment is suitable for them
3. To comply with statutory requirements
NOTE: Must retain form for 7 years
When is Conflict of Interest Disclosure Required?
- Must be provided to borrower and lender
- Forms must be Identical
- Must use Form 10
- Disclose Direct and Indirect interest
Direct: Known right away, comes directly from transac. (EG. Commissions, Loyalty/Rewards points)
Indirect: Interest not known right away, or obviously (EG. Trailer Fees, fees paid by lender, preferential pricing based on volume and efficiency
Explain Contents of Disclosure to Borrowers and Lenders
In Form 10, broker must include…
1. Name, Phone number, and address of mortg. broker
2. Info or property being mortgaged ( Address, Legal Description, Postal Code)
3. Direct or indirect interests of mortgage broker
4. Direct or indirect interests of related parties or associates of mortg. broker
