Mortgage Administrator Disclosure Requirements

This overview was developed to help mortgage administrators (administrators) comply with disclosure requirements under the new Mortgage Brokers Act and rules. Administrators must provide private investors disclosure and obtain written acknowledgment regarding conflict of interest, remuneration, administration agreements and mortgage(s) held in trust. These requirements are set out in the law—they are not suggestions.

Timing of disclosure

Every disclosure of information to a private investor must be made at the earliest opportunity and, in any case, no later than two business days before the administrator and the private investor enter into a mortgage administration agreement for the applicable mortgage. If the private investor consents in writing to receiving the disclosure after the deadline, the disclosure may instead be made no later than one business day before the administrator and the private investor enter into a mortgage administration agreement for the applicable mortgage.

Within ten days after the administrator and private investor enter into an agreement, the administrator must provide a copy of the agreement to the private investor.

Maintenance of records

An administrator must retain all books, records and documents for a minimum period of seven years after the date of the transaction to which the books, records or documents relate.

Format of disclosure

All required documents must be in writing and express information clearly, concisely, in a logical order and in a manner that is likely to bring the information to the reader’s attention.

Conflict of interest disclosure

Every administrator must provide a private investor with the following information in writing:

• whether the administrator or any related person has or may have an interest in the proposed administration transaction
• if the administrator or any related person has such an interest, the nature of that interest

The administrator must obtain the borrower’s written acknowledgement that the administrator made the required disclosure.

Remuneration disclosure

An administrator must give the following information, in writing, to a private investor in connection with the administration of a mortgage:

• whether the administrator has received, may receive, or will receive a fee or other remuneration, directly or indirectly, from another person in connection with the administration of the mortgage
• if a fee or other remuneration is or may be payable to the administrator, the identity of the other person, the basis for calculating the amount of the fee or other remuneration and, in case of a benefit other than money, the nature of the benefit
• whether the administrator has paid, may pay, or will pay a fee or other remuneration, directly or indirectly, to another person in connection with the administration of the mortgage
• if a fee or other remuneration is or may be payable, the identity of the other person, the basis for calculating the amount of the fee or other remuneration and, in case of a benefit other than money, the nature of the benefit.

The administrator must obtain the written acknowledgement of the private investor that the administrator made the required disclosure.

Mortgage administration agreement

The agreement entered into between an administrator and a private investor must include terms and conditions that require the administrator to do all of the following:

• promptly remit to the private investor all payments due and owing to the private investor under the mortgage that is the subject of the agreement
• immediately notify the private investor on becoming aware of any of the following changes with respect to the property that is the subject of the agreement:
  • any subsequent encumbrance on the property
  • any change in the use of the property
  • any change in the amount or nature of insurance coverage on the property
  • any other significant change in circumstances affecting the property
• provide to the private investor an annual statement of payments made by the borrower that indicates:
  • the total amount of payments received from the borrower during the statement period
  • the amount of the payments applied to principal and to interest
  • the outstanding principal balance of the mortgage at the end of the statement period
  • the total amount of fees or other remuneration received by the administrator for administering the mortgage during the statement period
• immediately notify the private investor on becoming aware of any default under the mortgage
• The agreement entered into between an administrator and a private investor must contain:
• the name under which the mortgage is or will be registered in the land titles office or registered under the laws of another jurisdiction in Canada
• a list of all fees or other remuneration that the administrator is to receive for the administration of the mortgage, including the method of calculation and payment
• any other expenses or costs related to the mortgage that will be charged to the private investor
• the extent of the responsibilities of the administrator and the private investor for decisions respecting:
  • the collection of money under the mortgage
  • the prepayment of principal under the mortgage
  • discharges and partial discharges of the mortgage
  • the commencement or continuation of enforcement proceedings under the mortgage
• the responsibility of the administrator to inform himself or herself as to the changes with respect to the property
• the disposition to be made of all payments made under the mortgage by the borrower, including any penalties and bonuses
• any conditions and restrictions with respect to the right of the private investor to terminate the agreement or assign his or her interest in the agreement
• if the mortgage is held in trust, the details of the trust

Mortgage(s) in trust

A mortgage is held in trust if held in the name of an administrator, but only if another person:

• holds an interest in that mortgage, or
• is entitled to share in the proceeds of that mortgage

No person can receive or hold a mortgage in trust unless they hold an administrator licence, and if receiving or holding a mortgage on behalf of a private investor, has a trust agreement (see below) and a mortgage agreement, assignment of mortgage or other instrument conveying the mortgage, or portion of a mortgage, to the person:

• has been duly executed
• expressly states that the person is acting as a trustee for an investor

Every administrator that receives a mortgage in trust must ensure that the interests of the beneficiaries in the mortgage are registered in the land titles registry against the administrator’s interest in the mortgage.

Trust agreement

With respect to the receiving or holding of trust money, the written trust agreement must contain:

• an express acknowledgment of the trust
• the terms on which the trust money is to be received, held and disbursed
• a term that requires that all withdrawals of money from the trust account for remuneration to a mortgage brokerage or administrator, be done by way of cheque, or electronic transfer, payable to the general account of the mortgage brokerage or administrator

With respect to holding a mortgage in trust, the written trust agreement must:

• include a description of the interest in the mortgage that is the subject of the trust, including, if the interest represents less than the entire mortgage, the percentage of the mortgage that the interest represents
• set out the terms of the trust
• have appended to it a copy of the mortgage agreement that creates the interest that is the subject of the trust

The written trust agreement and the written administrative agreement may be combined into one agreement.