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Part II .

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Standards of Conduct for Mortgage Lenders Regulations

made under

Section 90 of the

Mortgage Regulation Act

S.N.S. 2012, c. 11

N.S. Reg. 128/2020 (effective November 1, 2021)

Table of Contents

Please note: this table of contents is provided for convenience of reference and does not form part of the regulations.

Click here to go to the text of the regulations .

Citation

Definitions

Duties to multiple investors in a mortgage

Standards of conduct

Information to be contained in advertisement

Information to be disclosed in correspondence

Duty to provide licence number

Duty to respond to complaint

Entering into unlawful transaction

Restriction on tied selling

Duty to return certain documents

Representing status of payment

Duty to ensure suitability of mortgage for borrower or private investor

Duty to verify identity

Duty to disclose information

Duty to provide information about remuneration for referral

Duty to inform if mortgage previously in default

Duties to private investor after completing mortgage transaction

Duties respecting reverse mortgages

Advance payment by borrower

Receiving money from investor

Duty to establish policies and procedures

Fees and remuneration paid to unlicensed persons

Duty to act with integrity, independence and competence

Citation

1 These regulations may be cited as the Standards of Conduct for Mortgage Lenders

Regulations .

Definitions

2 In these regulations,

“Act” means the Mortgage Regulation Act ;

“ Cost of Borrowing Disclosure Regulations ” means the Cost of Borrowing

Disclosure Regulations made under the Act;

“investment completion date”, in relation to a mortgage, means the earlier of the

following dates:

(

i) the date that an investor, or a mortgage brokerage on behalf of an

investor, enters into an agreement to invest in the mortgage,

(ii) the date that the investment in the mortgage is completed.

Duties to multiple investors in a mortgage

3 If more than 1 investor invests in a mortgage, the mortgage lender owes to each of the

investors the duties to investors imposed by these regulations in respect of the

investment.

Standards of conduct

4 The requirements set out in these regulations are prescribed as standards of conduct for

every licensed mortgage lender.

Information to be contained in advertisement

5 For a mortgage lender whose name as set out on its license is, or includes, a franchise

name that the mortgage lender is permitted to use under a franchise agreement, a

statement clearly indicating that the mortgage lender is independently owned and

operated is prescribed as the information required to be contained in an advertisement by

clause 58(2)(

b) of the Act.

Information to be disclosed in correspondence

(1) All of the following is prescribed as the information required to be disclosed under

subsection 60(1) of the Act by a mortgage lender in all correspondence and other

written material prepared or used in the course of the business:

(

a) the mortgage lender’s name as set out on its licence;

(

b) the mortgage lender’s licence number;

(

c) for a mortgage lender whose name as set out on its licence is, or includes, a

franchise name that the mortgage lender is permitted to use under a

franchise agreement, a statement clearly indicating that the mortgage lender

is independently owned and operated.

(2) The name and licence number referred to in clauses (1)(

a) and (

b) must be clearly

and prominently displayed wherever they are required to be disclosed.

Duty to provide licence number

7 When requested, a mortgage lender must give a person its licence number.

Duty to respond to complaint

8 On receiving a written complaint about its mortgage lender activities, a mortgage lender

must give the complainant a written response that contains all of the following:

(

a) the mortgage lender’s proposed resolution of the complaint;

(

b) a statement that, if the complainant is not satisfied with the proposed

resolution and believes that the complaint relates to a contravention of the

Act or a regulation made under the Act, the complainant may refer the

complaint to the Registrar.

Entering into unlawful transaction

9 A mortgage lender must not lend money on the security of a mortgage if the mortgage

lender has reasonable grounds to believe that the mortgage, its renewal or the investment

in it is unlawful.

Restriction on tied selling

(1) A mortgage lender must not coerce a borrower or investor to obtain a product or

service from a particular person, including the mortgage lender, as a condition for

obtaining another product or service from the mortgage lender.

(2) A mortgage lender is not coercing a borrower or investor as prohibited by

subsection (1) if it offers the borrower or investor more favourable terms for a

product or service than it would otherwise offer, and the more favourable terms are

offered on the condition that the borrower or investor obtain another product or

service from a particular person, including the mortgage lender.

Duty to return certain documents

11 A mortgage lender must promptly, without charge, return a deed, instrument or other

document to its owner.

Representing status of payment

(1) Except as provided in subsection (2), a mortgage lender must not, directly or

indirectly, represent to any person that any amount payable to the mortgage lender

in connection with mortgage lending is set or approved by any government

authority.

(2) Subsection (1) does not apply with respect to disbursements that may be made by a

mortgage lender for fees payable to record instruments under the Land Registration

Act .

Duty to ensure suitability of mortgage for borrower or private investor

(1) A mortgage lender must take reasonable steps to ensure that any mortgage that it

presents for the consideration of a borrower is suitable for the borrower having

regard to the needs and circumstances of the borrower.

(2) A mortgage lender must take reasonable steps to ensure that any investment in a

mortgage that it presents for the consideration of a private investor is suitable for

the private investor having regard to the needs and circumstances of the private

investor.

Duty to verify identity

(1) A mortgage lender must take reasonable steps to verify the identity of each

borrower and investor in a mortgage transaction that it offers to a borrower or

investor.

(2) To verify the identity of a borrower or investor, a mortgage lender may rely on

confirmation from a mortgage brokerage that represents the borrower or investor.

(3) A mortgage lender that is unable to verify the identity of another party to a

mortgage transaction that it offers to a borrower must advise the borrower of this

before the borrower enters into the mortgage agreement or mortgage renewal

agreement with the mortgage lender.

(4) A mortgage lender that is unable to verify the identity of another party to a

mortgage transaction that it offers to an investor must advise the investor of this

before the investment completion date.

Duty to disclose information

(1) A mortgage lender must disclose all of the following to a borrower or investor, or a

potential borrower or investor:

(

a) the nature of any relationship between the mortgage lender and any other

person involved in the mortgage transaction;

(

b) any conflicts or potential conflicts of interest in connection with the

mortgage transaction;

(

c) any material risks of a mortgage or investment in a mortgage,

(2) A mortgage lender must disclose to a borrower or potential borrower the

information required by subsection (1) before the borrower signs the mortgage.

Duty to provide information about remuneration for referral

16 A mortgage lender that refers a borrower or private investor or a prospective borrower or

private investor to another person for a fee or other remuneration must give all of the

following information in writing to the borrower or private investor or prospective

borrower or private investor either before or when making the referral:

(

a) a description of the nature of the relationship between the mortgage lender

and the other person;

(

b) a statement of whether the mortgage lender has received, may receive or

will receive a fee or other remuneration, directly or indirectly, for making

the referral.

Duty to inform if mortgage previously in default

17 A mortgage lender must not sell or attempt to sell, or arrange or attempt to arrange the

sale of, a mortgage that has been in default at any time in the previous 12 months unless

the mortgage lender clearly discloses the default and the amount and duration of the

default.

Duties to private investor after completing mortgage transaction

18 Promptly after completing a mortgage transaction with a private investor, a mortgage

lender must ensure that the private investor is provided with a copy of each of the

following:

(

a) the recorded mortgage;

(

b) the printout of the parcel register at the land registration office for the

property affected by the mortgage, showing the recording of the mortgage;

(

c) the lawyer’s report, if any, with respect to the recording of the mortgage and

the effect of the mortgage transaction;

(

d) the written disclosure provided to the borrower as required by the Cost of

Borrowing Disclosure Regulations .

Duties respecting reverse mortgages

(1) In this Section, “reverse mortgage” means a mortgage that satisfies both of the

following conditions:

(

a) the money that is advanced under the mortgage does not have to be repaid

until the occurrence of 1 or more of the following events:

(

i) the borrower’s death or, if there is more than 1 borrower, the death of

the last surviving borrower,

(ii) the acquisition by the borrower or, if there is more than 1 borrower,

the last surviving borrower of another dwelling to use as their

principal residence,

(iii) the sale of the mortgaged property,

(iv) the borrower or, if there is more than 1 borrower, the last surviving

borrower vacating the mortgaged property to live elsewhere with no

reasonable prospect of returning,

(

v) an event of default under the conditions of the mortgage;

(b) 1 or more of the following conditions applies while the borrower or, if there

is more than 1 borrower, the last surviving borrower continues to occupy the

mortgaged property as their principal residence and otherwise complies with

the terms of the mortgage:

(

i) no instalment repayments of the principal and no payment of interest

on the principal are due or capable of becoming due,

(ii) although interest payments may become due, no repayment of all or

part of the principal is due or capable of becoming due,

(iii) although interest payments and repayment of part of the principal

may become due, repayment of all of the principal is not due or

capable of becoming due.

(2) A mortgage lender must not enter into a reverse mortgage with a borrower unless

the mortgage lender receives from the borrower a written statement signed by a

lawyer stating that the lawyer has given the borrower independent legal advice

about the proposed reverse mortgage.

(3) Each mortgage lender that enters into a reverse mortgage must provide written

documentation to the borrower that illustrates the annual accumulation of interest

under the proposed reverse mortgage and the corresponding effect on the equity of

the borrower in the mortgaged property, for the period from the advancing of funds

until all of the equity of the borrower in the property is exhausted, in each of the

following scenarios:

(

a) the interest rate and the value of the property remain the same over the

period set out in the illustration;

(

b) the interest rate remains the same over the period set out in the illustration

and the value of the property increases by 1% per year;

(

c) if the interest rate is capable of increasing under the mortgage, the interest

rate increases by 2% per year after the 2nd year and remains the same for

the remaining period set out in the illustration, and the value of the property

increases by 1% per year;

(

d) if the interest rate is capable of increasing under the mortgage, the interest

rate increases by 2% per year after the 2nd year and remains the same for

the remaining period set out in the illustration, and the value of the property

remains the same over the period set out in the illustration.

(4) In preparing the written documentation required by subsection (3), a mortgage

lender must assume that the borrower makes no payments under the mortgage

during the period set out in the illustration other than the payments required to be

paid under the mortgage.

Advance payment by borrower

(1) Except as provided in subsection (2), a mortgage lender must not charge, collect or

attempt to collect a fee from a borrower in relation to a mortgage to which the Cost

of Borrowing Disclosure Regulations apply until all of the following have

occurred:

(

a) the mortgage lender has provided a written commitment to fund the

mortgage;

(

b) the commitment has been accepted by the borrower in writing;

(

c) a copy of the signed commitment has been provided to the borrower.

(2) This

Section does not apply with respect to actual fees disbursed by a mortgage

lender to third parties for credit reports, registration fees, courier services or

appraisal services if there is an existing written agreement between the mortgage

lender and the borrower that provides for the borrower to reimburse the mortgage

lender for these costs.

Receiving money from investor

21 A mortgage lender must not receive money from an investor or enter into an agreement

to receive money from an investor for any investment in mortgages unless an existing

mortgage is available on a specific property.

Duty to establish policies and procedures

(1) A mortgage lender must establish and implement policies and procedures that are

reasonably designed to ensure that the mortgage lender and each person acting on

its behalf in the business of mortgage lending complies with the requirements of

the Act and its regulations, including all of the following:

(

a) disclosing the mortgage lender’s relationship to each party in a transaction;

(

b) taking steps to verify the identity of borrowers and investors;

(

c) determining the suitability of a mortgage or investment in a mortgage for a

borrower or private investor;

(

d) resolving complaints about its mortgage lending activities;

(

e) identifying the material risks of a mortgage or investment in a mortgage for

a borrower or investor and disclosing the material risks to the borrower or

investor;

(

f) identifying potential conflicts of interest between the mortgage lender and

any other person involved in a mortgage transaction and disclosing any

potential conflict of interest to the borrower or investor.

(2) A mortgage lender must establish and implement policies and procedures

providing for the adequate supervision of each person acting on its behalf in the

business of mortgage lending.

Fees and remuneration paid to unlicensed persons

23 A mortgage lender must not pay a fee or other remuneration to an unlicensed person for

any activity requiring a licence unless the other person is exempt from the requirement to

hold a licence for that activity under the Exemption Regulations made under the Act.

Duty to act with integrity, independence and competence

24 A mortgage lender must always act with integrity, independence and competence when

carrying on the business of mortgage lending.

Legislative History

Reference Tables

Standards of Conduct for Mortgage Lenders

Regulations

N.S. Reg.

128/2020

Mortgage Regulation Act

Note: The

information in these tables does not form part of the regulations and is

compiled by the Office of the Registrar of Regulations for reference only.

Source Law

The current consolidation of the Standards of Conduct for Mortgage Lenders Regulations made

under the Mortgage Regulation Act includes all of

the following regulations:

N.S.

Regulation

In force

date*

How in force

Royal Gazette

Part II Issue

128/2020

Nov 1, 2021

date specified (date that Act comes

into force on proclamation)

Oct 9, 2020

The following regulations are not yet in force and

are not included in the current consolidation:

N.S.

Regulation

In force

date*

How in force

Royal Gazette

Part II Issue

*See subsection 3(6) of the Regulations Act for

rules about in force dates of regulations.

Amendments by Provision

ad. = added

am. = amended

fc. = fee change

ra. = reassigned

rep. = repealed

rs . = repealed and substituted

Provision affected

How affected

..........................................................

Note that changes to headings are not

included in the above table.

Editorial Notes and Corrections

Note

Effective

date

Repealed and Superseded

N.S.

Regulation

Title

In force

date

Repealed

date

Note: Only

regulations that are specifically repealed and replaced appear in this

table. It may not reflect the entire

history of regulations on this subject matter.