MORTGAGE BROKER ACT CH 2

“MORTGAGE BROKER” IS:  lends money secured in whole or in part by mortgages, whether the money is the mortgage broker's own or that of another person  holds himself or herself out as, or by an advertisement, notice or sign indicates that he or she is, a mortgage broker  carries on a business of buying and selling mortgages or agreements for sale  in any one year, receives an amount of $1 000 or more in fees or other consideration  during any one year, lends money on the security of 10 or more mortgages  carries on a business of collecting money secured by mortgages

Exceptions  Insurers licensed under Insurance Act  Banks, credit unions, trust companies  Person acting for the government  A lawyer in the course of practice  Person working for the Government  Person lending money on land to provide housing for employees

Which of the following is not an activity included in the definition of a mortgage broker under the Mortgage Brokers Act?  1. A person who carries on a business of lending money on secured in whole or in part by mortgages, weather the money is the mortgage broker’s own or that of another person.  2. A person who, on behalf of another, in any manner acquires or disposes of real estate.  3. A person who carries on a business of buying and selling mortgages or agreement for sale.  4. A person who in any one year, received an amount of $1,000 or more in fees or other consideration, excluding legal fees for arranging mortgages for other persons.

Which of the following is not an activity included in the definition of a mortgage broker under the Mortgage Brokers Act?  1. A person who carries on a business of lending money on secured in whole or in part by mortgages, weather the money is the mortgage broker’s own or that of another person.  2. A person who, on behalf of another, in any manner acquires or disposes of real estate.  3. A person who carries on a business of buying and selling mortgages or agreement for sale.  4. A person who in any one year, received an amount of $1,000 or more in fees or other consideration, excluding legal fees for arranging mortgages for other persons.

54. Which of the following people would NOT be specifically exempted from the requirements of the Mortgage Broker’s Act?  Selma, a mortgage loan officer at one of the banks  Joe, a criminal lawyer, helps his clients on getting a loan. He has collected $19,000 of fees this year  Al Cooper is a real estate licensee who facilitates the sale of a vender-take –back mortgage during the course of one of his real estate transactions  Jane, an employee of the Ministry of Finance for BC, lends money for the income households on the security of land

54. Which of the following people would NOT be specifically exempted from the requirements of the Mortgage Broker’s Act?  Selma, a mortgage loan officer at one of the banks  Joe, a criminal lawyer, helps his clients on getting a loan. He has collected $19,000 of fees this year  Al Cooper is a real estate licensee who facilitates the sale of a vender-take –back mortgage during the course of one of his real estate transactions  Jane, am employee of the Ministry of Finance for BC, lends money for the income households on the security of land

Licensing System  Mortgage Broker (MB)  ( Company, partnership, sole proprietorship )  Must have a registered Submortgage Broker  Hold money in Trust – must file annual financial statements to Registar – NO prescribed form!  Pay fee $1,000  Submortgage Broker  (Only Individuals)  Must be employed by Mortgage Broker  If employment terminated = suspension of license  Pay fee $1,000

License Registration:  Must be renewed every 2 years

43. Which one of the following pairings is NOT consistent with the Mortgage Brokers Act?  (1) Mortgage broker = Spade Corporation; submortgage broker = Samantha Spade.  (2) Mortgage broker = Spade and Spade (a partnership); submortgage broker = Samantha Spade.  (3) Mortgage broker = Samantha Spade; submortgage broker = Samantha Spade.  (4) Mortgage broker = Spade and Spade (a partnership); submortgage broker = Spade Corporation

43. Which one of the following pairings is NOT consistent with the Mortgage Brokers Act?  (1) Mortgage broker = Spade Corporation; submortgage broker = Samantha Spade.  (2) Mortgage broker = Spade and Spade (a partnership); submortgage broker = Samantha Spade.  (3) Mortgage broker = Samantha Spade; submortgage broker = Samantha Spade.  (4) Mortgage broker = Spade and Spade (a partnership); submortgage broker = Spade Corporation

Responsibilities of Mortgage Broker :  Ensuring all books and records of MB are accurate and up to date  Ensuring that all employees are registered under Mortgage Broker Act  And informed of all the relevant MB legislation and regulations

MORTGAGE BROKER ACT - provincial legislation that regulates the conduct of mortgage professionals in BC Protection of the public

REGISTAR -Boss  Duties performed by FICOM  Can investigate breach under MB Act and criminal fraud  Attach conditions or restrictions to the registration (refusal)  Inspect all books of account  Freeze the trust funds  Decision is appealable to the Financial Services of Tribunal NOT Supreme Court of BC

Breach of Mortgage Broker Act:  Registration suspended or cancelled  Pay fine, imprisoned  The wronged party may file a civil suit against the broker  A bond may be required from each broker involved

FICOM  An agency of the Provincial Government.  It has been given discretion by Lieutenant Governor in Council to perform the duties of the Registrar  Jurisdictions extends to credit unions, trust companies, insurance, Mortgage Broker and Real Estate  Governs the registration of mortgage/submortgage brokers It NOT created by Mortgage Broker Act

Mortgage Brokers Association of BC (MBABC)  Code of Ethics  Promotes the interests of MB professionals

Discipline Committees  Protect the interests of the public  Act as an educator  Not guilty until it’s proven Penalties:  Suspension of membership privileges  A reprimand  Pay the cost of the hearing  Complete educational courses

1). Which of the following forms of discipline is not open to disciplinary committee of a mortgage brokerage professional association?  Suspension of a registration under the Mortgage Brokers Act.  A reprimand.  Suspension of membership privileges.  The cost of the hearing.

1). Which of the following forms of discipline is not open to disciplinary committee of a mortgage brokerage professional association?  Suspension of a registration under the Mortgage Brokers Act.  A reprimand.  Suspension of membership privileges.  The cost of the hearing.

2). Which of the following statements about Financial Institutions Commission ( FICOM) is false.  FICOM is an agency of the provincial government that administers a number of statutes and regulations, including Mortgage Brokers Act.  FICOM`s jurisdiction includes credit unions, insurance and trust companies.  FICOM is responsible for enforcing the consumer protections granted by the Business Practices and Consumer Protection Act.  Through the Registrar of Mortgage Brokers, FICOM governs the registration of mortgage broker and submortgage brokers.

2). Which of the following statements about Financial Institutions Commission ( FICOM) is false.  FICOM is an agency of the provincial government that administers a number of statutes and regulations, including Mortgage Brokers Act.  FICOM`s jurisdiction includes credit unions, insurance and trust companies.  FICOM is responsible for enforcing the consumer protections granted by the Business Practices and Consumer Protection Act.  Through the Registrar of Mortgage Brokers, FICOM governs the registration of mortgage broker and submortgage brokers.

 3). John is a member of a mortgage brokerage professional association and just been found by a disciplinary committee to have breached the association’s by-laws. Which of the following penalties are likely to be available for the association to impose on John? A.Suspension of the use of the association’s member services. B.Required performance of community service. C.Imprisonment for offences which are also criminal in nature. D.a fine  ① a, b and d only ② a and d only ③ b and c only ④ all of the above.

 3). John is a member of a mortgage brokerage professional association and just been found by a disciplinary committee to have breached the association’s by-laws. Which of the following penalties are likely to be available for the association to impose on John? A.Suspension of the use of the association’s member services. B.Required performance of community service. C.Imprisonment for offences which are also criminal in nature. D.a fine  ① a, b and d only ② a and d only ③ b and c only ④ all of the above.

4). Which of the following are powers of the Registrar of Mortgage Brokers under the Mortgage Brokers Act. A.The Registrar has the power to investigate any complaints regarding a breach of Mortgage Brokers Act. B.Registrar has the power to investigate criminal fraud. C.Registrar’s powers of investigation allow him or her to enter, inspect all books of account and other records, and to seize any relevant information from a mortgage broker. D.the Registrar has the power to freeze the trust funds of any mortgage broker pending the outcome of the investigation. ① only a, c, and d ② only a and c ③ only a, b and c ④ all of the above

4). Which of the following are powers of the Registrar of Mortgage Brokers under the Mortgage Brokers Act. A.The Registrar has the power to investigate any complaints regarding a breach of Mortgage Brokers Act. B.Registrar has the power to investigate criminal fraud. C.Registrar’s powers of investigation allow him or her to enter, inspect all books of account and other records, and to seize any relevant information from a mortgage broker. D.the Registrar has the power to freeze the trust funds of any mortgage broker pending the outcome of the investigation. ① only a, c, and d ② only a and c ③ only a, b and c ④ all of the above

Business Practices and Consumer Protection Act (BPCPA)  The Court can re-open a mortgage transaction under the Consumer Protection act if it believes the interest rate is harsh or unconscionable.  disclosure must be given by mortgage brokers or lenders to individuals who borrow for primarily personal, family, household purposes, regardless of whether the broker or lender is charging additional fees or expenses.  The rate of interest must be expressed as an APR - Annual Percentage Rate on a Disclosure Statement.  BPCPA does NOT prescribe the use of a specific form  Disclosure statement must be given to the borrower 2DAYS prior to the borrower incurring an obligation under a credit agreement

 10).When a mortgage broker must provide a written disclosure statement in certain circumstances. The documents must be in a prescribed form and it must be dated and signed by the managing broker. Assuming some exceptions applies, in which of the following transactions would the managing broker be needed to provide a written disclosure statement?  Transaction where the mortgage broker arranges a mortgage for a lender in return for a commission  Transaction which a mortgage broker arranges the sale of a lender’s interest in the mortgage for a brokerage fee  Transaction in which a mortgage broker sells his or her interest in a mortgage to a third party  In all of the above circumstances a written disclosure form would be required

 10).When a mortgage broker must provide a written disclosure statement in certain circumstances. The documents must be in a prescribed form and it must be dated and signed by the managing broker. Assuming some exceptions applies, in which of the following transactions would the managing broker be needed to provide a written disclosure statement?  Transaction where the mortgage broker arranges a mortgage for a lender in return for a commission  Transaction which a mortgage broker arranges the sale of a lender’s interest in the mortgage for a brokerage fee  Transaction in which a mortgage broker sells his or her interest in a mortgage to a third party  In all of the above circumstances a written disclosure form would be required

RED FLAGS  Appraisal is missing or makes no sense  The appraiser in not on the approved list  There is a vendor-take back mortgage on the property  There number of trades on the property in a short period of time  The final purchase is higher then a listing price  Property contains illegal suites

 9).which of the following are “red flags” that a mortgage broker might use to identify a value fraud? A. there are a number of trades on the property in a short period of time B.there is a vendor take-back mortgage on the property C.the real estate transaction involves a relative of one of the real estate broker D. an appraisal is missing or does not make sense ① only C and D ② only A, C and D ③ only A, b and D ④ all of A, B, c and D are red flags that might increase a value fraud

 9).which of the following are “red flags” that a mortgage broker might use to identify a value fraud? A. there are a number of trades on the property in a short period of time B.there is a vendor take-back mortgage on the property C.the real estate transaction involves a relative of one of the real estate broker D. an appraisal is missing or does not make sense ① only C and D ② only A, C and D ③ only A, b and D ④ all of A, B, c and D are red flags that might increase a value fraud

Which of the following is a red flag mortgage brokers should be conscious of in order to spot value fraud? A.There is a vendor take back mortgage on the property B.The property contains an unauthorized suite C.There are a number of trades on the property in a short period of time D.The listing price is higher that the final purchase price E.The appraiser is on the approved list of appraisers for the lender ① A, D, E are red flags mortgage brokers should be conscious of in order to spot value fraud ② A, B, C are red flags mortgage brokers should be conscious of in order to spot value fraud ③ D and E are red flags mortgage brokers should be conscious of in order to spot value fraud ④ Only C are red flags mortgage brokers should be conscious of in order to spot value fraud

Which of the following is a red flag mortgage brokers should be conscious of in order to spot value fraud? A.There is a vendor take back mortgage on the property B.The property contains an unauthorized suite C.There are a number of trades on the property in a short period of time D.The listing price is higher that the final purchase price E.The appraiser is on the approved list of appraisers for the lender ① A, D, E are red flags mortgage brokers should be conscious of in order to spot value fraud ② A, B, C are red flags mortgage brokers should be conscious of in order to spot value fraud ③ D and E are red flags mortgage brokers should be conscious of in order to spot value fraud ④ Only C are red flags mortgage brokers should be conscious of in order to spot value fraud