FAQs on Types of Licences and Requirements

General
Mortgage Brokerages
Mortgage Brokers
Mortgage Agents
Mortgage Brokers and Agents
Mortgage Administrators
Principal Brokers
Real Estate Brokers
Other


 

General

 

Mortgage Brokerages

  1. What is a Mortgage Brokerage?
  2. What are the requirements for a Mortgage Brokerage licence?
  3. What are the licensing criteria for a Mortgage Brokerage?
  4. Does a Mortgage Brokerage require errors and omissions insurance?
  5. Does a Mortgage Brokerage require a separate Mortgage Administrator’s licence if it administers funds?
  6. What name can a Mortgage Brokerage use to be licensed?
  7. Are there any restrictions on Mortgage Brokerage names?
  8. When does a Mortgage Brokerage have to notify the Financial Services Commission of Ontario (FSCO) of any changes?
  9. Can a foreign-owned business receive a Mortgage Brokerage licence in Ontario?

 

Mortgage Brokers

  1. What is a Mortgage Broker?
  2. What are the requirements for a Mortgage Broker licence?
  3. What is FSCO’s screening process for Mortgage Brokers?

 

Mortgage Agents

  1. What is a Mortgage Agent?
  2. What are the requirements for a Mortgage Agent licence?
  3. Why does the Mortgage Brokerages, Lenders and Administrators Act require that Mortgage Agents be licensed?
  4. If a Mortgage Agent leaves a Mortgage Brokerage, how easy is it to begin working for another Mortgage Brokerage?
  5. What is FSCO’s screening process for Mortgage Agents?

 

Mortgage Brokers and Agents

  1. What is the main difference between a Mortgage Broker and Mortgage Agent?
  2. Can I work as a Mortgage Agent for one company and a Mortgage Broker for another (hold two different licences)?
  3. Why does the Mortgage Brokerages, Lenders and Administrators Act only allow Mortgage Agents and Brokers to work for one Mortgage Brokerage?
  4. Are there any age restrictions on becoming a Mortgage Agent or Broker?
  5. Do Mortgage Agents and Brokers require separate errors and omissions insurance from their Mortgage Brokerage?
  6. If my Mortgage Agent/Broker licence is revoked, when can I reapply?

 

Mortgage Administrators

  1. What is a Mortgage Administrator?
  2. What are the requirements for a Mortgage Administrator’s licence?
  3. Does a Mortgage Administrator require separate errors and omissions insurance? 
  4. Are collection agencies exempt from requiring a Mortgage Administrator’s licence?
  5. Do Mortgage Brokers and Agents work for Mortgage Administrators?

 

Principal Brokers

  1. What is a Principal Broker?
  2. What are the duties of a Principal Broker?
  3. What are the required qualifications for a Principal Broker?
  4. How many Principal Brokers can a Mortgage Brokerage have?

 

Real Estate Brokers and Brokerages

  1. Do Real Estate Brokers need to be licensed in order to deal in mortgages?
  2. Under the Mortgage Brokerages, Lenders and Administrators Act, is a Real Estate Broker allowed to use a second name, in addition to the legal name that is registered with FSCO?

 

Lenders

  1. Do private lenders need to be licensed?
  2. Do I need a licence to refer a borrower to lender, or a lender to a borrower, if I get a referral fee?
  3. Is there a licence for a lender?

1. What types of licences are required under the new Mortgage Brokerages, Lenders and Administrators Act?

Under the new Act, there are four types of licences: 

 

  • Mortgage Brokerage
  • Mortgage Administrator
  • Mortgage Broker
  • Mortgage Agent

2. What is a Mortgage Brokerage?

 

A Mortgage Brokerage is a corporation, partnership or sole proprietorship that authorizes or allows licensed Mortgage Brokers and Mortgage Agents to deal in mortgages on its behalf.

 

3. What are the requirements for a Mortgage Brokerage licence?

Under the Act, each Mortgage Brokerage:

 

  • Must be incorporated or formed in Canada (for partnerships and corporations), or if a sole proprietor be a resident of Canada.
  • Is required to have a mailing address in Ontario that is suitable for receiving registered mail.
  • Must have errors and omissions (e & o) insurance which also covers fraudulent acts up to a minimum of $500,000 for any one occurrence and $1 million for all occurrences during a 365-day period.
  • Must designate a Principal Broker on its application.
  • Is required to have its Mortgage Brokerage licence issued in the Brokerage’s legal name, or in both its legal name and one other name that is registered under the Business Names Act.
  • Along with its sole proprietor, partners or officers and directors (as applicable), must meet the suitability requirements that are listed in the regulations. 

4. What are the licensing criteria for a Mortgage Brokerage?

The Mortgage Brokerages, Lenders and Administrators Act regulations require that the following be considered for each application for a Mortgage Brokerage licence:


  • Whether the Mortgage Brokerage can be expected to be financially responsible in its business, considering its financial position.
  • Whether the past actions of the Mortgage Brokerage’s sole proprietor, officers, directors or partners (as applicable) provide reason for believing that the Brokerage’s business will be not be carried out in a lawful or honest way.
  • Whether the Mortgage Brokerage currently is, or will be doing, any business that will not follow the Act.
  • Whether false statements have been made on the Mortgage Brokerage licence application.

In addition to the above criteria, the Superintendent of Financial Services may also consider other issues or facts that he considers appropriate.

5. Does a Mortgage Brokerage require errors and omissions insurance?

Each Mortgage Brokerage requires errors and omissions insurance with extended coverage for fraudulent acts. Under the MBLAA, brokerages must have errors and omissions (E&O) insurance covering a minimum of $500,000 in respect of any one occurrence and $1 million in respect of all occurrences in a given year involving the corporation or any mortgage broker or agent authorized to deal or trade in mortgages on its behalf. If the brokerage is also applying for an administrator licence, the administrator must also have errors and omissions (E&O) insurance in the amounts noted above to separately cover the administrator licence.

6. Does a Mortgage Brokerage require a separate Mortgage Administrator’s licence if it administers funds?

Yes, if a Mortgage Brokerage administers funds it must apply for a Mortgage Administrator’s licence.

7. What name can a Mortgage Brokerage use to be licensed?

A Mortgage Brokerage must be licensed using its legal name, or its legal name and one other name that is registered under the Business Names Act.

8. Are there any restrictions on Mortgage Brokerage names?

A Mortgage Brokerage cannot be licensed using a name that is exactly the same, or confusingly similar to that of another Mortgage Brokerage.  In addition, a Mortgage Brokerage cannot use a name that may be regarded as offensive.

9. When does a Mortgage Brokerage have to notify the Financial Services Commission of Ontario (FSCO) of any changes?

A Mortgage Brokerage must notify FSCO of the following within 5 days:


  • a new/replacement Principal Broker,
  • a change in the location of its principal place of business,
  • a change in the location of any office,
  • an opening of a new office,
  • any changes to its officers, directors and/or partners,
  • a change in its e-mail address and mailing address, and
  • if a Mortgage Broker or Agent is no longer authorized to act on its behalf.

10. Can a foreign-owned business receive a Mortgage Brokerage licence in Ontario?

Under the Mortgage Brokerages, Lenders and Administrators Act, 2006, a foreign-owned business can receive a Mortgage Brokerage licence to do business in Ontario.  However, the Mortgage Brokerage must:


  • be incorporated in Canada (for a corporation),
  • be formed in Canada (for a partnership), or
  • be a resident of Canada (for a sole proprietorship).

11. What is a Mortgage Broker?

A Mortgage Broker is a person who:

 

  • Carries out mortgage activities for the Mortgage Brokerage.
  • Brings together borrowers who need mortgage loans, and companies and/or individuals with money to lend (as the Mortgage Brokerage’s representative).
  • Negotiates on behalf of the borrower to get the best possible financing deal from the lender (as the Mortgage Brokerage’s representative).  However, a Mortgage Broker does not administer the mortgage.
  • May be responsible for supervising the activities of Mortgage Agents.

12. What are the requirements for a Mortgage Broker licence?

In order to be licensed as a Mortgage Broker, you must:

*In certain circumstances, experience under the Mortgage Brokers Act may satisfy this requirement.

13. What is FSCO’s screening process for Mortgage Brokers?

To ensure all licence applicants are suitable to deal with the public, FSCO conducts criminal background checks (CPIC) during the application process, and reviews each applicant’s professional and educational background to ensure they meet the Act’s requirements. 

 

If there are questions regarding an applicant’s suitability, the Principal Broker must take reasonable steps to satisfy himself/herself that the applicant is suitable for licensing.

14. What is a Mortgage Agent?

A Mortgage Agent is an individual who carries out mortgage activities for the Mortgage Brokerage, under the supervision of a licensed Mortgage Broker.  In addition, a Mortgage Agent can only work for one Mortgage Brokerage.

15. What are the requirements for a Mortgage Agent licence?

In order to be licensed as a Mortgage Agent, you must:

  • be 18 years of age or older,
  • be a resident of Canada,
  • have a mailing address in Ontario that can receive registered mail (not a post office box),
  • be authorized by a Mortgage Brokerage to deal in mortgages,
  • work for only one Mortgage Brokerage,
  • meet or be exempt from the Mortgage Agent education requirements, and
  • have a valid e-mail address (this is necessary for the application process).

16. Why does the Mortgage Brokerages, Lenders and Administrators Act require that Mortgage Agents be licensed?

The Mortgage Brokerages, Lenders and Administrators Act requires everyone who deals or trades in mortgages to be licensed, unless an exemption applies.  This Act protects the public interest by requiring all Mortgage Agents to be qualified and regulated.

17. If a Mortgage Agent leaves a Mortgage Brokerage, how easy will it be to begin working for another Mortgage Brokerage?

If you are a Mortgage Agent, you do not need any regulatory approvals to leave a Mortgage Brokerage and transfer to another.  However, you will need to update your employment information online via the Licensing Link system.  This will only take a few minutes of your time and can be done quite easily.   

18. What is FSCO’s screening process for Mortgage Agents?

To ensure all licence applicants are suitable to deal with the public, FSCO conducts criminal  background checks (CPIC) during the application process, and reviews each applicant’s professional and educational background to ensure they meet the Act’s requirements. 

 

Applicants will respond to a variety of questions on the application form. The Principal Broker will be expected to take reasonable steps to ensure that the Mortgage Agent meets the requirements to be licensed.

19. What is the main difference between a Mortgage Broker and a Mortgage Agent?

The main difference between a Mortgage Agent and a Mortgage Broker is that a Mortgage Broker requires at least two years of work experience, and must have taken and passed an approved Mortgage Broker course.  Mortgage Agents must also be supervised by a Mortgage Broker.  In addition, a Mortgage Broker is eligible to be appointed as a Principal Broker for a Mortgage Brokerage. 

 

Refer to questions 11, 12, 13 and 14 if you wish to learn more about the roles of Mortgage Brokers and Agents.

20. Can I work as a Mortgage Agent for one company and a Mortgage Broker for another (hold 2 different licences)?

No, you are only allowed to work for one Mortgage Brokerage and can only be licensed as a Mortgage Agent or a Mortgage Broker, not both.

21. Why does the Mortgage Brokerages, Lenders and Administrators Act only allow Mortgage Agents and Brokers to work for one Mortgage Brokerage?

In order to improve consumer protection, it is necessary for a Mortgage Brokerage to be responsible for the work of its Mortgage Agents and Brokers. Each Mortgage Brokerage must appoint a Principal Broker who will ensure that each Mortgage Broker and Mortgage Agent complies with the Act.

22. Are there any age restrictions to become a Mortgage Agent or Broker?

A Mortgage Agent or Broker must be 18 years of age or older.

23. Do Mortgage Agents and Brokers require separate errors and omissions insurance from their Mortgage Brokerage?

Mortgage Agents and Brokers do not require separate errors and omissions (e & o) insurance from their Mortgage Brokerage, as they are covered under the Mortgage Brokerage’s errors and omissions policy.

24. If my Mortgage Agent/Broker licence is revoked, when can I reapply?

If your Mortgage Agent/Broker licence is revoked, you are no longer licensed to carry out mortgage activities in Ontario.   To reapply for a licence, you must satisfy the Superintendent of Financial Services by providing evidence that you no longer pose a risk to the public.  You must wait twelve (12) months before reapplying for a Mortgage Agent/Broker licence (according to section 8 of regulation 409/07 of the Mortgage Brokerages, Lenders and Administrators Act).  This is twelve months from the date your licence is revoked. 

 25. What is a Mortgage Administrator?

A Mortgage Administrator is a business that: 

 

  • Receives mortgage payments from borrowers and sends them to investors.
  • Takes steps on behalf of investors to enforce payments under mortgages.
  • Is not required to appoint a Principal Broker, and its employees are not required to be licensed.

26. What are the requirements for a Mortgage Administrator’s Licence?

In order to act as a Mortgage Administrator, a business:

 

  • Must be incorporated or formed in Canada (for partnerships and corporations), or be a resident of Canada (for sole proprietorships).
  • Must have a mailing address in Ontario that is suitable for receiving registered mail (it cannot be a post office box).
  • Must have errors and omissions insurance which covers fraudulent acts up to a minimum of $500,000 for any one occurrence and $1 million for all occurrences during a 365-day period.
  • Must have a Mortgage Administrator’s licence issued in its legal name, or in both its legal name and one other name that is registered under the Business Names Act.  (If a business is a licensed Mortgage Brokerage, it must have a separate Mortgage Administrator’s licence if it is also conducting business as a Mortgage Administrator.)
  • Must meet the suitability requirements that are listed in the regulations, along with its sole proprietor, partners or officers, and directors (as applicable).
  • Must prove it has a financial guarantee for $25,000. The financial guarantee may be: an irrevocable letter of credit with a financial institution, unimpaired working capital, a surety bond issued by an insurer licensed under the Insurance Act, or some other form of financial guarantee which is approved by the Superintendent. 

27. Does a Mortgage Administrator require separate errors and omissions insurance?

Yes, each Mortgage Administrator requires separate errors and omissions (e & o) insurance with extended coverage for fraudulent acts.  The errors and omissions insurance must be able to provide coverage for a minimum of $500,000 for any one occurrence and $1,000,000 for all other occurrences that may occur in a 365-day period.

28. Are collection agencies exempt from requiring a Mortgage Administrator’s licence?

Collection agencies are exempt from requiring a Mortgage Administrator’s licence if they are registered under the Collection Agencies Act and do not receive and send mortgage payments to investors. 

29. Do Mortgage Brokers and Agents work for Mortgage Administrators?

Mortgage Brokers and Agents do not work for Mortgage Administrators.  Since Mortgage Administrators do not deal in mortgages, they do not need Mortgage Brokers and Agents to work for them.

30. What is a Principal Broker?

Under the Mortgage Brokerages, Lenders and Administrators Act, 2006, each Mortgage Brokerage must appoint one Principal Broker. The Principal Broker’s job is to be the Chief Compliance Officer for the Mortgage Brokerage.  


A Mortgage Brokerage must have a Principal Broker at all times.  In addition, a Mortgage Brokerage may only have one Principal Broker at a time.

31. What are the duties of a Principal Broker?

According to regulation 410/07 (Principal Brokers: Eligibility Powers and Duties), the Principal Broker’s duties include: 

 

  • Acting as the Chief Compliance Officer for the Mortgage Brokerage.
  • Ensuring that the Brokerage and each Mortgage Broker and Agent follow all of the regulations and requirements that apply under the Act.
  • Taking reasonable steps to deal with anyone who does not follow the Act.
  • Reviewing the Brokerage’s policies and procedures to see if they follow the Act.
  • Reviewing the Mortgage Brokerage's policies and procedures to ensure the Mortgage Brokerage follows the Act and that Mortgage Brokers and Mortgage Agents are adequately supervised.
  • Signing and approving any trust account reconciliation statements prepared by the Brokerage to confirm that they are accurate.

32. What are the required qualifications for a Principal Broker?

In order to be a Principal Broker, you must be a licensed Mortgage Broker who is authorized by the Mortgage Brokerage to deal or trade in mortgages on its behalf.

 

You also need to have the following status:

 

  • If the Mortgage Brokerage is a corporation, you must be a director or officer of the corporation.
  • If the Mortgage Brokerage is a partnership (other than a limited partnership), you must be a partner.
  • If the Mortgage Brokerage is a limited partnership, you must be a general partner, or a director or officer of a corporation that is a general partner.
  • If the Mortgage Brokerage is a sole proprietorship, you must be the owner or sole proprietor.

33. How many Principal Brokers can a Mortgage Brokerage have?

A Mortgage Brokerage can only have one Principal Broker at a time.

34. Do Real Estate Brokers need to be licensed in order to deal in mortgages?

Under the Mortgage Brokerages, Lenders and Administrators Act, 2006, Real Estate Brokers do not need to be licensed if they are only providing referrals that provide limited information about a borrower to a potential lender (and vice versa).  However, the Act does require a Real Estate Broker to become licensed, if he/she is carrying out mortgage broker activities.

35. Under the Mortgage Brokerages, Lenders, And Administrators Act,2006, is a Real Estate Broker allowed to use a second name, in addition to the legal name that is registered with FSCO?

All Mortgage Brokerages must be licensed under their legal name.  They may also use one other name that is registered to the company under the Business Names Act.

36. Do private lenders need to be licensed?

Private lenders who lend their own money on the security of real estate must be licensed if they are doing business as mortgage lenders.  However, private lenders do not need to be licensed if they use a licensed Mortgage Brokerage.

37. Do I need a licence to refer a borrower to lender, or a lender to a borrower, if I get a referral fee?

You do not need a licence to give referrals that provide limited information about a borrower to a potential lender (and vice versa), as long as you:

 

  • provide the nature of your relationship to the borrower or lender,
  • state that you are receiving compensation for providing the referral, and
  • provide the referral information that is allowed under the Mortgage Brokerages, Lenders and Administrators Act’s regulations.

Note:  The referrals that are allowed under section 1 of regulation 407/07 (Exemptions from the requirements to be licensed) are the name, address, telephone number, fax number, e-mail address and website address of the potential borrower/lender, or the individual who acts on behalf of the prospective borrower/lender.

38. Is there a licence for a lender?

Lenders carrying on the business of lending money on the security of real property must be licensed as a Mortgage Brokerage, unless an exemption applies. A Mortgage Brokerage must have a Principal Broker who has a Mortgage Broker licence.

 
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