O. Reg. 695/20: MORTGAGE BROKERAGES: STANDARDS OF PRACTICE

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ontario regulation 695/20

made under the

Mortgage Brokerages, Lenders and Administrators Act, 2006

Made: November 26, 2020
Filed: December 1, 2020
Published on e-Laws: December 1, 2020
Printed in The Ontario Gazette: December 19, 2020

Amending O. Reg. 188/08

(MORTGAGE BROKERAGES: STANDARDS OF PRACTICE)

1. (1) Subsection 1 (1) of Ontario Regulation 188/08 is amended by adding the following definition:

“permitted client” has the same meaning as in section 1.1 of National Instrument 31-103 entitled “Registration Requirements, Exemptions and Ongoing Registrant Obligations”, being a rule made by the Ontario Securities Commission under the Securities Act; (“client autorisé”)

(2) The definitions of “syndicated mortgage” and “qualified syndicated mortgage” in the subsection 1 (1) of the Regulation are revoked.

(3) Subsection 1 (1) of the Regulation is amended by adding the following definitions:

“qualified syndicated mortgage” has the meaning set out in subsection (2); (“hypothèque syndiquée admissible”)

“syndicated mortgage” means a mortgage in which two or more persons participate, directly or indirectly, as a lender or investor in a debt obligation that is secured by the mortgage; (“hypothèque syndiquée”)

(4) Subsections 1 (2) and (3) of the Regulation are revoked and the following substituted:

(2) A syndicated mortgage is a qualified syndicated mortgage if all of following criteria are satisfied in respect of the syndicated mortgage:

1. The syndicated mortgage secures a debt obligation on property that,

i. is used primarily for residential purposes,

ii. includes no more than four units, and

iii. includes no more than one unit that is used for non-residential purposes.

2. The syndicated mortgage does not secure a debt obligation incurred for the construction or development of property.

3. At the time the syndicated mortgage is arranged, the amount of the debt it secures, together with all other debt secured by mortgages on the property that have priority over, or the same priority as, the syndicated mortgage, assuming in all cases that the maximum amounts of any such mortgages are fully drawn, does not exceed 90 per cent of the fair market value of the property relating to the mortgage, excluding any value that may be attributed to proposed or pending development of the property.

4. The syndicated mortgage cannot be subordinated to future financing without the consent of each lender.

5. There is no existing agreement that requires any lender of the syndicated mortgage to consent to future subordination of the syndicated mortgage.

6. No person has the ability to consent to future subordination of the syndicated mortgage on behalf of the lenders of the syndicated mortgage without obtaining the consent of each lender.

2. The French version of section 3 of the Regulation is amended by striking out “consortiale” and substituting “syndiquée”.

3. The French version of subsection 9 (3) of the Regulation is amended by striking out “consortiale” and substituting “syndiquée”.

4. The Regulation is amended by adding the following section before the heading “Information about Fees and Other Payments”:

Certain transactions exempt

19.1 Despite sections 18 and 19, a brokerage is not required to disclose any information under those sections to an investor that is a permitted client in respect of a syndicated mortgage that is not a qualified syndicated mortgage, unless the investor is an individual.

5. (1) Subsection 24 (2) of the Regulation is revoked and the following substituted:

(2) Subsection (1) does not apply in the following circumstances:

1. The borrower, lender or investor, as the case may be, is another brokerage or a financial institution.

2. The mortgage in question is a syndicated mortgage that is not a qualified syndicated mortgage and the borrower, lender or investor, as the case may be, is a permitted client, provided that, if the permitted client is an individual, the permitted client has consented in writing to the brokerage not taking the steps required by subsection (1).

(2) Subsection 24 (3) of the Regulation is revoked.

6. Sections 24.1 and 24.2 of the Regulation are revoked.

7. Subsection 25 (2) of the Regulation is revoked and the following substituted:

(2) Subsection (1) does not apply in the following circumstances:

1. The lender or investor, as the case may be, is a member of a designated class of lenders and investors and the mortgage in question is a qualified syndicated mortgage or a mortgage that is not a syndicated mortgage.

2. The borrower, lender or investor, as the case may be, is a permitted client that is not an individual and the mortgage in question is a syndicated mortgage that is not a qualified syndicated mortgage.

8. Section 26 of the Regulation is amended by adding the following subsection:

(5) Subsections (1) to (4) do not apply in the case of a syndicated mortgage that is not a qualified syndicated mortgage and is presented to a permitted client, unless the permitted client is an individual.

9. (1) Subsection 27 (3) of the Regulation is revoked and the following substituted:

(3) Subsection (1) does not apply in the following circumstances:

1. The lender is another brokerage.

2. The investor is another brokerage or a financial institution.

3. The borrower, lender or investor, as the case may be, is a permitted client that is not an individual and the mortgage in question is a syndicated mortgage that is not a qualified syndicated mortgage.

(2) Subsection 27 (4) of the Regulation is revoked.

10. Section 31.1 of the Regulation is revoked.

11. Subsection 36 (3) of the Regulation is revoked and the following substituted:

(3) Subsections (1) and (2) do not apply to the disclosure of information respecting syndicated mortgages that are not qualified syndicated mortgages to lenders or investors that are permitted clients.

12. Paragraph 10 of subsection 40 (3) of the Regulation is revoked and the following substituted:

10. The verification of a lender’s or investor’s status as a permitted client.

Commencement

13. This Regulation comes into force on the later of July 1, 2021 and the day it is filed.

 

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