Types of records that must be kept
As per Ontario Regulation (O. Reg.) 188/08: Mortgage Brokerages: Standards of Practice, sections 46-48 and 52, a mortgage brokerage is required to keep complete and accurate records of:
- Financial records of its mortgage activities in Ontario, which must be kept separate or distinguishable from any deemed trust funds or other assets pertaining to other activities.
- Every mortgage application, instrument and renewal agreement that is received or arranged by the brokerage.
- Every other agreement entered into by the brokerage in the course of dealing or trading in mortgages or in the course of mortgage lending.
- All documents or written information given to or obtained from a borrower, lender, investor or any other person or entity. This includes relevant transaction-related communications between the parties, including any hand-written notes and emails.
As per Ontario Regulation (O. Reg.) 189/08: Mortgage Administrators: Standards of Practice sections 29-31 and 36, a mortgage administrator is required to keep complete and accurate records of:
- Financial records of its licensed activities in Ontario, which must be distinguished between the deemed trust funds held by it, mortgages held in trust by it for a lender or investor and any other assets pertaining to other activities.
- All documents or written information given to or obtained from a lender or prospective lender, an investor or prospective investor or any other person or entity pursuant to a requirement established under Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA).
- Every agreement entered by the mortgage administrator in the course of administering mortgages.
Length of time records must be kept
A mortgage brokerage must retain records for at least six years after the expiry of the term of the mortgage or renewal transactions, or the completion date or expiry of the transaction. These files include:
- Records that relate to a mortgage or mortgage renewal agreement.
- Records that relate to the purchase, sale or trade in a mortgage.
- All other records, including financial records. This includes documentation for transactions that were initiated but did not fund/close.
A mortgage administrator must retain records for at least six years after the expiry of the agreement. These files include:
- Records that relate to an agreement to administer a mortgage.
- All other records that it is required to create pursuant to a requirement established under MBLAA.
Where records must be kept
- Mortgage brokerages and mortgage administrators must store its paper-based records at its principal place of business in Ontario, or at another specified premises in Ontario if the brokerage or administrator has notified the Financial Services Regulatory Authority of Ontario (FSRA)’s Chief Executive Officer.
- For records that originate at another place of business (e.g., at a branch office), the brokerage or administrator must forward them to its principal place of business in Ontario (or to the other specified premises notified to FSRA).
- Records can be stored electronically as long as the brokerage or administrator can promptly retrieve them in legible electronic format upon request, and they are clear and easy to understand.
- Records in electronic format do not need to be stored at the brokerage or administrator’s principal place of business, so long as they can be retrieved promptly upon request.
- Photocopied records are acceptable in cases where the client requested that the original documents be returned.
- A brokerage shall not unreasonably withhold any deed, instruments or other document from its owner.
Up-front Fees (advance payments)
As per O. Reg. 188/08, section 37 (1):
- If the principal amount of a mortgage is $400,000 or less, a brokerage cannot require or accept an advance payment or deposit for services to be rendered, or expenses to be incurred by the brokerage or any other person.
- Where fees are collected in advance from the borrower by the brokerage as a deposit for services to be rendered, or expenses to be incurred, those fees are considered to be deemed trust funds and must be placed in the brokerage’s trust account within two business days of receipt.
- Where fees are collected in advance of the transaction’s completion for services already rendered, or where a borrower is required to agree to a “cancellation fee” (e.g., incurred once the transaction has reached a key milestone, but non-refundable if the transaction does not close/fund), the brokerage should ensure that borrowers clearly understand these obligations and that they are written out in a clear and easy-to-read manner.