Until April 30, 2020
Until April 30, 2020, the mortgage brokerage sector will be regulated by the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ) This link will open in a new window. As of May 1, 2020, mortgage brokerage will be a sector governed under the Act respecting the distribution of financial products and services (the "Distribution Act") and regulated by the AMF.
Therefore, as of May 1, 2020, two separate authorizations will be required to carry on mortgage brokerage and real estate brokerage activities: a mortgage broker certificate issued by the AMF and a real estate broker licence issued by the OACIQ.
Until April 30, 2020, real estate brokers are permitted to refer clients to mortgage lenders and to be remunerated by such lenders contingent on the making of a loan. In such cases, they must disclose to the client the existence of a referral agreement and the fact that they receive remuneration.
Effective May 1, 2020
Persons who refer a client to mortgage lender
Persons who refer a client to a lender may not be remunerated contingent on the making of a loan secured by immovable hypothec, except if they are covered by an exception and in a situation described in section 11.2 of the Distribution Act.
Effective May 1, 2020, real estate brokers will need a mortgage broker certificate issued under the Distribution Act in order to purse activities as mortgage brokers and, among other things, receive remunerationUnder the Distribution Act, the firm, independent representative or independent partnership receives the remuneration and then redistributes it to the representative. that is contingent on the making of a mortgage loan.
The Distribution Act stipulates that ‘’only the holder of a mortgage broker licence and persons benefitting from an exception may engage in a brokerage transaction relating to a loan secured by immovable hypothec for others and in return for remuneration that is contingent on the making of such a loan.”
Real estate brokers who do not hold a mortgage broker certificate will, however, still be able to refer clients directly to mortgage lenders and be remunerated by them provided the remuneration is not contingent on the making of a loan.
They will, for example, be able to be paid by way of an amount for each referral, a lump sum, an annual amount, and so forth.
Mortgage brokers may not confine their activities to client referrals.
Persons who refer clients to a mortgage lender made before May 1, 2020 can be remunerated in accordance with the law in force at that time, even if the remuneration is paid after May 1, 2020.
Persons who refer clients to a mortgage broker cannot be paid by the mortgage broker contingent on the making of loan secured by immovable hypothec, except if they are permitted to receive a share of a commission pursuant to section 100 of the Distribution Act.
As real estates brokers are among those permitted by that section to share in a commission, they will be able to refer clients to a mortgage broker and receive a share of the mortgage broker’s commission from the mortgage brokerUnderthe Distribution Act, firms, independent representatives or independent partnerships are authorized to share their commissions. The amount of such share may vary contingent on the making of the loan that the mortgage broker obtains from the mortgage lender.End of the warning
Mortgage brokers and their obligations
Regardless of the current situation, as of May 1, 2020, mortgage brokers will not be able to confine their activities to making referrals. When they become involved in a mortgage transaction, they will have to perform all the acts that make up a mortgage brokerage transaction.
Consequently, mortgage brokers will have to comply with all the rules and obligations applicable to them and set out in AMF regulations, including those pertaining to professional development and ethical conduct, and the rules governing the pursuit of activities as a representative.
Real estate agency-mortgage brokerage firms
Theoretically, as the regulations made under the Distribution Act currently stand and barring a change in this regard, there is nothing preventing a real estate agency from registering as a mortgage brokerage firm if it is a legal person.
In such a case, several rules must be followed, including ensuring that the information collected by mortgage brokers remains confidential. Such information must be recorded in the mortgage brokers’ client files and be inaccessible to persons not authorized to access it, including real estate brokers.
However, as part of regulatory development work to be carried out after May 1, 2020 pertaining to all clienteles regulated by the Distribution Act, the AMF will analyze the application of its multidisciplinarity rules and may seek comment on the changes to be made.
Changes to the regulatory framework for mortgage brokerage
The AMF is continuing its work to incorporate the mortgage brokerage sector into its regulations.
For information about licensing, examinations and professional development programs, see the Mortgage brokerage supervision page, which includes an FAQ.
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