Second Consultation: Mortgage Rule Changes

RECA has opened a new consultation about proposed changes to the Real Estate Act Rules regarding mortgage broker standards of practice. The consultation is based on industry trends, emerging issues, and industry feedback, and was recommended to Council by the Mortgage Broker Advisory Committee.

RECA is proposing:

  • Amendments to the Real Estate Act Rules
  • New forms and updates to existing forms, both of which contain mandatory content for all disclosure and relationship forms

“The proposed changes are intended to better inform the public in their dealings with mortgage professionals,” said Gary Siegle, RECA’s Mortgage Broker Practice Advisor.

The first round of consultation for this topic was in the spring of 2018. At that time, we asked stakeholders for input on:

  1. Disclosures of material risk and product suitability to consumers
  2. Removal of intermediary relationship option
  3. Document and information verification: mortgage fraud
  4. Private lending procedures

RECA’s Mortgage Broker Advisory Committee reviewed the feedback from the consultation and then made the following changes:

  • Changed the title of the Material Risks Disclosure Form to the more consumer-friendly “Understanding Your Mortgage.” The form has been condensed, and initials for each section are no longer required
  • Condensed the “Mortgage Suitability Disclosure” and added a completion guide to better explain its purpose and use
  • Kept the “Intermediary Relationship” option and added a specific definition of it in the (new) rules and (revised) service agreements
  • Added a rule to make the content within RECA’s forms mandatory
  • Added a “completion guide” to the “Checklist for Detecting and Preventing Mortgage Fraud” to better explain the checklist’s purpose and use
  • Added new rules and procedures for brokerages who represent private lenders, and developed three new forms with mandatory content:
    • “Know Your Client”
    • “Private Lender Disclosure Statement”
    • “Written Service Agreement Sole Agency with a Private Lender”

More information about the consultation is on, and in the consultation paper. The consultation will close on October 31, 2019.

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“We hope mortgage professionals, stakeholders, and consumers will take the time to provide us feedback so RECA’s decisions on these changes are well-informed,” said Gary.

“It’s about facilitating better service and a clearer relationship between mortgage professionals and the public.”

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