Borrower Disclosure Forms
While the MBLAA 2006 does not provide for standardized borrower disclosure forms, all forms used by brokers and agents must be approved by RMA. Should a broker/agent choose to use a form other than the one supplied by Filogix, those forms must be approved in advance and must be in total compliance with the legislation.
Brokers wishing to enter into contractual agreements with their clients must have all sample contracts and forms approved in advance prior to their use. All broker/client contracts must be in full compliance with MBLAA 2006.
Investor/Lender Disclosure Statement
[Reg. 188/08, s. 31 & 32]
- The brokerage must give each lender and /or investor in a mortgage/investment in a mortgage that is not a member of the Designated Class of lenders and investors (e.g., a financial institution or a brokerage acting on its own behalf) a completed Investors and lenders Disclosure Form.
- Mortgage transactions with investors and/or lenders that are not a part of the Designated Class are referred to as “private transactions”.
- For investors/lenders that are not part of the Designated Class, disclosure with respect to the following must be provided
- Role of the brokerage
- Material risks of the mortgage/mortgage investment
- Referral fees
- Estimates of unknown Information
- Mortgage Default
- Conflict of Interest.
Brokers or agents who deal with private investors must complete government authorized disclosure forms accompanied with the risk tolerance form. While the forms may be completed by an agent, they must be signed by a broker before being forwarded to the investor for review.
In addition to the Investors and Lenders Disclosure Form, the brokerage must give each lender/investor the following:
- A copy of the mortgage instrument, in the case of an investment in an existing mortgage
- Documentary evidence of the value of the property (1) A copy of an appraisal of the property, completed within the preceding 12 months, or (2) other documentary evidence of the value of the property, other than an agreement of purchase and sale.
- If available, a copy of any agreement of purchase and sale entered into in the preceding 12 months.
- Evidence of the borrower’s ability to meet the mortgage payments
- A copy of the application for the mortgage and any supporting documents
- For a new mortgage; evidence of any down payment
- A copy of any agreement that the lender or investor may be asked to enter into with the brokerage
- Any other information, in writing, that would be reasonably considered material to a lender or investor’s decision about the mortgage or mortgage investment.
This disclosure and documentation described directly above does not apply if the lender or investor is a member of the Designated Class of lenders and investors.
[Reg.188,s.31 (1)-(2)]
Mortgage Previously in Default
If the mortgage has been in default during the past 12 months, the brokerage must disclose to the investor the amount and duration of the default. The brokerage must get written acknowledgement that the investor has received this information. This disclosure and acknowledgement is currently addressed in the Investors and Lenders Disclosure Form.
[Reg. 188/08,s.28]
Lender Renewal Form
[Reg. 188/08,s.32]
In cases of mortgage renewals, a brokerage must provide each lender that is not a member of the Designated Class with a completed Renewal Form. This form must be signed by a broker and addresses the same type of disclosures covered in the Investor Disclosure Form.
In addition, the brokerage must provide the lender with the following:
- If an appraisal was completed over the preceding 12 months, a copy of the appraisal
- If an agreement of purchase and sale was entered into in the preceding 12 months, a copy of the agreement.
- Any other information, in writing, that would be reasonably considered material to a lender’s deceisiion about the mortgage renewal.
- This disclosure and documentation described directly above does not apply if the lender or investor is a member of a Designated Class of lenders and investors [Reg.188,s.31(2)]
Other Documentation
All forms completed by head office with respect to MBLAA 2006 will be completed on authorized government forms at all times. The most current version of all forms must be used.
