Information on Licensing Exemptions

Understanding Licensing Exemptions

Mortgage services in BC are regulated through the Mortgage Services Act (“MSA”), Mortgage Services Regulation (“Regulation”), and Mortgage Services Rules (“Rules”). The information below sets out the licensing exemptions authorized under the MSA legislative framework.

More information on licensing requirements can be found on BCFSA’s Mortgage Services Knowledge Base.

Licensing Exemptions

The exemptions outlined in the Regulations only apply to people who are not currently licensed. If a person is licensed, any service that can be defined as dealing, trading, administering, or lending may only be offered through the brokerage they are licensed with.

Some of the exemptions are limited in scope, so it is important to refer to the legislation or seek professional advice if you are not sure an exemption applies to you. BCFSA takes unlicensed activity seriously and the consequences can be significant.

Securities Act

Investment dealers registered under BC’s Securities Act do not need a license under the MSA for certain mortgage services related to syndicated mortgages (excluding qualified syndicated mortgages), if they follow the Securities Act. If they want to sell “qualified syndicated mortgages” they must be registered under the MSA.

A “syndicated mortgage” is where multiple lenders share the debt. A “qualified syndicated mortgage” is a syndicated mortgage that:

• Is not backed by bonds or similar financial instruments;
• Must be sold by a licensed individual;
• Secures debt on residential property with up to 4 units;
• Cannot be used for construction or development loans;
• Total debt must be less than 90% of the property’s market value;
• Is limited to one specific debt;
• Interest rate matches the debt it secures;
• Administration fees must be disclosed; and
• Term length matches the debt it secures.

If an Investment Dealer registered under, and compliant with, the Securities Act is selling a syndicated mortgage that is not a qualified syndicated mortgage, then they may perform the following mortgage services without an MSA license:

• Soliciting someone to lend money secured by real estate;
• Advising lenders on mortgage contracts;
• Providing borrower information to lenders;
• Assessing borrowers for lenders; and/or
• Trading in mortgages.

Real Estate Licensees

A real estate licensee, licensed under B.C.’s Real Estate Services Act, requires a separate mortgage broker license unless they are arranging a vendor take-back mortgage during a trade in real estate. This exemption applies if the following conditions are met:

• The real estate licensee does not hold themselves out as providing mortgage services; and

• The real estate licensee is not otherwise required to be licensed or is not licensed under the MSA.

Simple Referrals

Someone who is providing information about a potential borrower to a lender is “dealing” under the MSA and needs to get licensed. There is an exemption for people who provide to lenders just the name and contact information of the person who wants to borrow money, but only if they are not carrying on the business of providing that information to lenders.

Reporting Agencies

Reporting Agencies are people who provide reports for profit or as part of a business , as defined by B.C.’s Business Practices and Consumer Protection Act,. Reporting agencies do not need an MSA licence to give information about a potential borrower to a lender. This exemption only applies if they do not provide any other mortgage services or claim to do so.

Notaries

Notaries in good standing with the Society of Notaries Public of B.C. do not need an MSA licence if they negotiate or arrange a mortgage for someone else as part their regular services, permitted under B.C.’s Notaries Act, of preparing property documents for filing or registration.

Accountants

Accountants licensed under the Chartered Professional Accountants Act do not need an MSA licence to give advice about mortgage contracts if it is part of their regular accounting services.

Some Federally Regulated Entities

Federal cooperative credit societies and retail associations registered under the Cooperative Credit Associations Act (Canada) do not require an MSA license.

Exceptions for some Directors, Officers, and Employees

Exempt organizations (ones that that do not need an MSA licence) still require people to act on their behalf.

A director, officer, or employee of an exempt organization do not need an MSA license to provide mortgage services for that organization or its affiliates.

Under the Business Corporations Act, an affiliate is:

• Owned by the exempt organization.
• Owned by the same parent company.
• Controlled by the same person or entity.

Other Exemptions

In addition to any exemptions mentioned above, the following persons and organizations do not require an MSA licence, under section 4 of the MSA:

• insurance companies;
• savings institutions;
• a director, officer or employee of an insurance company or a savings institution in respect of mortgage services provided on behalf of that insurance company or financial institution;
• any person acting for the government of Canada or the government of a province or for an agency of any of those governments, in respect of mortgage services provided on behalf of that government or agency;
• a lawyer in respect of mortgage services that are incidental to legal services provided by the lawyer;
• a person acting under the authority of a court;
• a trustee in bankruptcy, custodian, receiver, receiver manager or liquidator who is appointed under a federal or provincial enactment, in respect of mortgage services provided by the person in that capacity;
• an executor or administrator of an estate, in respect of mortgage services provided by the person to the estate in the person’s capacity as executor or administrator; and
• a trustee, in respect of mortgage services provided under the terms of a will or marriage settlement.

Lending Exemptions

Exemption for Individuals

An individual is exempt from needing to be licensed when providing mortgage lending services if the individual is:

• lending their own money or that of their spouse;
• is only acting on behalf of themselves or their spouse;
• not carrying on the business of providing the service of mortgage lending.

Exemption for Principal Brokers and Mortgage Brokers

A licensed principal broker or mortgage broker is exempt from the licensing requirement to work under a brokerage when providing mortgage lending services if the licensee:

• is lending their own money or that of their spouse;
• is only acting on behalf of themselves or their spouse;
• is not carrying on the business of providing mortgage lending services; and
• discloses to the principal broker of their mortgage brokerage that they are providing mortgage lending services, information on the real property securing the mortgage, the amount and term of the mortgage, and the identity of the borrowers of the mortgage loan.

More information on lending exemptions can be found on BCFSA’s Mortgage Services Knowledge Base.

Definitions

Spouse: is a person married to another person or a person living with another person in a marriage-like relationship.

Applicable Section of Mortgage Services Act, its Regulations, or the Mortgage Services Rules

MSA

s. 4 [Exemptions]

MSA Regulations

s. 3 [Exemption for certain registrants under Securities Act]

s. 4 [Exemption for licensees under Real Estate Services Act]

s. 5 [Exemption for reporting agencies under Business Practices and Consumer Protection Act]

s. 6 [Exemption for notaries]

s. 7 [Exemption for accountants]

s. 8 [Exemption for certain federally regulated entities]

s. 9 [Exemption for certain directors, officers and employees]

s. 10 [Exemption for individuals making referrals]

s. 39 [Exemption for individuals]

s. 40 [Exemption for principal brokers and mortgage brokers]