Information on Licensing Levels and Categories

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Understanding Licensing Levels and Categories

Mortgage services in BC are regulated through the Mortgage Services Act (“MSA”), Mortgage Services Regulation (“Regulation”), and Mortgage Services Rules (“Rules”). This information sets out the licensing requirement under the MSA legislation. More information on licensing exemptions can be found on BCFSA’s Mortgage Services Knowledge Base.

Under the MSA, a person cannot offer to provide mortgage services for any kind of payment unless they are licensed as a principal broker or mortgage broker and are working for a mortgage brokerage. There are some exceptions that apply.

A mortgage services licensee provides mortgage services within a licensed mortgage brokerage under the supervision of a licensed Principal Broker. The information below explains how licensing level and category requirements work under an MSA license.

Licence Levels

There are three mortgage services licence levels:

1. Mortgage Brokerage,
2. Principal Broker, and
3. Mortgage broker.

An individual may be licensed at any licence level, but non-individuals (i.e. corporations and partnerships) can only be licensed as a mortgage brokerage.

1. A mortgage brokerage licence allows a person to carry on the business of providing mortgage services through a mortgage broker (or principal broker). If the brokerage has branch offices, each branch needs its own licence. The mortgage services (i.e. categories) offered by the brokerage must match what the principal broker’s licence allows. Sole proprietors also need a brokerage licence. More information on Sole Proprietors can be found on BCFSA’s Mortgage Services Knowledge Base. A mortgage brokerage cannot operate without a principal broker.
2. Each brokerage must have a licensed principal broker, an individual authorized to act for the brokerage. If there are branch offices, each branch needs a principal broker. A principal broker can only be licensed at one mortgage brokerage unless the brokerages are affiliated. In that case, one principal broker can be licensed at up to four related mortgage brokerages, unless the Superintendent approves more. The principal broker supervises and supports licensees and has responsibility for the control and conduct of the mortgage business. More information on licensee duties can be found on BCFSA’s Mortgage Services Knowledge Base.
3. A mortgage broker licence allows an individual to provide mortgage services under a principal broker’s supervision. All mortgage brokers must be licensed under a brokerage and can only offer mortgage services (i.e. categories) allowed by the principal broker and brokerage’s licences.

Licence Categories

In addition to licensees having a licensing level, everyone must be licensed in at least one mortgage services category—dealing, trading, administering, or lending.

1. Dealing

Dealing: arranging (originating) mortgages between borrowers and lenders and includes:

• Asking people to borrow or lend money secured by real estate.

• Giving advice to a potential borrower or lender about a specific mortgage.

• Providing information about a potential borrower to a lender.

• Assessing a potential borrower for a lender.

• Negotiating or arranging mortgages for others.

Example

A couple planning to purchase their first home in Kamloops searches online for mortgage brokers and finds Sylvia, a licensed mortgage broker who works at Valleyview Mortgage Brokerage. Sylvia takes on the role of asking about their needs and then helping them find a lender and secure a mortgage with appropriate terms.

She begins by asking questions and verifying information. This includes gathering information about their financial situation, such as how much they earn, what debts they carry, and how much they have saved for a down payment. Using this and other information she’s gathered, she advises them on the types of mortgages they may qualify for and outlines the realistic terms of the mortgages (e.g., term of loan, prepayment privileges, total cost of borrowing, etc.). Next, Sylvia assesses their financial profile and compiles a package for potential lenders. This package includes credit checks, income verification, and an affordability analysis. She then negotiates with several lenders on the couple’s behalf to secure the most favorable terms. Sylvia discloses all relevant forms and information to the couple at the appropriate times, including the total cost of borrowing and how much money she will potentially make off the mortgage transaction. Sylvia should be discussing the terms of the commitment and the other offers with the couple so they are aware and can make an informed decision. Once a lender provides a commitment (offer to borrower), Sylvia arranges the mortgage by guiding the couple through the paperwork and ensuring both borrowers fully understand the agreement. In this process, Sylvia does not provide the loan herself. Instead, she acts as a connector and facilitator, bridging the needs of the borrowers with the terms offered by the lender.

2. Trading

Trading: means doing (or attempting to do) any of the following activities:

• Asking someone to buy, sell, or trade mortgages.

• Buying, selling, or trading mortgages for someone else.

• Buying, selling, or trading mortgages for yourself.

• Buying a loan secured by real estate.

Someone performing trading services is working on behalf of one lender who wants to sell their interest in the mortgage security to another lender. The borrower is not involved in the trading transaction.

Example

A mortgage investment entity (MIE) based in Vancouver holds a portfolio of consumer and commercial mortgages. To manage the risk in the portfolio and free up capital to fund new mortgages, the MIE decides to sell a group of higher-risk mortgages. Arun, an employee of the MIE who is licensed in the category of trading, is responsible for facilitating this transaction.

Arun begins by reviewing the MIE’s mortgage portfolio and identifying which loans are suitable for trading. These may include mortgages with higher interest rates, shorter terms, or borrowers with less stable credit histories. His role is to find a buyer, typically another lender or investor, who is interested in purchasing these types of mortgage assets.

Once he understands the MIE’s goals and the characteristics of the mortgages for sale, Arun reaches out to his network of potential buyers. He shares relevant details about the mortgages, such as loan-to-value ratios, borrower profiles, and payment histories, while ensuring all information is shared in compliance with privacy and disclosure rules. Arun does not contact the borrowers directly, as they are not involved in the trading transaction.

After negotiating terms with a potential buyer, Arun facilitates the sale of the selected mortgages. He ensures that both parties understand the terms of the transaction, including the price, servicing arrangements, and any conditions of the sale. Arun discloses any fees or commissions he may earn from the transaction to the buyer and ensures all documentation is completed accurately and in a timely manner.

In this process, Arun does not own the mortgages himself, nor does he lend money. Instead, he acts as an intermediary, connecting one lender who wants to sell mortgage assets (in this case, the MIE) with a lender or investor who wants to buy them. His role is to support the efficient transfer of mortgage investments, helping both parties meet their portfolio objectives.

3. Administering

Administering: managing mortgage payments for lenders, including:

• Collecting and processing payments from borrowers and sending them to lenders.

• Monitoring borrowers’ performance on their mortgage obligations.

• Enforcing payment by borrowers.

Example

A licensed mortgage brokerage, Summit Mortgage Services, manages a portfolio of existing mortgages on behalf of several private investors. One of their licensed administrators, Devan, oversees the day-to-day servicing of these mortgages. Each month, Devan receives mortgage payments from a diverse group of borrowers in trust for the lenders. Devan records each payment, ensures it is correctly applied to the borrower’s account, and monitors each borrower’s payment history. If a borrower misses a scheduled payment, Devan initiates procedures in accordance with the mortgage agreement. This may involve discussions with the borrower, issuing formal notices, or escalating the matter to legal counsel.

In this role, Devan does not arrange new mortgages or provide loans. Instead, he administers existing mortgage agreements by managing payments, tracking borrower performance, and ensuring lenders receive timely and accurate remittances.

4. Lending

Lending: lending money secured by real estate, including buying a debt obligation secured by real estate. Brokerages licensed in lending can deal, trade, and administer their own loans. They can also work with mortgage dealers at other brokerages to help find potential borrowers or with mortgage traders to sell their mortgages to other lenders. However, if brokerages licensed in the lending category want to deal, trade, or administer loans from people they are not related to¹, then the brokerage would need to get licensed in those categories.

^{1 Note that sections 39 and 40 of the Regulation provide mortgage lending exemptions for individuals, principal brokers and mortgage brokers, specifically if they are lending their own money or their spouse’s money. More information on licensing exemptions can be found on BCFSA’s Mortgage Services Knowledge Base.}

Example

A licensed mortgage brokerage, Salish Coast Mortgages, is licensed in the “lending” category under the MSA. A borrower came to them through a simple referral. Salish Coast Mortgages assessed the unrepresented borrower and agreed to lend them $500,000 for a residential home. The brokerage originates and funds the loan itself, and it registers the mortgage against the property title. Once monthly mortgage payments begin, Salish Coast Mortgage can collect the payments, monitor performance, and enforce the terms of the agreement.  If they want to, they can also sell that mortgage to another person, as defined by the MSA.

Because Salish Coast Mortgages is licensed in the lending category, it is also permitted to:

• Deal in its own mortgages (e.g., offering and arranging the loan),

• Trade mortgages it issues (e.g., selling or assigning them), and

• Administer its own loans (e.g., collecting payments and enforcing terms).

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

MSA

s. 3 [Requirement for licence to provide mortgage services]

s. 9 [Licence levels and categories]

MSA Rules

s. 2 [Licence categories]

s. 4 [Principal broker may be licensed in relation to a maximum number of affiliated mortgage brokerages]