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Mortgage Insurance Disclosure (Banks, Authorized Foreign Banks, Trust and Loan Companies, Retail Associations, Canadian Insurance Companies and Canadian Societies) Regulations

SOR/2010-69

BANK ACT

COOPERATIVE CREDIT ASSOCIATIONS ACT

INSURANCE COMPANIES ACT

TRUST AND LOAN COMPANIES ACT

Registration 2010-03-25

Mortgage Insurance Disclosure (Banks, Authorized Foreign Banks, Trust and Loan Companies, Retail Associations, Canadian Insurance Companies and Canadian Societies) Regulations

P.C. 2010-389 2010-03-25

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, hereby makes the annexed Mortgage Insurance Disclosure (Banks, Authorized Foreign Banks, Trust and Loan Companies, Retail Associations, Canadian Insurance Companies and Canadian Societies) Regulations pursuant to

(a) subsections 418.1(3)Footnote a and 552(3)Footnote b of the Bank ActFootnote c;

(b) subsection 382.2(3)Footnote d of the Cooperative Credit Associations ActFootnote e;

(c) subsections 469.1(3)Footnote f and 542.061(3)Footnote g of the Insurance Companies ActFootnote h; and

(d) subsection 418.1(3)Footnote i of the Trust and Loan Companies ActFootnote j.

Interpretation

 The following definitions apply in these Regulations.

borrower

borrower means a person who obtains a residential mortgage. (emprunteur)

institution

institution means any of the following:

insurer

insurer includes a government agency that provides mortgage insurance to an institution. (assureur)

mortgage insurance

mortgage insurance means an insurance policy or a guarantee against default on a residential mortgage. (assurance hypothécaire)

point of service

point of service means a physical location at which an institution issues or initiates the issuance of a residential mortgage through a natural person. (point de service)

residential mortgage

residential mortgage means a loan made in Canada on the security of residential property that has four or less residential units. (hypothèque résidentielle)

  • SOR/2016-142, s. 6(F)

Application

 These Regulations do not apply in respect of an institution that has obtained mortgage insurance from an insurer if neither the institution nor any of its affiliates charges borrowers an amount for that insurance.

Manner and Timing of Disclosure

 Any information that is required to be disclosed by an institution under these Regulations must be disclosed in language, and presented in a manner, that is clear, simple and not misleading.

 Every institution that provides residential mortgages to borrowers and charges them an amount for mortgage insurance must

  • (a) maintain and make available at each of its branches or offices and at each of its points of service where residential mortgages are offered in Canada and on each of its websites through which residential mortgages are offered in Canada, the information in respect of mortgage insurance referred to in sections 5 and 6, paragraphs 7(a), 8(a) and 9(a) and subparagraphs 10(a)(i) and (b)(i) for each insurer with which it has entered into an arrangement to receive payments or benefits;

  • (b) provide to customers and to the public, on request, the information referred to in sections 5 and 6 and paragraphs 7(a), 8(a) and 9(a) and subparagraphs 10(a)(i) and (b)(i) for each insurer with which it has entered into an arrangement to receive payments or benefits; and

  • (c) provide to each borrower that the institution charges for mortgage insurance, in a separate document, at or before the time that they enter into the mortgage agreement,

    • (i) the information referred to in sections 5 to 10 as it applies to that particular borrower,

    • (ii) the total of the amounts referred to in paragraphs 7(a), 8(c) and 9(c) and subparagraphs 10(a)(iii) and (b)(iii) as they apply to that particular borrower, and

    • (iii) the total of the percentages referred to in paragraphs 7(b), 8(b) and 9(b) and subparagraphs 10(a)(ii) and (b)(ii) as they apply to that particular borrower.

General Information on Mortgage Insurance

 Every institution that charges borrowers an amount for mortgage insurance must disclose

  • (a) the coverage provided by the mortgage insurance, including which party is protected by the mortgage insurance and which party pays for it;

  • (b) the manner in which the amount that the institution is being charged by the insurer for the mortgage insurance is calculated; and

  • (c) any other information in respect of the mortgage insurance that could reasonably be expected to have an impact on the borrower.

Disclosure of Information Relating to Arrangements Between Institutions and Insurers

  •  (1) Subject to subsection (2), every institution that enters into an arrangement with an insurer to receive payments or benefits from the insurer, shall, if the insurer also provides the institution with mortgage insurance, disclose in a single document information relating to all of their business arrangements with the insurer in respect of that mortgage insurance, including

    • (a) the nature of the arrangements;

    • (b) any payments or benefits referred to in section 7 or 8 that are received directly or indirectly by the institution from the insurer or any of its affiliates; and

    • (c) any payments or benefits referred to in section 9 or 10 that are expected to be received directly or indirectly by the institution from the insurer or any of its affiliates.

  • (2) Subsection (1) does not apply in respect of a business arrangement entered into by an institution to provide the insurer with products and services that are offered by the institution to its customers and to the public in the normal course of business.

 If an institution receives payments or benefits in respect of mortgage insurance from an insurer under an arrangement referred to in subsection 6(1) on a per residential mortgage basis, the institution must disclose

  • (a) in respect of each type of activity that is the subject of such payments or benefits, the amount of each of those payments or benefits expressed in dollars; and

  • (b) in respect of a particular borrower that obtains a residential mortgage from the institution, the amount of each of those payments or benefits expressed as a percentage of the amount that the institution charges the borrower for mortgage insurance.

 If, on the first day of a fiscal quarter, an institution has, in any of the first four fiscal quarters of the preceding five fiscal quarters, received payments or benefits in respect of mortgage insurance from an insurer under an arrangement referred to in subsection 6(1) on a basis other than that referred to in section 7 and each of those five preceding fiscal quarters begins on or after July 1, 2010, the institution must disclose

  • (a) in respect of each type of activity that is the subject of such payments or benefits, the total amount, expressed in dollars, of such payments or benefits received from that insurer in those first four fiscal quarters;

  • (b) each of the total amounts referred to in paragraph (a) expressed, respectively, as a percentage of the total amount paid to the insurer by the institution in respect of policies and guarantees in those first four fiscal quarters; and

  • (c) in respect of a particular borrower that obtains a residential mortgage from that institution, the amounts, expressed in dollars, that are determined by multiplying the amount that the institution charges the borrower for mortgage insurance by each of the percentages referred to in paragraph (b).

 If, on the first day of a fiscal quarter, an institution has not, in any of the first four fiscal quarters of the preceding five fiscal quarters, received payments or benefits in respect of mortgage insurance from an insurer under an arrangement referred to in subsection 6(1), but expects to receive such payments or benefits from an insurer in that fiscal quarter, or in any of the three following fiscal quarters, on a basis other than that referred to in section 7, the institution must disclose

  • (a) in respect of each type of activity that is the subject of such payments or benefits, the total amount, expressed in dollars, of such payments or benefits that the institution expects to receive from that insurer in that fiscal quarter and the three following fiscal quarters;

  • (b) each of the total amounts referred to in paragraph (a) expressed, respectively, as a percentage of the total amount expected to be paid to the insurer by the institution in respect of policies and guarantees in that fiscal quarter and the three following fiscal quarters; and

  • (c) in respect of a particular borrower that obtains a residential mortgage from that institution, the amounts, expressed in dollars, that are determined by multiplying the amount that the institution charges the borrower for mortgage insurance by each of the percentages referred to in paragraph (b).

 If, on the first day of a fiscal quarter that begins on or after January 1, 2011 or includes but does not begin on that day, an institution has, in any of the first four fiscal quarters of the preceding five fiscal quarters, received payments or benefits under an arrangement in respect of mortgage insurance from an insurer on a basis other than that referred to in section 7 and one or more of those five preceding fiscal quarters begins before July 1, 2010, the institution must

  • (a) if the fiscal quarter begins on or after January 1, 2011, disclose

    • (i) in respect of each type of activity for which the institution expects to receive payments or benefits in respect of mortgage insurance from that insurer under an arrangement referred to in subsection 6(1) in that fiscal quarter and the three following fiscal quarters, the total amount, expressed in dollars, of such payments or benefits,

    • (ii) each of the total amounts referred to in subparagraph (i) expressed, respectively, as a percentage of the total amount expected to be paid to the insurer by the institution in respect of policies and guarantees in that fiscal quarter and the three following fiscal quarters, and

    • (iii) in respect of a particular borrower that obtains a residential mortgage from that institution, the amounts, expressed in dollars, that are determined by multiplying the amount that the institution charges the borrower for mortgage insurance by each of the percentages referred to in subparagraph (ii); and

  • (b) if the fiscal quarter includes January 1, 2011 but does not begin on that day, disclose

    • (i) in respect of each type of activity for which the institution receives or expects to receive payments or benefits in respect of mortgage insurance from that insurer under an arrangement referred to in subsection 6(1) in that fiscal quarter and the three following fiscal quarters, the total amount, expressed in dollars, of such payments or benefits,

    • (ii) each of the total amounts referred to in subparagraph (i) expressed, respectively, as a percentage of the total amount paid or expected to be paid to the insurer by the institution in respect of policies and guarantees in that fiscal quarter and the three following fiscal quarters, and

    • (iii) in respect of a particular borrower that obtains a residential mortgage from that institution, the amounts, expressed in dollars, that are determined by multiplying the amount that the institution charges the borrower for mortgage insurance by each of the percentages referred to in subparagraph (ii).

 
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