Draft regulation
under the Mortgage Brokers Act, for consultation
purposes only 
COST OF BORROWING AND DISCLOSURE TO BORROWERS
APPLICATION AND
INTERPRETATION
1. Application
2. Definitions
COST OF BORROWING
3. Calculation of the APR
4. Annual interest rate as APR
5. Included and excluded charges
DISCLOSURE TO BORROWERS
6. Manner of making disclosures
7. Timing of initial disclosure
8. Disclosurefixed interest mortgage for a fixed
amount
9. Disclosurevariable interest mortgage for a fixed
amount
10. Disclosureline of credit
11. Disclosure after amendment to a mortgage
12. Disclosurerenewal of a mortgage
13. Disclosureoffer to waive payment
DEFAULT CHARGES
14. Default charges
ADVERTISING
15. Advertisingmortgage for a fixed amount
16. Advertisingline of credit
17. Advertisinginterestfree periods
PURCHASING INSURANCE
18. Insurance
COMMENCEMENT
19. Commencement
APPLICATION AND INTERPRETATION
Application
 This Regulation applies to every mortgage other than a
mortgage entered into with a borrower who is not a natural person,
or a mortgage that a borrower enters into for business purposes.
Definitions
 In this Regulation,
" APR" means
the cost of borrowing expressed as an annual rate on the principal
referred to in subsection 3 (1);
"disbursement charge" means a charge, other than one referred
to in subsection 5 (1), to recover an expense incurred to arrange,
document, insure or secure a mortgage and includes a charge
referred to in clause 5 (2) (c);
"principal" means the amount borrowed under a mortgage but
does not include any cost of borrowing.
COST OF BORROWING
Calculation of the APR

 For the purpose of section 7.2 of the Act, the cost of borrowing
for a mortgage is the annual rate on the principal as calculated
using the formula,
in which,
"APR"
is the annual percentage rate cost of borrowing,
"C" is the cost of borrowing within the meaning of section
5 over the term of the mortgage,
"P" is the average of the principal of the mortgage outstanding
at the end of each period for the calculation of interest
under the mortgage, before subtracting any payment that
is due at that time, and
"T" is the term of the mortgage in years, expressed to
at least two decimal points of significance.
 For the purpose of subsection (1),
 the APR
may be rounded off to the nearest eighth of a per cent;
 each instalment payment made on the mortgage must be
applied first to the accumulated cost of borrowing and
then to the outstanding principal;
 a period of,
 one month is 1/12 of a year,
 one week is 1/52 of a year, and
 one day is 1/365 of a year;
 if the annual interest rate underlying the calculation
is variable over the period of the mortgage, it must be
set as the annual interest rate that applies on the day
that the calculation is made;
 if there are no instalment payments under the mortgage,
then the APR
must be calculated on the basis that the outstanding principal
is to be repaid in one lump sum at the end of the term
of the mortgage; and
 a mortgage for an amount that comprises, in whole or
in part, an outstanding balance from a prior mortgage
is a new mortgage for the purpose of the calculation.
 The cost of borrowing for a line of credit or credit card
secured under a mortgage is,
 if the mortgage has a fixed annual interest rate, that
annual interest rate; or
 if the mortgage has a variable annual interest rate,
the annual interest rate that applies on the date of the
disclosure.
Annual interest rate as APR
 The APR
for a mortgage is the annual interest rate if there is no cost
of borrowing other than interest.
Included and excluded charges

 Subject to subsection (2), the cost of borrowing for a
mortgage, other than one that secures a line of credit, consists
of all the costs of borrowing under the mortgage over its
term and including the following charges:
 Administrative charges, including charges for services,
transactions or any other activity in relation to the
mortgage.
 Charges for the services, or disbursements, of a lawyer
or notary that the lender required the borrower to retain.
 Insurance charges other than those excluded under clauses
(2) (a) and (f).
 The mortgage broker's charges, if they are included
in the amount borrowed.
 Charges for appraisal, inspection or surveying services
provided directly to the borrower in relation to the property
that is security for a loan.
 The cost of borrowing for a mortgage does not include,
 charges for insurance on the mortgage,
 if the insurance is optional, or
 if the borrower is its beneficiary and the amount
insured reflects the value of an asset that is security
under the mortgage;
 charges for an overdraft;
 charges paid to register documents or obtain information
from a public registry about security interests related
to property given as security;
 penalty charges for the prepayment of the mortgage;
 charges for the services, or disbursements, of a lawyer
or notary, other than those mentioned in paragraph 2 of
subsection (1);
 charges for insurance against defects in title to real
property, if the insurance is paid for directly by the
borrower;
 charges to maintain an account that are required for
a highratio mortgage or that are optional;
 any charges to discharge a security interest; or
 default charges.
DISCLOSURE TO BORROWERS
Manner of making disclosures

 A mortgage broker must give the borrower a written disclosure
statement that provides the information required by this Regulation.
 Information disclosed in a disclosure statement may be
based on an assumption or estimate if the assumption or estimate
is reasonable and if the information,
 cannot be known by the mortgage broker when he, she
or it makes the statement; and
 is identified to the borrower as an assumption or estimate.
 A disclosure statement, or a consent in relation to a disclosure
statement, must be written in plain language that is clear
and concise and it must be presented in a manner that is logical
and likely to bring to the borrower's attention the information
that is required to be disclosed.
 If the borrower consents in writing, the disclosure statement
may be provided by electronic means in an electronic form
that the borrower can retrieve and retain.
Timing of initial disclosure

 A mortgage broker that proposes to enter into or arrange
a mortgage with a borrower must give the initial disclosure
statement required by this Regulation to the borrower on or
before the earlier of,
 the day on which the borrower makes the first payment,
other than a disbursement charge, in relation to the mortgage;
and
 two clear business days before the borrower enters into
the mortgage agreement.
 Clause (1) (b) does not apply if the borrower consents,
in writing, to being given the initial disclosure on the day
he or she enters into the mortgage agreement.
Disclosure  fixed interest mortgage
for a fixed amount

 A mortgage broker that enters into or arranges a mortgage
for a fixed interest rate for a fixed amount, to be repaid
on a fixed future date or by instalment payments, must give
the borrower an initial disclosure statement that includes
the following information:
 The principal amount of the mortgage.
 The amount of each advance of the principal and when
each advance is to be made.
 The total amount of all payments.
 The cost of borrowing over the term of the mortgage,
expressed in dollars and cents.
 The term of the mortgage, and the period of amortization
if it is different from the term.
 The annual interest rate and the circumstances, if any,
under which it is compounded.
 The APR,
if it differs from the annual interest rate.
 The date on and after which interest is charged and
information concerning any period during which interest
does not accrue.
 The amount of each payment and when it is due.
 The fact that each payment made on the mortgage must
be applied first to the accumulated cost of borrowing
and then to the outstanding principal.
 Information about any optional service in relation to
the mortgage that the borrower accepts, the charges for
each optional service and the conditions under which the
borrower may cancel the service, if that information is
not disclosed in a separate statement before the optional
service is provided.
 The information required by section 7.3 of the Act,
including default charges that may be imposed under section
14 of this Regulation.
 The property in which the lender takes a security interest
under the mortgage.
 Any charge paid for any other mortgage broker involved
in the transaction, if the other broker's charges are
included in the amount borrowed and are paid directly
to the other broker.
 The fact that there is a charge to discharge a security
interest and the amount of the charge on the day that
the statement was provided.
 The nature and amount of any charge other than an interest
charge, or the formula if the amount cannot be determined
at the time of disclosure.
 If the outstanding balance of the mortgage is increased
because the borrower has missed a scheduled instalment payment
or because a default charge is levied on the borrower for
missing a scheduled instalment payment, the mortgage broker
(if the mortgage broker is a lender in the transaction or
administers the mortgage) must give the borrower a subsequent
disclosure statement not more than 30 days after the missed
payment or the imposition of the default charge that describes
the situation and its consequences.
Disclosure  variable interest mortgage
for a fixed amount

 A mortgage broker that enters into or arranges a mortgage
with a variable interest rate for a fixed amount, to be repaid
on a fixed future date or by instalment payments, must give
the borrower an initial disclosure statement that includes
the following information:
 The information described in paragraphs1, 2, 5, 7, 8
and 10 to 16 of subsection 8 (1).
 The annual rate of interest that applies on the date
of the disclosure statement.
 The method for determining the annual interest rate
that applies after the date of the disclosure statement
and when that determination is made.
 The amount of each payment based on the annual interest
rate that applies on the date of the disclosure statement
and the dates when those payments are due.
 The total amount of all payments and of the cost of
borrowing based on the annual interest rate that applies
on the date of the disclosure statement.
 If the loan is to be paid by instalment payments and
the amount to be paid is not adjusted automatically to
reflect changes in the annual interest rate that applies
to each instalment payment,
 the annual interest rate above which the amount
of a scheduled instalment payment on the initial principal
does not cover the interest due on the instalment
payment, and
 the fact that negative amortization is possible.
 If the loan does not have regularly  scheduled payments,
 the conditions that must occur for the entire outstanding
balance, or part of it, to become due, or
 the provisions of the mortgage that set out those
conditions.
 If the variable interest rate for the loan is determined
by adding or subtracting a fixed percentage rate of interest
to or from a public index that is a variable rate, the mortgage
broker must give the borrower an additional disclosure statement
at least once every 12 months that contains the following
information:
 The annual interest rate at the beginning and end of
the period covered by the disclosure statement.
 The outstanding balance at the beginning and end of
the period covered by the disclosure statement.
 The amount of each instalment payment due under a payment
schedule and the time when each payment is due, based
on the annual interest rate that applies at the end of
the period covered by the disclosure statement.
 If the variable interest rate for the mortgage is determined
by a method other than that referred to in subsection (2),
the mortgage broker (if the mortgage broker is a lender in
the transaction or administers the mortgage) must give the
borrower an additional disclosure statement no more than 30
days after increasing the annual interest rate by more than
1 per cent above the most recently disclosed rate and the
disclosure statement must contain the following information:
 The new annual interest rate and the date on which it
takes effect.
 The amount of each instalment payment and the time when
each payment is due, for payments that are affected by
the new annual interest rate.
 In this section,
" public index" means an interest rate, or a variable base
rate for an interest rate, that is published at least weekly
in a newspaper or magazine of general circulation, or in some
media of general circulation or distribution, in areas where
borrowers whose mortgages are governed by that interest rate
reside.
Disclosure  line of credit

 A mortgage broker that arranges a mortgage securing a line
of credit must give the borrower an initial disclosure statement
that includes the following information:
 The initial credit limit, if it is known at the time
the disclosure is made.
 The annual interest rate, or the method for determining
it if it is variable.
 The nature and amounts of any noninterest charges.
 The minimum payment during each payment period or the
method for determining it.
 Each period for which a statement of account is to be
provided.
 The date on and after which interest accrues and information
concerning any grace period that applies.
 The particulars of the charges or penalties referred
to in paragraph 5 of section 7.3 of the Act, including
default charges that may be imposed under section 14 of
this Regulation.
 The property in which the lender takes a security interest
under the mortgage.
 Information about any optional service in relation to
the mortgage that the borrower accepts, the charges for
each optional service and the conditions under which the
borrower may cancel the service, if that information is
not disclosed in a separate statement before the optional
service is provided.
 A local or tollfree telephone number, or a telephone
number with a prominent indication that collect calls
are accepted, that the borrower may use to get information
about the account during the lender's regular business
hours.
 Any charge for any other mortgage broker involved in
the transaction, if the other broker's charges are included
in the amount borrowed and are paid directly to the other
broker by the lender.
 If the initial credit limit is not known when the initial
disclosure statement is made, the mortgage broker (if the
mortgage broker is a lender in the transaction or administers
the mortgage) must disclose it,
 in the first statement of account provided to the borrower;
or
 in a separate statement that the borrower receives on
or before the date on which the borrower receives that
first statement of account.
 Subject to subsection (4), the mortgage broker (if the mortgage
broker is a lender in the transaction or administers the mortgage)
must give the borrower an additional disclosure statement
at least once a month that contains the following information:
 The period covered by the disclosure statement and the
opening and closing balances in the period.
 An itemized statement of account that discloses each
amount credited or charged, including interest, and the
dates when those amounts were posted to the account.
 The sum for payments and the sum for credit advances
and interest and other charges.
 The annual interest rate that applied on each day in
the period and the total of interest charged at those
rates in the period.
 The credit limit and the amount of credit available
at the end of the period.
 The minimum payment and its due date.
 The borrower's rights and obligations regarding any
billing error that may appear in the statement of account.
 A local or tollfree telephone number, or a telephone
number with a prominent indication that collect calls
are accepted, that the borrower may use to get information
about the account during the mortgage broker's regular
business hours.
 The additional disclosure statements described in subsection
(3) are not required for a period during which there are no
advances or payments and,
 there is no outstanding balance at the end of the period;
or
 the borrower has notice that the mortgage has been suspended
or cancelled due to default and the lender has demanded
payment of the outstanding balance.
Disclosure after amendment to a mortgage

 This section applies to a mortgage broker who is a lender
in the transaction or who administers the mortgage.
 Subject to subsection (3), if a mortgage is amended by a
subsequent agreement, the mortgage broker must give the borrower
a written statement within 30 days after the borrower enters
into the subsequent agreement, and the statement must describe
the changes to the information required to be disclosed in
the initial disclosure statement for the mortgage.
 If a mortgage for a fixed amount has a schedule for instalment
payments and the schedule is amended by a subsequent agreement,
the lender must give the borrower a written statement within
30 days after entering into the subsequent agreement, and
the statement must set out the new payment schedule and any
increase in the total amount to be paid or the cost of borrowing.
Disclosure  renewal of a mortgage

 This section applies to a mortgage broker who is a lender
in the transaction or who administers the mortgage.
 If a mortgage is to be renewed on a specified date, the
mortgage broker must give the borrower an additional disclosure
statement at least 21 days before the specified renewal date,
and the statement must contain the information required by,
 section 8, if the mortgage is for a fixed interest rate;
or
 section 9, if the mortgage is for a variable interest
rate.
 The additional disclosure statement must specify that,
 the cost of borrowing will not be increased after the
disclosure statement is given to the borrower and before
the mortgage is renewed; and
 the borrower's rights under the mortgage continue, and
the renewal does not take effect, until the day that is
the later of the specified renewal date and the day that
is 21 days after the borrower receives the statement.
 If a lender does not intend to renew a mortgage after its
term ends, the mortgage broker shall notify the borrower of
the lender's intention at least 21 days before the end of
the term.
Disclosure  offer to waive payment

 This section applies to a mortgage broker who is a lender
in the transaction or who administers the mortgage.
 If, under a mortgage for a fixed amount, a lender offers
to waive a payment without waiving the accrual of interest
during the period covered by the payment, the mortgage broker
must disclose to the borrower in a prominent manner in the
offer that interest will continue to accrue during that period
if the borrower accepts the offer.
 If a lender offers to waive a payment under a mortgage that
secures a line of credit, the mortgage broker must disclose
to the borrower in a prominent manner in the offer whether
interest will continue to accrue during any period covered
by the offer if the borrower accepts the offer.
DEFAULT CHARGES
Default charges
 If a borrower fails to make a payment when it becomes due or
fails to comply with an obligation under a mortgage, in addition
to interest, the mortgage broker may impose charges for the sole
purpose of recovering the costs reasonably incurred,
 for legal services required to collect or attempt to collect
the payment;
 for expenses incurred to realize on a security interest
taken under the mortgage or to protect such a security interest,
including the cost of legal services required for that purpose;
or
 for expenses incurred to process a cheque or other payment
instrument that the borrower used to make a payment under
the mortgage but that was dishonoured.
ADVERTISING
Advertising  mortgage for a fixed amount

 If a mortgage broker advertises a mortgage for a fixed amount
and if the advertisement includes a representation about the
interest rate or the amount of any payment or of any charge
other than interest, the advertisement must also include the
APR and
the term of the mortgage and the APR
must be provided at least as prominently as the representation
and in the same manner as the representation is made, whether
visually or aurally or both.
 If the APR
or the term of the mortgage is not the same for all mortgages
to which the advertisement relates, the disclosure must be
based on an example of a mortgage that fairly depicts all
those mortgages and is identified as a representative example
of them.
Advertising  line of credit
 If a mortgage broker advertises a mortgage that secures a line
of credit and if the advertisement includes a representation about
the annual interest rate or the amount of any payment or of any
charge other than interest, the advertisement must also include
the annual rate of interest on the date of the advertisement and
any initial or periodic charges other than interest and that information
must be provided at least as prominently as the representation
and in the same manner as the representation is made, whether
visually or aurally, or both.
Advertising  interestfree periods

 If a mortgage broker advertises that the mortgage broker
will finance a mortgage and if the advertisement includes
a representation, express or implied, that a period of the
mortgage is free of any interest charges, the advertisement
must indicate whether interest accrues during the period and
is payable after the period and that information must be provided
at least as prominently as the representation, if it was express,
or in a prominent manner, if it was implied.
 If interest does not accrue during the period, the advertisement
must also disclose any conditions that apply to the forgiving
of the accrued interest and the APR,
or the annual interest rate in the case of a mortgage that
secures a credit card or line of credit, for a period when
those conditions are not met.
PURCHASING INSURANCE
Insurance

 A borrower who is required by a mortgage broker (if the
mortgage broker is a lender in the transaction or administers
the mortgage) to purchase any insurance may purchase it from
any insurer who may lawfully provide that type of insurance,
except that the mortgage broker may reserve the right to disapprove,
on reasonable grounds, an insurer selected by the borrower.
 A mortgage broker who offers to provide or to arrange insurance
referred to in subsection (1) must at the same time clearly
disclose to the borrower in writing that the borrower may
purchase the required insurance through an agent and from
an insurer of the borrower's choice.
COMMENCEMENT
COMMENCEMENT
 This Regulation comes into force on [insert date].