Nationwide Lending Centres Inc. Policies and Procedures

Transcription

1 Nationwide Lending Centres Inc. Policies and Procedures 1. Privacy Policy 2. Broker and Agent Protection of Data 3. Advertising 4. File Handling and Retention 5. Complaints 6. Use of Forms 7. Suitability 8. Fraud Prevention 9. Syndicated Mortgages 10. Errors and Omissions Insurance 11. Branch Offices 12. Human Resources 13. Termination 14. Other Matters 15. Dealing with Borrowers and Lenders 16. Implementation of Regulations The following contains all of the critical Policies and Procedures required under the Mortgage Brokerage, Lenders and Administrators Act 2006 (MBLAA) for Nationwide Lending Centres Inc. in order to govern how all of our Mortgage Agents and Brokers will conduct their day-to-day business. Policies and Procedures are required under Ontario regulation 188/08 s. 41 Our brokerage designated a principal broker who satisfies the following criteria: The individual is a mortgage broker who is authorized by the brokerage to deal or trade in mortgage on its behalf. The individual is a Director or Officer of the corporation The brokerage will notify FSCO within 5 days if there is a change of principal broker (O. Reg. 193/08, s. 11) Every broker and agents will notify FSCO and Nationwide Lending Centres Inc. of any changes to their personal information ( , home address, phone number, fax number) The brokerage will adequately supervise its brokers, agents and branch offices (O. Reg. 188/08, s. 40) Nationwide Lending Centres Inc. will appoint a number of licensed brokers to Act as regional supervisors. These regional supervisors will be responsible for the following:

2 The regional supervisor must be available as required to assist the agents under his/her supervision The regional supervisor will Act as a mentor as well as a supervisor to the agents under his control The broker will review and sign Investor Disclosure Forms on behalf of the agents prior to them being forwarded to the investor for review The regional supervisor will physically meet with all agents under his control at least once a quarter All brokers and agents are required to attend staff meetings on a regular basis either in person or by conference call. Attendance is mandatory for these meetings. While the chief Compliance Officer is ultimately responsible for the documentation of agents files, the regional supervisors will randomly spot check files in progress to ensure compliance with the legislation. Agents who hire assistants to assist with administrative functions must ensure that the assistants are not dealing in mortgages as defined in the Act. Administrative assistants are prohibited from taking applications, signing clients or directly discussing product placement with potential clients. Their role should be restricted to dealing with lenders and borrowers with respect outstanding documentation and other administrative functions. It will be the responsibility of the supervising broker to ensure that administrative assistants are not dealing in mortgages illegally. The brokerage is not involved in any other business with another entity that may jeopardize the integrity, independence or competence of its mortgage brokerage activity (O. Reg. 188/08, s.56) The brokerage will file electronic an Annual Information Return by no later than March 31 st of every year. Nationwide Lending Centres Inc. is a corporation: The corporation was incorporated in Canada The corporation has a physical mailing address in Ontario (O. Reg. 408/07 s. 1(1)): 137 Norfolk Street - Upper Guelph, Ontario N1H 4J8 Phone: (519) Fax: (519) The brokerage will notify FSCO of any changes in the location (place of business) within 5 days. In the event of any office location opening or closing, the brokerage will notify FSCO within 5 days (O. Reg. 193/08 s 8 and 9) The brokerage will notify FSCO within 5 days if there are any changes to their directors or officers. (O.

3 Reg. 193/08 s. 10) The brokerage will report to FSCO any , phone number or fax number changes within 5 days. Errors & Omissions The corporation has Errors and Omissions (E&O) from an insurer who is approved by the Superintendent of FSCO. This E&O must have a minimum of $500,000 in respect of any one occurrence involving the corporation or any broker or agent authorized to deal or trade in mortgages on its behalf and $1 million in respect of all occurrences during a 365 day period involving the corporation or any broker or agent. The brokerage will always carry E&O insurance with the required coverage while dealing and trading in mortgages. (O. Reg. 188/08 s.42) Proof of insurance will be available to FSCO upon request.

4 Broker and Agent Protection of Data All agents and brokers will take reasonable steps to protect personal data supplied by clients. All original documentation will be kept in secure premises not accessible to the public. Once a file is complete, any documents not required will be returned to the client immediately. Original documentation will be submitted to head office in either hard copy or electronic format, after the closing of the transaction. While agents may retain copies of files for their personal use, every effort must be made to safeguard the information on hand. It should be noted that all files are the property of Nationwide Lending Centres Inc. Any documentation not further required, must be shredded immediately. All electronic documentation must be password protected. Laptops containing client files shall not be left unattended in public areas. What Is Personal Information? In this Privacy Policy, Personal Information means information that is gathered in connection with an application, pre-approval, request for information for a mortgage(s) or loan(s) and insurance or other product through Nationwide Lending Centres Inc. or Nationwide Lending Centres Inc. affiliates and is provided to, or collected by, Nationwide Lending Centres Inc. and its staff or by Nationwide Lending Centres Inc. agents, associates, and affiliates on Nationwide Lending Centres Inc. behalf (collectively, Nationwide Lending Centres Inc. ). Head Office Protection of Data Head Office will take reasonable steps to ensure the security of the data of client files. Scanned documentation must be adequately protected and catalogued. All client records and personnel records will be kept in locked cabinets or in secured electronic format. All computers at head office will be password protected and data will be backed up on a regular basis by a third-party source. Why Nationwide Lending Centres Inc. Collects Personal Information Nationwide Lending Centres Inc. collects and uses Personal Information for the following purposes: Provide mortgage brokering services to the Client and offer products and services best suited to their needs, including arranging and/or renewing loan(s)/mortgage(s), informing the client of group creditor insurance and other products offered or approved by Nationwide Lending Centres Inc. or its affiliates that may be of interest to the Client; Checking Client credit worthiness through credit bureau inquiry and personal information agents who have information on a Client s financial position. Advising Clients of the financial options, as well as, ongoing developments of the mortgage market and industry;

5 Auditing the services provided to our Clients; Compliance with all municipal, provincial, federal and other applicable laws; and Such other specific purposes which are communicated to the Client by a member of Nationwide Lending Centres Inc. before collection of such Personal Information. Except when otherwise permitted by law, we will only use a Client s Personal Information for the purposes identified to the Client. When Personal Information is to be used for a purpose not identified, we will take all reasonable steps to ensure that new purpose is identified prior to use. How Do We Collect Personal Information? The Client is our main source of information. With the Client s consent, we may also obtain information directly from a third party to help us determine eligibility for various financial products and services. For credit matters, for example, it is essential that we know the clients financial worth as well as the clients credit record. We will also contact other lenders, financial institutions, credit bureaus and employers. Consent is therefore important because without it, we will not be able to carry out the appropriate inquiries and it might be difficult for us to offer the credit product requested. In most cases, consent is given on the forms used for specific products or, from time to time, on a separate form. The declaration of consent is clear and unambiguous. Consent A clients provision of Personal Information to Nationwide Lending Centres Inc. means that they agree and consent that Nationwide Lending Centres Inc. can collect, use and disclose such Personal Information in compliance with this Privacy Policy. Nationwide Lending Centres Inc. will not collect, use or disclose a Client s Personal Information without the Client s written consent, except in certain extraordinary circumstances. Such extraordinary circumstances shall include without limitation, when legal, medical or security reasons make it impossible or impractical to obtain consent or where it is otherwise in the best interests of the Client. The most common method we use to obtain a Client s consent is by way of the Client s written consent as part of the application. We may also obtain a Client s consent through communications of other written documentation. In order to produce evidence of consent, the mortgage broker must produce independent evidence of consent obtained directly from the person whose credit bureau is to be searched. This would include a consent form which has been physically signed by the person. Verbal consent will be accepted provided it is accompanied with documentation such as a written log consisting of the consent, example being, date of conversation with the time of the consent from the client with his name, address and phone number and this is to be placed and kept in the clients file. In addition, verifiable consent given to a mortgage broker from a person to have their credit bureau searched must be obtained prior to the credit bureau search, and not following it.

6 At Nationwide Lending Centres Inc., we recognize and respect every individual s right to privacy. When you apply for a mortgage or other credit, Nationwide Lending Centres Inc. establishes a confidential file that is kept in our offices. We limit access to information in your file to Nationwide Lending Centres Inc. agents and staff who require it in order to perform their duties, to credit grantors, credit bureaus, suppliers of service, mortgage insurer s, to persons you have granted access, and to persons authorized by law. As discussed this is our privacy policy regarding personal information and a request for your authorization for us to access your credit information for the purpose of securing a mortgage approval, for you. We use the information to determine your eligibility for credit and other administrative matters. We will be unable to proceed with the mortgage approval without your authorization. Yes we give you verbal authorization to access my credit history that is when you will document the Name of the client, time, date and year. When receiving verbal authorization from a client the agent or broker will read the above statement and will document the Name, address and phone number of the client including the date and the time of the approval for authorization from the client which will be added and stored to clients file. Agent/Broker will explain to client without this information the agent will not be able to proceed with the mortgage. All files are stored electronically and a retention of files are kept for 6 years Our Clients may withdraw their consent by written notice to us at any time, subject to any legal or contractual restrictions and reasonable notice. A Client s refusal to provide, or subsequent withdrawal of, his or her consent may affect Nationwide Lending Centres Inc. ability to provide the Client with mortgage services. A member of Nationwide Lending Centres Inc. will inform the Client of the implications of such withdrawal. To withdraw consent, a Client should contact the Chief Privacy Officer in writing at: Attn: Chief Privacy Officer 137 Norfolk Street Guelph, Ontario N1H 4J8 Phone: (519) Fax: (519)

7 Use and Disclosure of Personal Information We will use a Client s Personal Information to provide financial advice and services to the Client, to administer our database, to include Clients in direct marketing Activities and for the other uses described above under the heading Why Nationwide Lending Centres Inc. Collects Personal Information". Under certain circumstances, Nationwide Lending Centres Inc. will disclose a Client s personal information to third parties. Specifically, Personal Information may be used, shared and disclosed to, from, or with, the members of Nationwide Lending Centres Inc., witnesses in a litigation proceeding, experts retained on a Client s behalf, private investigators, agents retained on behalf of a Client, credit reporting agencies, credit bureaus, as well as such other third parties as are necessary to facilitate the matter for which the Client has retained our office and provided its consent. Under certain circumstances Nationwide Lending Centres Inc. may disclose Personal Information where: required or authorized by law to do so, for example if a court issues a subpoena; a Client has consented to the disclosure; when mortgage services by Nationwide Lending Centres Inc. are provided to a Client requiring us to give Personal Information about a Client to a third party (for example, to a lender in a real estate mortgage transaction) the Client s consent will be implied, unless the Client tells us otherwise; where it is necessary to pull a credit bureau for purposes of processing a mortgage transaction; if Nationwide Lending Centres Inc. engages a third party to provide administrative or support services to us (such as computer back-up services, payroll, shredding or archival file storage) and the third party is bound by our Privacy Policy; protection of Nationwide Lending Centres Inc. best interests protection of public interests such as the denouncement of criminal Activity such as fraud or money laundering. In all such cases, authorities are contacted and personal information may be disclosed; if we retain a law firm(s) to Act on our behalf for any reason; or if the information is already publicly known. Limiting collection and retention of Personal Information Nationwide Lending Centres Inc. limits the collection of a Client s Personal Information to that which is necessary for the purposes identified in this Privacy Policy as same may be amended from time to time, or for any additional purpose identified to the Client before the collection of the Personal Information. As well, Personal Information is not used or disclosed for purposes other than those for which it was originally collected, except with the consent of the Client or as otherwise permitted by law. Nationwide Lending Centres Inc. will retain Personal Information only for so long as it is needed to fulfill the purposes

8 for which it was obtained and to meet our professional requirements as set out our governing regulatory bodies and/or any other legal requirement, statutory or otherwise, from time to time. Accuracy Nationwide Lending Centres Inc. strives to ensure that a Client s Personal Information is as accurate, complete, and up-to-date as is necessary for the purposes for which it is used. Safeguards Nationwide Lending Centres Inc. endeavors to maintain adequate safeguards to protect against loss, theft, unauthorized access, disclosure, copying, use or modification of Clients Personal Information in the care of the Nationwide Lending Centres Inc.. Nationwide Lending Centres Inc. uses various methods to safeguard personal information, including physical security, computer and electronic security, destruction of information no longer needed, and contractual protections with third party data processors. Protection Client lists are never passed on to third parties other than affiliated members of Nationwide Lending Centres Inc. When they are hired, our employees and agents must undertake to respect the confidential nature of client information. Only employees and associates who need to view the file as part of their work have access to this information. Accountability, Openness and Client Access Nationwide Lending Centres Inc. is responsible for the Personal Information under its control and has appointed a Chief Privacy Officer to oversee our efforts to comply in all material respects with applicable privacy legislation and the terms of this Privacy Policy. The Chief Privacy Officer and those designated by the Chief Privacy Officer address and investigate questions or concerns regarding a Client s Personal Information. Nationwide Lending Centres Inc. will provide a Client access to their Personal Information. The Client may correct or amend any inaccuracies in the Client s Personal Information. Nationwide Lending Centres Inc. has the right to refuse a request for access to Personal Information if: The information is protected by legal privilege; Granting access would reveal confidential commercial information; The information was collected for purposes related to the detection and prevention of fraud; The information was generated in the course of a formal dispute resolution process; The information would likely reveal personal information about another individual; The request is vexation or frivolous; To protect our firm s rights and property.

9 Advertising Policy Definition of Promotional Materials Promotional Materials are defined as those materials which you would distribute to peers or referral sources within the Mortgage, Real Estate, Legal, and Appraisal, Inspection, or Financial Services industries in order to promote your business in the hopes of gaining referrals. In addition, Promotional Materials are also defined as those materials which you use to promote our Brokerage s name, brand, and identity, along with your own identity. This includes (but is not limited to) items like golf balls or golf towels, shirts, pens, coffee mugs, awards, etc. Each promotional item will be evaluated on a case-by-case basis to determine whether or not full brokerage information needs to be displayed. In any case, if anything has the individual Agent or Broker name on it, it is the policy of this Brokerage that the proper title as dictated by FSCO will follow your name (i.e. Mortgage Agent or Mortgage Broker). Please submit all Promotional Material ideas / proofs to the Principal Broker for approval before purchasing and distributing so they can be approved as Promotional Materials as per this definition. Use of Authorized Names For the purposes of marketing and advertising, you are only permitted to use the name under which you are registered on the FSCO Website. To verify what name you are registered under, visit and search on your legal name or your license number. This is the name you must conduct your business under, and must be the name you use on all advertising and marketing materials. For example: If your first name is David, and you are registered on the FSCO website as William, then you must use your full first name when marketing yourself unless you have asked FSCO to include an alias for you under the license listing. You cannot market yourself as Bill or Willie unless the FSCO Listing also has this name listed (usually in brackets, at the end of your given names). Please note that FSCO will accept alias names under which you can market yourself, as long as you notify them via or in writing. Contact FSCO via telephone at and speak with the Mortgage Broker Licensing section to begin this process. Use of Title (Broker/Agent) You must always ensure that you list yourself either as Mortgage Agent, or Agent

10 Mortgage Broker, or Broker in all marketing and promotional materials. These titles must appear immediately following or below your name. You may use descriptive phrase such as Specialist in Retail and Commercial Mortgages or A Highly-Trained Mortgage Expert in addition to your legal title, but these phrases have to be in addition to your title of Mortgage Agent or Mortgage Broker. For example: John Doe, AMP, Broker A highly trained mortgage specialist Mortgage brokers and agents must disclose their license number and the authorized name and license number of their home brokerage in all of their public relations materials. All advertising must be approved by the principal broker or designate before final orders are placed. This includes the ordering of business cards, printed material, websites, media and advertising, flyers, brochures, and all other marketing materials, Brokerage Name and License number must be prominently displayed along with Head office address. The principal broker will approve the draft ad, and must also approve the final artwork or content before the order is finalized. If a Broker or Agent wishes to change the name in which they are licensed (e.g. to add a bracketed name, to change to a married name, etc.) a written request, with supporting documentation if required, must be submitted to the FSCO licensing department to have the change approved. Use of Trade Name and Franchisee Name Nationwide Lending Centres Inc. is the name that appears on FSCO s website, is our brokerage license number. Regulation 188/08 clearly states that all marketing, advertising, promotional materials, business cards, etc. must contain this name beside our brokerage license number. False, Misleading or Deceptive Information Any advertising or marketing materials you use must not contain any misleading or deceptive information. Misleading representations may be the result of: Negligence

11 Incompetence Intentional misrepresentation Improper use of disclaimers Improper reliance on industry terms Incomplete comparative ads Implied endorsements Improper use of teasers Use of unsubstantiated exaggeration Lack of timely reviews of advertisement Examples of False or Misleading Advertisements Providing sample monthly repayment amounts for mortgage loans requiring no repayment of principal, without properly identifying that the payments shown represent only the interest portion; Advertising payment amounts for mortgage loans with unusually long amortization periods that do not specify the amortization period; Advertisements which contain repayment figures but do not contain an indication of the amortization period used to determine the repayment figure; Advertisements for interest-only mortgages that do not specify that the repayments do not include any principal amounts While in some instances the term for illustration purposes may be included with advertisements such as the above, it may or may not be sufficient to ensure that the ad is not misleading. The best practice is ABC: Always Be Clear. Business cards [Reg.188/08s.5-6] Subject to guidelines established by FSCO, the name or Nationwide Lending Centres Inc. will be prominent on all business cards. The brokerage license number will appear under the company name. The broker s or agent s name s registered with FSCO and FSCO s registration number will appear with

12 the title broker (or mortgage broker) or agent (or mortgage agent) depending on their licensing qualifications. No other titles will be permitted on business cards. If an agent is operating from a location where the public is invited to do business, this location must be listed as a branch office with head office and that address may be indicated on the business card. If your location is not registered as a branch office, that address may not be shown on the business card. The Head office address must be listed and your local phone number may be included on the card. Use of names On all advertising materials, brokers or agents where identified, must use their legal names as they are licensed with FSCO, or an alias or known-as name, which has also been licensed with FSCO. No other names are permitted in any advertising materials. Yellow Pages Yellow Pages ads must be approved in advance by head office. In all display advertising, Nationwide Lending Centres Inc.and the corresponding license number must be prominent. In addition, your name and license qualifications (broker or agent) must also be indicated. Brokerages must answer their telephones using either their legal name or trade name as registered with FSCO. In the case of a simple listing, the listing must be in the name of Nationwide Lending Centres Inc. Your name as broker or agent may also appear in the listing, but under no circumstances may the listing be in your name alone. If you operate a personal Corporation, that corporation must be invisible to the public. Its name cannot be used in any advertising or marketing materials and is there for payroll purposes only. You must represent yourself as a broker or agent of Nationwide Lending Centres Inc. at all times. Websites Brokers and agents are permitted to maintain personal websites. Although the URL for the website may belong to the broker or agent, all content on the site shall refer to Nationwide Lending Centres Inc. All content on the sites must be approved by head office. The homepage must refer to Nationwide Lending Centres Inc. and show the license number of the company. All other pages must indicate that the agent or broker is a representative of Nationwide Lending Centres Inc., indicating the licensing designation. Other forms of advertising

13 The content, appearance, and messaging in all other forms of advertising must be consistent with Nationwide Lending Centres Inc. s overall advertising philosophy. All advertising must be approved in advance by head office. File Handling and Retention Files in process All files that are in process should be maintained in accordance with the privacy policy and protection of data policy. Once complete, the file will be forwarded to head office for compliance audit and payment of fees due. Completed files All completed files will be forwarded in electronic format to head office. Upon receipt of the file, the chief Compliance Officer or designate will review all documentation to ensure total compliance with MBLAA, An electronic notation in the file will indicate that the file has been reviewed and complies. Files that are deficient will be returned to the originating agent for rectification. No payment will be made to the broker or agent until the file is complete and satisfies all of the requirements. File retention [Reg.188/08,s.48 (1-3)] Original mortgage files will be retained with the mortgage agent/broker for a period of six years past the maturity date of the mortgage whether the file closed or not. All documentation deemed to be pertinent will be kept on file for six years. This includes s and notes on all files. Electronic copies of closed mortgage files will be retained at Head Office at 137 Norfolk Street Guelph, Ontario for a period of six years past the maturity date of the mortgage. All documentation deemed to be pertinent by us will be kept on file for six years. [Reg.188/08,s.4-7] Documentation relating to cancelled or incomplete files will be maintained for a minimum of six years by acting agent or broker. All hard copies will be shredded after that point in time. [Reg. 188/08 s. 46(1)] Complaints The brokerage has an established process for resolving complaints and has a designated person who is authorized to receive and resolve complaints (O. Reg. 188/08 s.41 (1) & (2)) The brokerage keeps record of all complaints received along with responses to the complainants in the following format Electronic

14 No matter how hard we try to do the best we can for our clients or investor, there will always be those occasional situations where clients or investor are simply not happy with their experience of acquiring a mortgage through Nationwide Lending Centres Associate. This policy exists for two reasons: To ensure we meet the needs and expectations of our clients or investor when responding to their concerns To comply with the MBLAA (2006) and Regulations (188/08 s.41 (1) & (2)) Definition of Complaint It is important to define what we mean by Complaint in this policy. During the course of interactions with Clients (defined as either an Investor or Borrower), Brokers and Agents should strive to communicate effectively at all times, and ensure proper notes are taken regarding conversations with clients to avoid confusion at a later date. Issues will arise, and most of these will usually be dealt with during your interactions with the client directly. If, however, a situation arises where the client remains unhappy, and states that they wish to lodge a complaint (or speak to your boss/manager/broker etc.) then the following policy applies. Complaints Officer The Principal Broker of the firm is the designated Complaints Officer. Any and all complaints should be brought to the immediate attention of the Complaints Officer. Registration of Complaint Upon notification by the client that they wish to file a complaint, you must escalate the situation to the Complaints Officer. Should the client wish to deal directly with the Complaints Officer, provide their contact information to the Complaints Officer or, if the client insists, provide the Client with the name of the Complaints Officer and provide the following information to the Client: Telephone number: address: Mailing address: Processing of Complaint Upon receipt of a complaint from a Client, the Complaints Officer will take immediate action to investigate. Should the complaint relate to a completed file, the Complaints Officer will pull existing documentation on file with the company. The Complaints Officer will review the documentation, and then forward the complaint to the specific agent or broker for comment. Should the complaint relate to a file in progress,

15 the Complaints Officer will immediately contact the agent or broker responsible for the file and forward the complaint for comments. Should the agent or broker responsible for the file not be forthcoming in dealing with the matter, the Complaints Officer will take all reasonable steps to deal with the matter. Should the complaint relate to an issue relating to the Mortgage Brokerage Lenders and Administrators Act, all efforts will be made to determine if the transaction was in compliance with the legislation. If a breach of the legislation is discovered, remedial Action will be taken immediately. Should the complaint be of such a nature that a claim against Nationwide Lending Centres Inc. s errors and omissions insurance policy is possible, the Complaints Officer will notify the insurer of the potential claim. Response Process Verbal Complaints The Complaints Officer will respond to Clients verbally regarding any complaint within 48 hours of receipt. If the Client remains agreeable to this process, then the Complaints Officer will continue to report to the Clients as is reasonable given the circumstances of the complaint. Should the complaint still remain unresolved in the mind of the Client, the Complaints Officer will advise the Client to document their complaint and forward it directly to the Complaints Officer in writing, via letter mail or . Response Process Written Complaints The Complaints Officer will respond to Clients verbally regarding any complaint within 48 hours of receipt, and will follow up with a written response as quickly as reasonable under the circumstances (and allowing for proper investigation). Any written response must also tell the Client who made the complaint that, if they are not satisfied with the proposed resolution and if the Client believes that the complaint relates to a contravention of the Act or a regulation, the Client may refer the complaint to the Superintendent of the Financial Services Commission of Ontario. A copy of the official FSCO Mortgage Business Activity Complaint Form must also be included with any written response. At no time will any Mortgage Broker or Agent respond directly to a written complaint. Written complaints must be forwarded immediately to the Complaints Officer. All responses to written complaints must come directly from the Complaints Officer. Documentation Requirements All documentation relating to any complaint must be retained in accordance with proper file handling requirements and within the original mortgage transaction file as per the policies in this manual.

16 Use of Forms 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 NLC. Should a broker/agent choose to use a form other than the one supplied by D&H Expert, 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 Disclosure to Borrowers Introduction Under the MBLAA and its Regulations (O. Reg. 188/08, s. 24), it is our duty, as Mortgage Brokers and Agents, to consider the needs and circumstances of the borrower to ensure that any mortgage presented is suitable for them. There are three basic elements to this suitability: Does this mortgage product meet with all of the client s needs? Does this mortgage product meet their risk tolerance? Is this mortgage product affordable for the client? In addition, we need to ensure we have disclosed any and all material risks (O. Reg. 188/08, s. 25) inherent in the transaction, disclosed any potential conflicts of interest (O. Reg. 188/08, s. 27) in recommending a specific product, and disclosed anything else that may be material to the client s decision to proceed with the mortgage transaction. The policies and procedures below apply to all borrowers in all circumstances. We will now go into each of these elements in detail. Know Your Client Form It is vital in all circumstances to understand all of the needs, wants, and goals behind the client s mortgage application. However, many times our clients don t understand all of the options and variables that come with mortgage products today, and may not have properly considered their future needs at the time of the application. For this reason, it is mandatory that a Know Your Client (KYC) Borrower Form is filled out for each and every borrower on the application.

17 Please note when filling out this form that each and every question must be answered, each borrower must sign at the bottom, you must sign and date the form, and a copy must be given to the client at the time of their application. If the interview is conducted over the phone, then you must still ask the questions on the form and have the client sign and fax back to you or have them sign when you meet with them to present the mortgage commitment. Suitability Client Needs After completing this section of the KYC form, you will have a good indication of the length of time they intend to stay in their new/current home, whether they plan any renovations or improvements to the property, other potential financial pressures now or in the future, and any other details that will help you determine the type of product, prepayment privileges, term, and other features required to ensure your mortgage recommendation meets their needs. Suitability Risk Tolerance After completing this section, you will understand the client s risk profile in terms of fixed or variable rates, their ability to tolerate changes in their mortgage payments monthly or annually, their ability to tolerate payment shock (should payments drastically rise at the end of the initial term of the mortgage), and their ability to tolerate any changes in the value of their property. Suitability Affordability Once you have completed the entire KYC form with your client, you will also know if they have completed a simple budget form indicating the impact that this mortgage will have on their day-to-day financial situation. This is where determining the affordability of the mortgage is key to determining whether to recommend the mortgage to your client. FSCO has made it clear that, even though your client may qualify for a mortgage, and even though you may have a lender willing to issue a commitment, you must determine if a reasonable person would find the mortgage affordable under the client s financial circumstances. Collection of Identification Under Anti-Money Laundering laws, as well as the MBLAA and its Regulations, we have a duty to verify the identity of the clients we meet with (O. Reg. 188/08, s.10). To this end, it is our Brokerage s policy to collect a piece of acceptable identification from each client, record the number of the identification, photocopy it if possible or reasonable under the circumstances, and keep this information in the file. Original Documentation This section obligates the client to provide original documentation where available, which assists in the prevention of fraud. It is understood that this will not always be possible, given the nature of faxing and relations with clients today. However, we are still obligated to verify the veracity of any

18 documentation provided to us. Therefore, it is the policy of this brokerage that every Agent and Broker will exercise proper due diligence in the efforts of fraud prevention by verifying the authenticity of any documentation provided by a Client, and if potentially fraudulent documentation is discovered, it is immediately reported to the Principal Broker to be addressed. Under the MBLAA and its Regulations (O. Reg. 188/08, s. 17 (1, 2), it is mandatory that we return this original documentation to any Client at their request, do so without charging any fees, and do so in a timely manner. Disclosure A disclosure should be made no later than 2 business days before the borrowers enter into a mortgage commitment (O. Reg. 191/08, s. 7). The cooling off period of 2 days may be waived by the borrowers as an option. The mortgage broker or agent should never recommend waiving the cooling period to speed up the process. This must be a decision made by the borrowers. The brokerage may provide a disclosure statement to borrowers with information that may be based on an assumption or estimate if the assumption or estimate is reasonable (O. Reg. 191/08, s. 6 (3)) In its disclosure, the brokerage must disclose to the borrowers the following items: - The nature of the relationship between the brokerage and the lender(s) - The number of lenders the brokerage dealt with in the previous fiscal year - If the brokerage acted as a lender during that period Upon the borrowers request, the brokerage shall disclose the following: - Whether the brokerage was the lender for more than 50% of the total of mortgages and renewal during the previous fiscal year. - The name of the lender if the brokerage has used that one lender more than 50% of the time to fund mortgages or renewals during the previous fiscal year. Fees payable by others (O. Reg. 188/08, s. 21) The brokerage must disclose to a borrower, either for a mortgage or a renewal the following: - The brokerage may receive or has received a fee or other remuneration directly or indirectly from a person or entity in relation to the negotiation of the arranged mortgage or renewal.

19 - If the fee or other remuneration is payable to the brokerage by a person or an entity, the identity of the person making the payment must be disclosed along with the basis for calculating the amount of the fee or other remuneration and the nature of the benefit. Fees payable by the brokerage to others (O. Reg. 188/08, s. 22) The brokerage must disclose to a borrower, either for a mortgage or a renewal the following: - The brokerage may pay or has paid a fee or other remuneration directly or indirectly to a person or entity in relation to the negotiation of the arranged mortgage or renewal. - If the fee or other remuneration is payable by the brokerage by a person or an entity, the identity of the person to whom the payment is made to and must be disclosed along with the basis for calculating the amount of the fee or other remuneration and the nature of the benefit. Fees received by the brokerage for referral (O. Reg. 188/08, s. 23) The brokerage must disclose to a prospective borrower, if the brokerage refers the borrower to an entity, or person or lender that the brokerage may receive a fee for referral. This statement must include the following: - The nature of the relationship between the brokerage and the other person or entity to which the referral is being made to. Restrictions on payments by the brokerage (O. Reg. 188/08, s. 44) The brokerage shall pay fees or other remuneration to a licensed mortgage brokerage and not directly to a mortgage broker or a mortgage agent. Payments of incentives other than money (O. Reg. 188/08, s. 45) Despite what is mentioned above, the brokerage is allowed to provide incentive other than money for dealing or trading in mortgages to an authorized broker or agent on behalf of another brokerage if the following conditions are met: - The broker or agent has obtained the consent from the other brokerage - The brokerages have a written agreement governing the provisions of the incentive to the broker or agent - The brokerage has a written agreement with broker or agent who is governing the provisions of the received incentive

20 - Both agreements require the brokerage to periodically give the other brokerage particulars of the following (upon request): o Incentives provided by the brokerage to the broker or agent during the applicable period and, o Is an incentive entitles the broker or agent to exercise one or more options in the future, particulars of the options exercised during the applicable period. Conflicts of Interest Conflicts of Interest, or the perception of Conflicts of Interest, are another key area of disclosure to Clients, ensuring they are always aware of where there may be a potential motivation to not act in their best interests (O. Reg. 188/08, s. 27). Presenting a Client with one mortgage over another because you are going to receive a higher commission, for example, is a conflict of interest if the rate to the Client is lower for a lower-paying mortgage product. Other examples: The Mortgage Broker/Agent is related to the Appraiser The Lender is related to the Mortgage Broker/Agent The Lender is a family member of the Borrower When the Mortgage Brokerage/Broker/Agent is also the Lender If the Mortgage Broker/Agent or his/her spouse uses a self-directed RRSP to fund the mortgage for the Borrower Favouring a Lender for monetary reasons Receiving travel points, free holidays, or other incentives that are normally not available When a Mortgage Broker/Agent acts for both the Borrower and Lender If the Mortgage Broker/Agent receives higher bonus commissions for working with a specific lender during a specific timeframe If the Principal Broker is also a Real Estate Broker who is involved with listing and selling a property It is the policy of this brokerage that any and all perceived conflicts of interest will be disclosed to the client and recorded in this section of the Client Agreement so that these disclosures will form part of the file.

21 Communications with Parties Involved This section authorizes you, the Agent or Broker, to communicate with other parties involved in the mortgage transaction with those details pertinent to their conduct of business (e.g. notifying a Realtor that the mortgage is approved, arranging an appraiser, etc.) Indemnification of Brokerage This is a key disclosure section to the Client, in that they are acknowledging that, as the Agent or Broker or Brokerage, we are at the mercy of the Lenders and Insurers regarding conditions that must be fulfilled in order for a mortgage to fund. This section indemnifies us and holds us free from harm should we perform our duties properly, yet the mortgage does not fund as a result of the Lender or Insurer conditions not being fulfilled for any reason other than our negligence as the Broker, Agent, or Brokerage for the transaction. Disclosure of Material Risks This section outlines the various material risks inherent with mortgage transactions, and is selfexplanatory. It is the policy of this brokerage that each Agent and Broker will discuss the relevant material risks with all Clients, and marks the relevant check-boxes beside the risks that apply. If there are additional risks associated with the mortgage that are not included in this section, they must be documented and attached to the client agreement, after being initialed by the Client. Credit Bureau and Privacy Authorization This is a standard written clause which Equifax requires we have signed as proof the client has authorized us to pull a Credit Report through their services. In cases where clients provide authorization over the phone, it is the policy of this brokerage that the Client Agreement is signed on first meeting with the client, and a notation made in Expert that the client provided verbal authorization, with the time and date also registered in the appropriate field. The Privacy Authorization covers the sensitivity of the information we are receiving from the client, and how we use it for the purposes of a mortgage transaction. Duty to Verify Appraisals It is the policy of this Brokerage that, whenever a property appraisal is ordered by a Lender and arranged by the Agent/Broker or Client, that the Mortgage Agent or Broker will contact the Appraiser personally after the completed appraisal has been received by the Lender to ensure the Appraiser in question actually completed the appraisal.

22 Fees and Restrictions Fees A mortgage broker or agent shall not receive, directly or indirectly, any fee or other renumeration for dealing or trading in mortgages from a person or entity other than the brokerage on whose behalf he or she is authorized to deal or trade in mortgages (O. Reg. 187/08, s.4 (1) Advance Fees & Funds The MBLAA (O. Reg. 188/08, s. 37 (1) contains very specific rules regarding the collection of advance fees and funds for mortgage transactions. In every case, you are prohibited from collecting advance fees for mortgages of $300,000 or less if the principal amount of the mortgage is $300,000 or less, the Mortgage Brokerage cannot require or accept an advance payment/deposit for services to be rendered and expenses to be incurred by the Brokerage or any other person. For Private mortgages, you are also prohibited from receiving funds from investors/lenders in advance. Neither the Mortgage Brokerage nor the Mortgage Broker/Agent is permitted to receive funds from an investor unless an existing mortgage is available, or from a lender unless a mortgage application has been made on a specific property (O. Reg. 188/08, s. 38 (1, 2) Indicating Fees are Government-Approved You may not at any time indicate that Mortgage Brokerage fees are approved by the government or any government authority (O. Reg. 188/08, s. 20 (1) Guarantees You are prohibited from offering any guarantees to borrowers regarding future interest rates on variablerate mortgages, or any other guarantees regarding their mortgage that is not explicitly stated in the mortgage commitment or mortgage instrument. You are prohibited from offering guarantees to lenders/investors you cannot offer a guarantee to a lender/investor regarding a mortgage loan or mortgage investment. (O. Reg. 188/08, s. 16) Private transaction where the lender is not an institution Introduction Private Lenders (also known as Investors by the MBLAA) are a special case in our industry. Mortgages provided to Borrowers from Private Lenders must be treated with greater care and due-diligence due to the nature of our relationship to both the Borrower and Lender in these cases. The following section

23 outlines some of the special considerations, policies, and documentation surrounding Private Lending within our Brokerage. It is imperative that these rules be followed, as FSCO will be performing full audits of each and every mortgage brokerage in Ontario over the next year to verify that this information is in place, and that these policies and procedures are being followed. Principal Broker Must Approve All Private Lenders One of the biggest changes to the Private Lending world contained in the MBLAA and its Regulations is the need for the Principal Broker to evaluate and approve all Private Lenders used by any Agent or Broker within their Brokerage. This means that a physical file containing full Private Lender information must be maintained at the Brokerage s head office. A full investor risk profile conducted on the Private Lender must also be in the file in order to verify the suitability of each and every mortgage investment presented to them (O. Reg. 188/08, s 10 (2), s. 11 (1, 4) It is important to note that, while the Principal Broker must approve all Private Lenders and maintain a file on them, it does not mean that this Private Lender will be accessible directly to all Agents and Brokers in the firm. This process should ensure the protection of these private sources of funds. Know Your Client Form for Private Lenders In order for any Agent or Broker to work with a Private Lender, the first step is to have the Lender fill out a Know Your Client form for Private Lenders. It is the policy of this Brokerage that this form must be filled out, reviewed and approved by the Principal Broker, and filed at the Brokerage head office before we will process mortgage loans from this Private Lender. (O. Reg. 188/08, s. 24 (1)) Investor/Lender Disclosure Statement (Form 1) [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 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

24 Mortgage Default Conflict of Interest. Designated Class of Lenders or Investors In some cases, you may end up working with a Private Lender or consortium that belongs to (or should belong to) what the MBLAA Regulations calls a Designated Class of Lenders or Investors. The most common conditions you will face under which Private Lenders would be part of this class are as follows: A person or entity who is registered as an adviser or dealer under the Securities Act when the person or entity is acting as a principal or as an agent or trustee for accounts that are fully managed by the person or entity An individual, who, alone or together with his or her spouse, has net assets of at least $5 million and who provides written confirmation of this to the Brokerage An individual who, alone or together with his or her spouse, beneficially owns financial assets (being cash, securities within the meaning of the Securities Act, the cash surrender value of a life insurance contract, a deposit or evidence of a deposit) that have an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $1 million and who provides written confirmation of this to the Brokerage An individual whose net income before taxes in each of the two most recent years exceeded $200,000 or whose net income before taxes in each of those years combined with that of his or her spouse in each of those years exceeded $300,000, who has a reasonable expectation of exceeding the same net income or combined net income, as the case may be, in the current year and who provides written confirmation of this to the Brokerage (O. Reg. 188/08, s. 2) In these cases, if we have the relevant information on file as outlined above, you do not need to provide a copy of the Ontario Investor Disclosure Form (Form 1) to the Lender for each transaction. 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.

25 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 decision 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.

26 Fraud Prevention Mortgage Fraud and Identity Theft Mortgage fraud involves any material misstatement by a borrower in the course of applying for a mortgage loan, which is intended to mislead the lender, or a material misstatement by a lender or purported lender, which is intended to deceive a borrower. The purpose of the fraud may be to acquire a mortgage or to make a profit. Types: 1. Fraud for Shelter 2. Fraud for Profit 3. Fraud to Other Criminal Activities Fraud for Shelter: Fraud for shelter occurs when a borrower does not qualify for a mortgage or may only qualify for a mortgage that carries a higher interest rate. In these cases, borrowers may be motivated to make false statements on the mortgage application and provide falsified documents in order to obtain a mortgage. Preventative Measures (not exhaustive list) 1. Check job letters for irregularities 2. Question whether job matches income- refer to 3. Check whether postal code matches city 4. Ensure credit bureau matched employer 5. Validate pay stub by calling the provider for legality 6. Check NOAs closely for false information 7. Look up reverse phone numbers Fraud for Profit Includes numerous gross misrepresentations including: overstated income, overstated assets, overstated collateral, length of employment is overstated or fictitious employment is reported, and employment is backstopped by schemers. Preventative Measures 1. Check if appraisal is valid 2. Look out for illegal property flipping 3. Check for air loans (non-existing property loans) 4. Get title insurance to avoid title fraud

27 Fraud to Other Criminal Activities Includes: - Money Laundering - Clandestine Drug Labs - Marijuana Grow-ops The Grow-op problems- Police estimate that there are approximately 10,000 grow-ops in the GTA and more than 50,000 across Canada. These properties usually hold approximately 85% of humidity. Identity Theft Identity theft involves stealing, misrepresenting or hijacking the identity of another person or business and provides an effective means to commit other crimes. Preventative Measures 1. Ensure all documents are shredded prior to tossing them into the garbage 2. Contact Equifax/Trans Union periodically to check for fraudulent activity 3. Hold minimal information in your wallet 4. Always have copies of driver s license, health card, passport, citizenship cards, bank/credit cards etc 5. Examine your financial statements for unauthorized transactions How would you prevent yourself from mortgage fraud and identity theft? 1. Know the source of the referral 2. See the client and get to know them 3. Ask questions to get familiar with client 4. Make copies of driver license/ citizenship card. 5. Ensure documents are originally signed and not faxed or scanned Syndicated Mortgages No Broker or Agent may participate in arranging Mortgage Syndication under Nationwide Lending Centres Inc. name. Mortgage Syndication [Reg. 188/08 s.3]

28 Errors and Omissions Insurance [Reg. 188,s.42] Every mortgage brokerage must have E&O insurance that includes coverage for fraudulent acts up to a minimum of $500, for any one occurrence and $1million for all occurrences during a 356 day period. A brokerage must notify FSCO immediately if the E&O insurance maintained by a brokerage is cancelled or not renewed. Failure to comply with this requirement may result in $ penalty. Nationwide Lending Centres will subscribe to an Errors and Omissions policy in compliance with the MBLAA Coverage will remain in force of all times. The Compliance Officer will advise the insurer of any new agents being hired or any agents or brokers leaving the firm as required in the policy. Proof of insurance will be available to FSCO upon request. Please use the form below. Branch Offices A branch office, as defined in the regulations, is any place where the public is invited to attend to transact business. Brokers and agents who maintain separate offices must list those offices as branches to be noted with FSCO. Any change of address for branch offices must be notified to FSCO within five days. Brokers or agents who do not work out of a specified office, but invite the public into their home to do business must list their home address as a branch office. Brokers and agents receiving clients in a home: All home offices receiving clients must be registered with Head Office. This requires NLC signage with the brokerage license number displayed. The signage must be approved by the Principal Broker prior to printing. The home office must be a separate room and entrance to provide privacy and professionalism and may be subject to FSCO and Head office inspection. In the event you have a home office just for your personal use and not receiving clients in your premises you must on all business cards have the Head Office address listed as your place of business and not your place of residence as a place of business. Any changes that take place within office location Head Office must be notified immediately in order to comply with the 5 day ruling for reporting to FSCO. A broker or agent who does not invite the public into their home, but simply runs a home-based office, is not required to notify FSCO of a branch. However, that address may not be listed on any marketing materials.

29 Supervising Branch Offices Recommendations for supervising of branch offices include the following; Principal Broker may conduct onsite office inspections at the discretion of the Principal Broker. Each branch to be staffed with at least one agent with a minimum 5 years of experience Nationwide Lending Centres Inc. will require a senior broker to conduct face to face meetings with assigned agents at branches to review transactions on regular intervals. Human Resources Personnel files Head office will maintain a file for every broker or agent authorized to deal in mortgages on behalf of the company. This file will contain copies of the representative s qualifications, copy of photo identification, up to date contact information, and all other documents as deemed necessary during the hiring process. The file will also include any third-party contracts between Nationwide Lending Centres Inc., a broker/agent, and their personal corporation and with any lenders as required. The personnel file should also include an acknowledgment that the broker/agent has received a copy of the company's policies and procedures and agrees to comply with same. For any new employees joining the company, a resume will be included in addition to the above information. The Compliance Officer will process the license application for new hires within five days of their joining the company. New hires will not be permitted to carry on the business of dealing in mortgages until their application has been approved by FSCO. Personal corporations Should a broker or agent require that payment for services be paid to a corporation as opposed to themselves directly, a number of agreements must be in place before any funds can be advanced. The agreements must be in full compliance with the regulations of MBLAA 2006, in addition to agreements between the agent/broker and their personal corporation, which also signifies compliance with the legislation. The corporation may not receive any compensation for mortgage related activities from any source other than Nationwide Lending Centres Inc.

30 Use of third-party payroll service Should an agent or broker choose to utilize the services of a third-party payroll provider, an agreement must be in place between Nationwide Lending Centres Inc., the broker/agent, and their personal corporation directing payment of funds to that third-party provider. Receipt of non-cash consideration A broker or agent who receives nonmonetary compensation (basis points, reward points, or other rewards) directly from a lender must complete a three party agreement between themselves, the lender and Nationwide Lending Centres Inc., whereby Nationwide Lending Centres Inc. acknowledges payment of those items directly to the broker/agent and does not object to same. Restriction on Commissions by the Brokerage Nationwide Lending Centres Inc. will make no mortgage commission payments to a broker or agent licenced with another brokerage. All compensation earned on mortgage applications co-brokered will be paid directly to the referring brokerage and not an individual Broker or Agent. Suitability of Brokers and Agents The brokerage has a duty to notify FSCO of any unsuitable brokers or agents. The brokerage will prepare a report with evidence to provide FSCO. This evidence must be a clear violation of the MBLAA. (O. Reg. 188/08, s. 43 (1, 2, 3)) When a broker or agent is no longer authorized to deal or trade in mortgages by the brokerage, FSCO will be notified by reporting it on Licensing Link. (O. Reg. 193/08, s.12 (1)) Any licensed Mortgage Assistants are, by definition, therefore Mortgage Agents and must be licensed by Nationwide Lending Centres Inc. Any remuneration due to this Mortgage Assistant as a result of their own personal origination of mortgage business will be the responsibility of Nationwide Lending Centres Inc.; any remuneration for Mortgage Assistant duties will be the full responsibility of the Broker or Agent who hired the individual. Termination In the event an agent is doing unlawful acts, the Principal Broker of Nationwide Lending Centres Inc. will terminate with cause and report immediately to FSCO the conduct of the agent which will forbid the agent to work in the mortgage industry. In the event of termination of a Nationwide Lending Centres Inc. senior agent or broker account, all outstanding mortgage files that have closed must be sent in to Head Office within 7 days. Nationwide Lending Centres Inc. will allow access to D&H Expert for completion of any files in progress

31 for 30 days. Credit Bureau access will be terminated immediately. All outstanding commissions payable after the effective termination date will be paid out at a 90/10 spilt (90 percent to the senior agent or broker). All outstanding expenses including Credit Bureau and licensing fees etc. will be deducted as they are presented to Nationwide Lending Centres Inc. from the respective suppliers. All business cards, websites, yellow pages or any form of advertising promoting the association of the agent with Nationwide Lending Centres Inc. must be shredded or cancelled immediately. Other Matters Nationwide Lending Centres Inc. does not carry on any business outside of the mortgage brokerage Usage Policy Introduction The purpose of this policy is to ensure the proper use of the overall Nationwide Lending Centres Inc. system and make users aware of what Nationwide Lending Centres Inc. deems as acceptable and unacceptable use of its system. Nationwide Lending Centres Inc. reserves the right to amend this policy at its discretion. In case of amendments, users will be informed appropriately. Legal and Reputational Risks is a business communication tool and users are obliged to use this tool in a responsible, effective and lawful manner. Although by its nature seems to be less formal than other written communication, the same laws apply. Therefore, it is important that users are aware of the legal and reputational risks of If you forward s with any libelous, defamatory, offensive, racist or obscene remarks, you and Nationwide Lending Centres Inc. can be held liable; If you unlawfully forward confidential information, you and Nationwide Lending Centres Inc. can be held liable; If you unlawfully forward or copy messages without permission, you and Nationwide Lending Centres Inc. can be held liable for copyright infringement;

32 If you send an attachment that contains a virus, you and Nationwide Lending Centres Inc. can be held liable. In addition, any of the above could lead to negative media coverage, which would damage your personal reputation, the reputation of Nationwide Lending Centres Inc., and the reputation of Nationwide Lending Centres Inc. in general. By following the guidelines in this policy, you can minimize the legal and reputational risks involved in the use of . If you disregard the rules set out in this Policy, you will be fully liable for your actions, and Nationwide Lending Centres Inc. will disassociate itself from you as far as legally possible should there be any litigation or criminal action as a result. Failure to follow this policy may result in disciplinary action up to, and including, dismissal from Nationwide Lending Centres Inc. or termination of your contract. Legal Requirements The following rules are required by law and are to be strictly adhered to. It is prohibited to: Send or forward s containing libelous, defamatory, offensive, racist or obscene remarks; Send unsolicited messages; Forge or attempt to forge messages; Disguise or attempt to disguise your identity when sending mail; Send messages using another person s account; Copy a message or attachment belonging to another user without permission of the originator. Best Practices Nationwide Lending Centres Inc. considers an important means of communication and recognizes the importance of proper content and speedy replies in conveying a professional image and delivering good customer service. Users should take the same care in drafting an as they would for any other communication. Therefore Nationwide Lending Centres Inc. wishes users to adhere to the following guidelines: Replying to s s should be answered within at least 8 Working hours, but users should endeavour to answer priority s as soon as possible;

33 Priority s are s from existing customers and business partners. Maintenance Delete any messages that you do not need to have a copy of, and set your client to not leave a copy of the message on the server. Confidential Information is not a secure medium, meaning it can be easily compromised or read by third parties in transport. As a general rule, sensitive or confidential information should not be sent by . However, if there are circumstances where you must, please follow this procedure: Place the information in the form of a document using your word processor (e.g. Microsoft Word) or in Portable Document Format (PDF). Both of these formats have the option to protect the document with passwords. If the information is in the form of scanned documents, use a program such as WinZip or WinRar to compress (.zip or.rar) your files, and add a security password to the compressed file. Contact the other party and give them the password. Passwords should never be sent to the recipient via ; instead, they should be sent via other means (preferably verbally over the telephone). This ensures the locked document and the password can only be combined by the intended recipient. Encryption Users may not encrypt any s without obtaining written permission from Nationwide Lending Centres Inc. If approved, the encryption key(s) must be made known to the company. Accounts All accounts maintained on our systems are the property of Nationwide Lending Centres Inc. Passwords should not be given to other people and should be changed once a month. accounts not used for 60 days will be deactivated, and could face deletion from the Nationwide Lending Centres Inc. system. Tied Selling Brokers and agents of Nationwide Lending Centres Inc. are prohibited from engaging in tied selling. Borrowers cannot be required to obtain a product or service as a condition for obtaining another product or service from the Mortgage Brokerage (O. Reg. 188/08, s15)

34 Dealing with Borrowers and Lenders When dealing with borrowers and lenders, brokers and agents will adhere to the following guidelines as established in the Regulations. Role of the brokerage The broker or agent must determine whether the brokerage represents the borrower, the lender, or both and must disclose same to all parties in the prescribed manner. In the case of conflicts of interest, all conflicts (whether real or perceived) must be disclosed in the prescribed manner. Examples of potential conflicts include: When dealing with borrowers if the lender is also a broker, brokerage or agent if the lender is related to the broker or agent it's the broker, agent or brokerage maintains a controlling interest in the lender When dealing with investors if the broker, agent or brokerage will receive additional benefits from the transaction other than those disclosed in the normal course of business if any party related to the transaction (borrower, appraiser, solicitor or other party) is also related to the broker, agent, or brokerage Suitability of Mortgage Investments Except in the case where the lender is a financial institution, the broker or agent shall take reasonable steps to ensure the investment is suitable for the prospective investor. This will include maintaining an understanding of the lending criteria of potential investors. Verification of Identity Brokers and agents will make every effort to verify the identity of their borrowers. If they are unable to do so they will notify the potential lenders forthwith. When dealing with a private investor for the first time, it would be prudent to verify the identity of that investor. Identification of Material Risks Except in the case of institutional or designated lenders, brokers and agents will notify potential lenders or investors of any material risks in the transaction in the manner prescribed in the regulations. Unlawful Transactions A broker or agent will not act as a representative of any borrower, lender or investor if he has reasonable

35 grounds to believe that the transaction is unlawful. If a broker or agent has reason to doubt a borrower s legal authority to mortgage a property, you will notify prospective lender at the earliest opportunity. If a broker or agent has reason to doubt the accuracy of information contained in a mortgage application or in supporting documentation, he will advise the prospective lender immediately. Payments By Borrowers, Lenders & Investors Advance payment by borrower If the principal amount of a mortgage is $300,000 or less, a brokerage shall not require a borrower to make, and shall not accept, an advance payment or deposit for services to be rendered or expenses to be incurred by the brokerage or any other person. Implementation of Regulations Implementation Date Regulation January 1, 2009 Cost of borrowing Use of names and license numbers in public relations materials Duty to verify customer's identity Disclosure re: roll and relationships of brokerage Disclosure of fees receivable and payable Suitability of mortgage and material risks Conflicts of interest Disclosure to borrowers in new format Restriction on advance fees under $300,000 Policies and procedures Agreements regarding non-monetary compensation July 1, 2008 Licensing and education Exemption for disclosure to dedicated class of investors Use of authorized names Complaints Unlawful transactions Restriction on tied selling Disclosure brokerage s relationships Disclosure to private investors

36 Requirement to carry E&O insurance Restrictions on payments to personal corporations Restrictions on payments to non-licensed entities Retention of records