Keep Everything: Mortgage Brokerage Document Retention

If there’s a group of people who understand how much paper is involved in securing financing, it’s mortgage brokers. Applications, supporting documents, disclosures, service agreements, bank documents, oh my!

Every file has a lot of paper, but what do you keep? How long do you have to keep it? Does electronic storage count?

Why keep documents?

There’s no better way to settle disputed memories than with something in writing. Memories fade and everybody makes mistakes, but a written record keeps everything and everyone on the same page.

Retaining files helps brokers deal with misconduct within the brokerage, satisfies brokerage accountants, makes RECA Trust Assurance and Practice Review Officers happy, and makes it easier to provide evidence in the event of a complaint.
It’s also the law. Records need to be available at the brokerage’s registered business office if requested by a RECA practice review officer or conduct review officer for the purposes of review or investigation.

What you need to keep

Short answer: everything.

Longer answer: keep all records created and received during a mortgage deal. This includes all paper and electronic documents, including emails and texts between your brokerage, clients, other professionals, and lenders.

Even if a deal doesn’t close, or you haven’t reached the point of signing a service agreement with a potential client, keep every record up to that point.

You also need to keep general brokerage records including, but not limited to:

• corporate searches
• powers of attorney
• land title searches
• presentations made to prospective clients
• documents related to the underwriting process
• copies of any faxes or emails received or sent relating to the transaction
• credit bureau reports
• borrower and lender disclosure documents
• copies of all service agreements (Lender and Borrower Brokerage contracts) even though they may not have been accepted by the lender or borrower
• borrower application forms and borrowers’ consents whether they resulted in deals or not
• letters of employment, notice of assessment and other documents to support the borrower’s application
• feature sheets, offers to purchase, real estate appraisals and gift letters
• Consumer Protection Act cost of credit disclosure documents
• environmental, engineering and other professional reports
• progress, building or stage reports
• commitment letters and rejection communications
• mortgage administration agreements
• any notes made in day timers (electronic or otherwise)
• photocopies of all mortgage payments received
• trust account and general account information
• deposit slips, withdrawal slips and records related to internet banking operations
• reconciliations, trust ledgers and bank statements

What about storage?

The Real Estate Act Rules requires the brokerage to retain all records on closed and incomplete deals.

Try to have brokerage policies in place that ensure associates submit all their records to the brokerage in a timely manner. Access to records can affect deals in progress. If an associate is sick or otherwise unreachable and a lender demands a quick turnaround, it’s up to the brokerage to have access to the necessary files to keep the deal moving forward.

Can storage be electronic?

Yes. Brokerage records can be paper or electronic, as long as the storage environment is secure and located in Alberta.

Questions to ask yourself about your electronic records:

• is the storage location and medium reliable?
• does the proposed system require users to identify themselves by username and password or biometric access?
• does the proposed system maintain who created and modified the electronic record and the date of creation or modification?
• does the proposed system maintain a copy of the electronic record before modification?
• does the proposed system maintain who sent or received the electronic record and the date the electronic record was sent or received?
• is the information in electronic form maintained in the format in which it was created, sent or received, or in a format that does not materially alter the information of the original record in electronic form?
• does the electronic system maintain a copy of the computer program or of any other electronic devices to view, reproduce and print the documents in a timely manner?
• does the proposed system safeguard the document in electronic form by the software, password or security codes controlled by the broker?
• are the electronic records located in a physical premise in Alberta?
• if the electronic data is maintained by a third party supplier, what arrangements are there to safeguard and transfer the data to the brokerage in the event the third party supplier ceases business?
• are the premises where the electronic records are to be stored secure and are only accessible by the broker or by persons authorized by the broker?
• does the system provide the brokerage with the means to ensure all electronic records created in respect to a deal or potential deal, are stored together or are linked so as to create a complete record of all documents or records relating to the deal or potential deal?

How long should I store records?

RECA requires mortgage brokerages to retain mortgage deal records for a minimum of three years. However, if RECA has opened an investigation requiring your records, RECA may extend the required retention period.

You must keep any records relating to brokerage licensing indefinitely.

Brokers should have a record management plan that complies with the legislation, meets the needs of the brokerage, and ensures adequate maintenance of all documents and records. The brokerage must communicate its record keeping policies and procedures to all brokerage industry members and staff.