Mortgage Brokerage Record Management Plans

by Gary Siegle, RECA Regulatory Compliance Advisor, Mortgage Brokers

Mortgage brokers are no strangers to paperwork. Applications, supporting documents, disclosures, service agreements, banking confirmations—the list of information you are required to collect is extensive.

What do you do with this information you’ve collected?

You should retain and store the documentation your brokerage receives from prospective, existing, and past clients, as well as lenders, in a safe place. This documentation may include electronic files, emails, text messages, or even physical paper documents.

The Real Estate Act and Rules stipulate that mortgage brokerages must have a record management plan to make sure that their papers and records are kept up to date.

What is a Record Management Plan?

Your brokerage’s plan to retain information can be flexible. In other words, it’s up to you how you organize, save and file information. The most important part is that you keep the information in a secure location and that you clearly communicate your plan in writing to the associates and unlicensed staff of your brokerage.

For instance, your plan could specify that each associate must submit all client records within a certain amount of time. Or that all confidential documents are sent electronically via the secure server of the brokerage.

Creating your Record Management Plan

When creating or optimizing your record management plan, consider the following:

• is the physical or digital storage place secure?
• is the storage environment located in Alberta?
• what safeguards are in place to ensure unauthorized individuals cannot access or modify the files?
• if the files are located on a third-party cloud storage system, what safeguards are in place to protect the data?
• what is the succession plan if any third-party system used goes out of business?

What is a record?

Records are all types of communication related to your brokerage’s licensed activities. Common documents you’re expected to retain include:

• any documents associated with brokerage licensing
• signed copies of each service agreement
• mortgage administration agreements
• mortgage applications
• credit bureau reports
• commitment letters
• cost of credit disclosures
• investor lender disclosure
• banking records for trust and general accounts
• accounts and supporting documentation (include email, text messages, and other electronic communication related to each file)

Keeping the Records

How long you should keep records may vary. The Rules require that the brokerage retain any documents associated with mortgage deals for a minimum of three years. RECA may extend this retention period if an investigation by RECA requires your records. Always double-check before you hit the delete button or send a file through your paper shredder. Reference your brokerage’s record management plan to ensure you save and file important documents appropriately.

Summary

Your brokerage must be ready to produce its records for all agreements the brokerage has engaged in over the past three years, even if the deal didn’t close. RECA may call upon these files in a brokerage audit or as evidence in an investigation.

This records management information bulletin provides additional information on RECA’s record management retention requirements for mortgage brokerages. Although I wrote this article with a focus on mortgage brokers, the fundamental messages regarding records management apply to all industries RECA regulates.

If you would like to discuss your mortgage brokerage’s record retention plan and ensure it meets the legislative requirements, I am happy to speak to you. Please reach out to me at gsiegle@reca.ca.