Mortgages (Secondary Market) Act Amendment Act 1985 (No. 2) (Qld)

1651 ANNO TRICESIMO QUARTO ELIZABETHAE SECUNDAE REGINAE No. 107 of 1985 An Act to amend the Mortgages (SecondaryMarket) Act1984 - 1985 in certain particulars [ASSENTED TO 18TH D ECEMBER, 1985]

1652 Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 BE IT ENACTED by the Queen's Most Excellent Majesty, by and with the advice and consent of the Legislative Assembly of Queensland in Parliament assembled, and by the authority of the same, as follows:- 1. Short title . This Act may be cited as the Mortgages (Secondary Market) Act Amendment Act 1985 (No. 2). 2. Citation . (1) In this Act the Mortgages (Secondary Market) Act1984 as amended by Acts No. 106 of 1984 and No. 46 of 1985 is referred to as the principal Act. (2) The Principal Act as amended by this Act may be cited as the Mortgages (Secondary Market) Act 1984-1985. 3. Commencement . (1) Sections 1, 2 and this section commence on the day this Act is assented to for and on behalf of Her Majesty. (2) Except as provided by subsection (1), this Act or the provisions of this Act specified in the Proclamation shall commence on the day or days appointed by Proclamation for the commencement of this Act or, as the case may be, those provisions. 4. Amendment of s. 3 . Arrangement of Act. Section 3 of the Principal Act is amended by omitting all words from and including the words "Part II" to the end of the section and substituting the following words:- "PART II-MORTGAGE SECONDARY MARKET BOARD (ss. 5-16); PART III-REGISTRATION OF PERSONS TO OPERATE IN SECONDARY MORTGAGE MARKET (ss. 17-28); PART IV-SECONDARY MORTGAGE MARKET SECURITIES (ss. 29-37); PART V-PROVISIONS AFFECTING SECONDARY MORTGAGE MARKET (ss. 38-47); PART VI-PROCURATION FEES (ss. 48-53); PART VII-GENERAL PROVISIONS (ss. 54-56).". 5. Amendment of s. 4 . Interpretation . Section 4 of the Principal Act is amended by- (a) inserting after the definition "banking corporation" the following definition:- "Board" means the Mortgage Secondary Market Board from time to time constituted under this Act;"; (b) inserting after the definition "Commissioner" the following definitions:- "instrument" means any writing whatever; "land" means land anywhere within Australia and includes- (a) lots and common property into which any land is subdivided in accordance with the Building Units and

Mortgages ( Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 1653 Group Titles Act 1980-1984 or the corresponding enactment of Queensland that preceded that Act or in accordance with the corresponding enactment of any other State or Territory of the Commonwealth; and (b) an interest in land of a lessee from the Crown in right of Queensland, the Commonwealth or any other State or Territory of the Commonwealth;"; (c) omitting the definition "marketable security" and substituting the following definition:- "marketable security" means any promissory note, bill of exchange, certificate of entitlement or other security such that either- (a) the right to payment had by the holder thereof or by a person subrogated to the rights of the holder is secured by rights (whether actual or contingent upon default by a person liable upon the security) in respect of or enforceable against a mortgagee's entitlements under any mortgage or mortgages secured on land or on land and improvements thereon; or (b) the holder thereof is entitled to the whole or a share of a mortgagee's entitlements under any mortgage or mortgages secured on land or on land and improvements thereon;"; (d) inserting after the definition "Minister" the following definition:- -mortgage" means any instrument registered or registrable in respect of land or land and improvements thereon as securing a primary obligation of any person to pay any sum or sums;"; (e) omitting the definition "secondary mortgage market" and substituting the following definition:- secondary mortgage market" means the market formed by the buying, selling, offering for sale and issuing of, and offering to issue, secondary mortgage market securities;"; (f) inserting after the definition "secondary mortgage market" the following definition:- "secondary mortgage market security" means a marketable security that under this Act may be dealt with on the secondary mortgage market to which this Act applies;"; (g) adding at the end of the section the following paragraph:- "Every word of the masculine gender, when used in this Act, shall be construed to include the neuter gender where the case requires it.".

1654 Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 6. New heading to Part II . The Principal Act is amended by omitting the heading appearing immediately above section 5 and substituting the following heading:- "PART II-MORTGAGE SECONDARY MARKET BOARD". 7. Amendment of s. 5. The Board. Section 5 of the Principal Act is amended in subsection (1) by adding at the end thereof the words "to be called the Mortgage Secondary Market Board". 8. New Part III heading . The Principal Act is amended by inserting immediately before section 17 the following heading:- "PART III-REGISTRATION OF PERSONS TO OPERATE IN SECONDARY MORTGAGE MARKET". 9. Amendment of s. 17. Registration to allow operation on secondary mortgage market. Section 17 of the Principal Act is amended by- (a) in subsection (2), by inserting after the word "Commissioner" where it first occurs the words "shall furnish forthwith to the secretary of the Board a copy of the application and, subject to section 18,"; (b) in subsection (4), by inserting after the words "subsection (2)," the words "or in relation to applications to which section 18 applies upon completion of any investigations pursuant to that section,"; (c) by adding at the end of the section the following subsections:- "(6) If at any time it appears to- (a) the Governor in Council, in the case of a registration approved by him; or (b) the Board, in the case of a registration approved by it, that a registration granted under this section should be subject to conditions or further conditions, the Governor in Council or, as the case may be, the Board may approve of conditions or further conditions to which the registration shall be subject and, upon notification in writing of those conditions or further conditions being given to the holder of the certificate of the registration in question the registration shall become and be subject to those conditions or further conditions accordingly. (7) An application may be made under subsection (1) for a registration to be granted to a partnership in the name in which business is conducted or is to be conducted on behalf of the partnership and it is competent to the Governor in Council or, as the case may require, the Board to approve the grant of registration in that name.".

Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 1655 10. New s. 18. The Principal Act is amended by inserting after section 17 the following section:- "18. Registration procedures in prescribed cases . (1) The regulations may prescribe any person or class of person and in the case of a person or class of person other than a natural person whether that person is incorporated in Queensland or elsewhere in Australia to be a person or, as the case may be, a class of person entitled to the benefit of this section and in relation to each person or class so prescribed may declare one or more of the categories of registration available under this Act to be the category or categories in respect of which the person or class of person shall be entitled to the benefit of this section. A person or a member of a class of person prescribed under this subsection is in this section referred to as a "prescribed person" and a category of registration declared under this subsection is in this section referred to as a "declared category". (2) Where a prescribed person makes application under section 17 (1) to be registered under this Act and, if a declared category exists in relation to the prescribed person, the application seeks registration in the declared category, the Commissioner shall, within 28 days after the date of his receipt of the application, notify the secretary of the Board in writing whether he proposes to make or cause to be made any investigations into matters relevant to the applicant. (3) If pursuant to subsection (2) the Commissioner notifies that he-does not propose to make or cause to be made any investigations into matters relevant to the applicant or if the Commissioner fails to notify the secretary of the Board as required by subsection (2) within the time limited by that subsection, the Board is authorized to proceed in accordance with section 17 (5) in the absence of any report, recommendations or submissions of the Commissioner and to recommend the approval of the grant of the registration sought by the application or, as the case may require, to approve the grant of the registration sought by the application subject to the condition that the applicant remain a member of the prescribed class during the currency of the registration, and subject to such other conditions as the Board thinks fit to recommend or, as the case may require, to approve.". 11. Amendment of s. 20 . Board may hold hearing . Section 20 of the Principal Act is amended by adding at the end of the section the following subsection:- "(3) At a hearing before the Board under this section the applicant may appear in person or by counsel or solicitor.".

1656 Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 12. Amendment of s. 23. Notification of change in governing body of corporate registered person . Section 23 of the Principal Act is amended by- (a) omitting the note appearing in and at the beginning of the section and substituting the note "Notification of changes in control of registered persons"; (b) numbering the existing provisions as subsection (1); (c) adding at the end of the section the following subsections:- "(2) Where a change occurs in the membership of a partnership to which registration has been granted under the Act each member of the partnership shall noti fythe Commissioner in writing of the change within 14 days after the change occurs. Penalty: $1 000. (3) Receipt by the Commissioner of one notification of a change in the membership of a partnership shall be taken as sufficient compliance with subsection (2) by each of the members of the partnership in respect of that change.". 13. Amendment of s. 24 . Opportunity for hearing . Section 24 of the Principal Act is amended by- (a) numbering the existing provisions as subsection (1); (b) adding at the end of the section the following subsection:- "(2) At a hearing before the Board the holder may appear in person or by counsel or solicitor.". 14. New Part IV heading . The Principal Act is amended by omitting the heading immediately preceding section 27 and substituting the following heading:- "PART IV-SECONDARY MORTGAGE MARKET SECURITIES". 15. Repeal of s. 27 and new s. 29 in lieu . The Principal Act is amended by repealing section 27 and substituting the following section:- " 29. Requirements of secondary mortgage market securities. (1) A marketable security is a secondary mortgage market security of (a) the- (i) provisions of this section are complied with in all respects; (ii) provisions of this Act (other than of this section) that prescribe in relation to matters relevant to- marketable securities generally or marketable securities of the class of the marketable security in question; schemes such as that under which the marketable security in question is issued; or

Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 1657 trust deeds such as the trust deed that relates to the scheme under which the marketable security in question is issued, are complied with in all respects; and (iii) the covenants of the trust deed that relates to the scheme under which the marketable security is issued are complied with in all respects; or (b) the marketable security is one issued by a corporate body in which the Government of a State or Territory of the Commonwealth, other than the Government of Queensland, has a financial interest. (2) (a) The marketable security shall be issued under a scheme provided for by a trust deed executed by a registered issuer and by a registered trustee, who under the deed is the trustee, and duly approved by the Commissioner. (b) The marketable security shall confer on the holder thereof either- (i) a right to receive a payment or an indemnity secured by or enforceable against rights arising under the trust deed; or (ii) an entitlement specified in the trust deed. (c) The rights or entitlements conferred by the marketable security on the holder thereof are, upon its issue, or will be, within 60 days after its issue, or within such longer period not exceeding 90 days as the Minister may in a particular case allow by instrument under his hand, exerciseable against or in respect of moneys payable pursuant to first legal mortgages secured on land or land and improvements thereon being mortgages- (i) of which the trustee under the trust deed referred to in paragraph (a) is the registered mortgagee or is entitled pursuant to that trust deed to become the registered mortgagee upon demand by him; (ii) that are provided for by instruments of mortgage in the control of the trustee under the trust deed referred to in paragraph (a); and (iii) in respect of which the mortgagee is indemnified to the extent prescribed by an approved insurer against default by the mortgagor in payment of his liability thereunder. (d) Before the marketable security is issued there shall be delivered to the trustee under the trust deed referred to in

1658 Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 paragraph (a) a valuation of the land or land and improvements thereon on which are secured the first legal mortgages referred to in paragraph (c) being a valuation- (i) made within 12 months or such other time as is acceptable to the trustee before the time of its delivery to the trustee; and (ii) made by a registered valuer within the meaning of the Valuers Registration Act 1965-1984 or a corresponding enactment of a State (other than Queensland) or Territory of the Commonwealth or by a valuer acceptable to the Commissioner being in any case a valuer who- has not and whose partner has not acted as valuer, agent or broker in relation to the acquisition of the property to be valued or of the first legal mortgage thereon by any party to the scheme under which the marketable security is to be issued; and is independent of any person who is party to the scheme under which the marketable security is to be issued otherwise than as the proposed holder of the marketable security. (e) At the time the marketable security is issued, the amount that will become payable in respect of all marketable securities issued or to be issued under the scheme to which the trust deed referred to in paragraph (a) relates shall not exceed the aggregate of the- amount outstanding in respect of principal sums secured by the first legal mortgages committed to the control of the trustee under that trust deed; and the amount of all sums of money held by or payable to the registered trustee for the purposes of the trust deed; and the face value of investments held by the registered trustee for the purposes of the trust deed. (f) The value of each first legal mortgage committed to the control of the trustee under the trust deed that relates to the scheme under which the marketable security is issued shall not exceed- (i) in the case of a mortgage secured on land and improvements used by the mortgagor as his residence, 90 per centum; or

Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 1659 (ii) in the case of a mortgage secured on any other land or land and improvements thereon, 80 per centum, of the value, as shown in the valuation delivered in accordance with paragraph (d), of the land or land and improvements thereon on which the mortgage is secured.". 16. New ss. 30 to 32 . The Principal Act is amended by inserting before section 28 the following sections:- "30. Requirements of trust deed . (1) A trust deed referred to in paragraph (a) of section 29 (2)- (a) shall have as a party thereto a registered trustee who in the Commissioner's opinion has the appropriate degree of independence having regard to the functions, duties and powers of the trustee under the trust deed; (b) shall make provision that in the Commissioner's opinion is fair and reasonable for the retirement, removal and replacement of the trustee; and (c) shall provide for such other matters and things as are prescribed or as the Commissioner requires. (2) A trust deed referred to in paragraph (a) of section 29 (2) shall contain- (a) a covenant that the proportion borne by the value of the first legal mortgages committed to the control of the trustee under the trust deed to the value of the land or land and improvements thereon on which the mortgages are secured, being the value shown in the valuations delivered in accordance with paragraph (d) of section 29 (2), shall not exceed- (i) in the case of mortgages secured on land and improvements used by the mortgagor as his residence, 90 per centum of that value; or (ii) in the case of mortgages secured on any other land or land and improvements thereon, 80 per centum; (b) a covenant that at all times the face value of the marketable securities issued under the scheme to which the trust deed relates shall not exceed- (i) in a case to which subparagraph (iii) of paragraph (b) of section 34 is relevant and while it remains relevant, the value of the cash or investments (or both) within the disposition of the trustee under the trust deed in accordance with that subparagraph; or

1660 Mortgages ( Secondary Market ) Act Amendment Act (No . 2) 1985 , No. 107 (ii) in any other case, the aggregate of- the principal sums secured by the first legal mortgages committed to the control of the trustee under the trust deed in accordance with paragraph (c) of section 29 (2); and the amount of all sums held by or payable to the trustee for the purposes of the trust deed; and the face value of investments held by the trustee for the purposes of the trust deed; (c) a covenant that the registered issuer shall, upon the issue of any marketable security under the scheme to which the trust deed relates and at all times thereafter while any marketable securities issued under the scheme are outstanding, be assured of liquidity to the extent prescribed in relation to the class or classes of the outstanding marketable securities. (d) a covenant that the prescribed prudential requirements that are relevant to the class or classes of marketable securities issued or to be issued under the scheme to which the trust deed relates shall be complied with in all respects. 31. Prudential requirements concerning marketable securities. (1) A marketable security of a class referred to in column 1 of the following Table is not a secondary mortgage market security unless, where a percentage within the range specified in column 2 thereof expresses the proportion borne by- (a) the value of each relevant mortgage to the value of the land or land and improvements on which it is secured; or (b) the amount that will be payable upon maturity of the marketable security and all other marketable securities issued under the scheme in question to the value of all relevant mortgages, there exists in respect of each relevant mortgage an indemnity by an approved insurer to the mortgagee against default by each mortgagor in payment of the mortgagor's liability under the mortgage to the extent of the percentage specified in column 3 of the following Table (opposite the range in question) of the mortgagor's liability under the mortgage. (2) A marketable security of a class referred to in column 1 of the following Table is not a secondary mortgage market security unless, where a percentage within the range specified in column 2 thereof expresses the proportion borne by-

Mortgages (Secondary Market)Act Amendment Act (No. 2) 1985, No. 107 1661 (a) the value of all relevant mortgages to the value of the land or land and improvements on which they are secured; or (b) the amount that will be payable upon maturity of the marketable security and all other marketable securities issued under the scheme in question to the value of all relevant mortgages, the registered issuer of the marketable security shall, at the time he issues the security and at all times thereafter until maturity thereof be assured of liquidity to the extent of the percentage specified in column 4 of the following Table (opposite the range in question ) of the prescribed factor. TABLE RELEVANT TO SUBSECTIONS (1) AND (2) Column I Class of Security 4 Column 2 Proportion of Mortgage Value to Property Value or of Securities Value to Mortgages Value Column 3 Column 4 Indemnity Insurance Liquidity Requirement Requirement Debt-based security l Over 80% to 90% ditto Over 60% to 80% 100% 100% if relevant mortgage is a residential mortgage Nil Nil ditto ditto Pass-through security ditto ditto Over 60% to 90% To 60% Over 80% to 90% Over 50% to 80% To 50% I 40% top up if relevant mortgage is a commercial mortgage Nil 100% Nil Nil 100% 10% if there is a repurchase requirement: otherwise Nil 100% if relevant 10% if there is a mortgage is a repurchase residential mortgage requirement; otherwise Nil 40% top up if relevant mortgage is a commercial mortgage) Nil 10% if there is a re- purchase requirement; otherwise Nil II 57

1662 Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 (3) Notwithstanding the provisions of subsection (1) and the Table relevant thereto, where a relevant mortgage is secured on an estate of leasehold in land or land and improvements thereon the indemnity required against default in payment of a mortgagor's liability under the mortgage shall be to the extent of 100 per centum of that liability. 32. Form of liquidity . (1) The liquidity of which a registered issuer is required by section 31 (2) to be assured shall be in the form of- (a) lines of credit with or a guarantee given by a banking corporation; or (b) investments of a description specified in paragraph (e) or (f) of section 21 (1) of the Trusts Act 1973- 1981, or partly in one and partly in another or others of those forms. (2) Where the liquidity is in the form of lines of credit or a guarantee- (a) the lines of credit or guarantee shall be irrevocable during the life of any security issued under the scheme in connexion with which the liquidity is assured except to the extent that revocation thereof would not limit or restrict the registered issuer's capacity to meet his liabilities in respect of marketable securities then issued by him under the scheme; and (b) the documentation in respect thereof shall be such that the banking corporation providing the liquidity is under a duty enforceable at law to honour its obligations in respect of the provision of the liquidity." 17. Repeal of ss . 27A and 27B. The Principal Act is amended by repealing section 27A and section 27B. 18. Repeal of s. 28 and new s . 33 in lieu. The Principal Act is amended by repealing section 28 and substituting the following section:- "33. Availability of prescribed liquidity . A registered issuer shall keep the liquidity of which he is required by section 31 (2) to be assured available for the purpose only of honouring his liabilities in respect of marketable securities issued by him under the scheme in connexion with which the liquidity is assured."

Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 1663 19. New ss. 34 to 36. The Principal Act is amended by inserting before section 29 the following sections:- "34. Authorized trustee investment . A secondary mortgage market security is a security in which a trustee may invest trust funds- (a) if it is a secondary mortgage market security by reason of paragraph (b) of section 29 (1); or (b) if- (i) the rights or entitlements conferred by it are or will be (as provided by paragraph (c) of section 29 (2)) exerciseable against or in respect of moneys payable pursuant to first legal mortgages secured on land or land and improvements thereon in respect of which the mortgagee registered on the relevant instrument of title is or will be the trustee under the trust deed that relates to the scheme under which the secondary mortgage market security is issued; (ii) the provisions of section 31 are complied with in respect of it, with the following Table substituted for the Table provided for by that section; and (iii) during the period until he has in his control first legal mortgages as required by paragraph (c) of section 29 (2) the trustee under the trust deed referred to in subparagraph (1)- shall have within his disposition cash or investments, such as are referred to in paragraph (e) or (f) of section 21 (1) of the Trusts Act 1973-1981, to an amount at least equal to the face value of the marketable securities issued; or shall be satisfied that there exists a guarantee or line of credit with a banking corporation or a contract of indemnity with an approved insurer or a legally enforceable arrangement between himself and the person who is to issue marketable securities pursuant to the trust deed whereby (in any such case) the trustee will be able to realise a sum at least equal to the face value of the marketable securities from time to time issued pursuant to the trust deed.

1664 Mortgages ( Secondary Market) Act Amendment Act (No. 2) 1985 , No. 107 TABLE Column 1 Class of Security Column 2 Proportion of Mortgage Value to Property Value or of Securities Value to Mortgages Value Column 3 Column 4 Indemnity Insurance Liquidity Requirement Requirement Debt-based security Over 80% to 90% ditto Over 75% to 80% 100% 100% if relevant mortgage is a residential mortgage 25% 15% ditto ditto 40% top up if relevant mortgage is a commercial mortgage Over 662/3% to 75% 100% if relevant mortgage is a residential mortgage 40% top up if relevant mortgage is a commercial mortgage Over 50% to 662/3% 100% if relevant mortgage is a residential mortgage 12.5% 10% ditto ditto Pass-through security ditto ditto ditto ditto 40% top up if relevant mortgage is a commercial mortgage To 50% Nil 10% To 90% Nil 100% Over 80% to 90% 100% 25% if there is a repurchase requirement; otherwise Nil Over 75% to 80% 100% if relevant 15% if there is a mortgage is a repurchase residential mortgage requirement; otherwise Nil 40% top up if relevant mortgage is a commercial mortgage Over 662/3% to 75% 100% if relevant 12.5% if there is a mortgage is a repurchase residential mortgage requirement; otherwise Nil 40% top up if relevant mortgage is a commercial mortgage Over 50% to 662/3% 100% if relevant 10% if there is a mortgage is a repurchase residential mortgage requirement; otherwise Nil 40% top up if relevant mortgage is a commercial mortgage To 50% Nil 10% if there is a repurchase requirement; otherwise Nil

Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 1665 35. Certain exclusions from prudential requirements. A marketable security issued by a banking corporation or by a corporation with net tangible assets of a value in excess of $500 million may become and be a secondary mortgage market security notwithstanding that the issuer is not at any time assured of liquidity to the extent required by section 31 (2) or 34 and the Tables relevant thereto or at all. 36. Interpretation . (1) In this Part- "commercial mortgage" means any mortgage that is not a residential mortgage; "debt-based security" means a marketable security to which paragraph (a) of the definition "marketable security" in section 4 is apposite; "pass-through security" means a marketable security to which paragraph (b) of the definition "marketable security" in section 4 is apposite; "prescribed factor" means- (a) in the case of a debt-based security, the liability upon maturity of the issuer thereof in respect of all marketable securities issued under the scheme under which the debt-based security is issued; and (b) in the case of a pass-through security, the value of the first legal mortgages in the control of the trustee under the trust deed that relates to the scheme under which the pass-through security is issued; "relevant mortgage" means a mortgage pursuant to which are payable moneys against or in respect of which are enforceable the rights or entitlements conferred by a marketable security on the holder of the security, whether as a person entitled to the whole or a share of the mortgagee's entitlements under the mortgage or otherwise; "repurchase requirement" means a requirement in a trust deed that relates to a scheme under which a marketable security is issued that the trustee under the deed or the issuer of the marketable security shall acquire the security from the holder thereof whether upon the holder's request or the occurrence of any event; "residential mortgage" means a mortgage secured on land and improvements used by the mortgagor as his residence, and for no other purpose; "value" means in relation to land or land and improvements thereon the value thereof as shown in the valuation delivered in accordance with paragraph (d) of section 29 (2).

1666 Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 (2) Where any provision of this Part requires the existence of insurance expressed as "40% top up" it shall be taken to require a contract of indemnity against default by a mortgagor in payment of his liabilities under a relevant mortgage in respect of that part of the moneys payable pursuant to the mortgage which exceeds an amount equal to 60 per centum of the value of the land or land and improvements on which the mortgage is secured. (3) Where two or more sets of requirements contained in a Table that is relevant to any provision of this Part apply in relation to a particular marketable security, the provision shall be taken to be complied with in respect of the marketable security if the security complies with any of the applicable sets of requirements.". 20. Repeal of s. 29 and new s. 37 in lieu. The Principal Act is amended by repealing section 29 and substituting the following section:- "37 Certification of securities by trustees. The issuer of a secondary mortgage market security shall not- (a) deliver the security to a purchaser of it from him; or (b) hold as purchaser the security, unless the security is duly certified as prescribed by the regulations by the trustee under the trust deed relating to the scheme under which the security is issued.". 21. New Part V. The Principal Act is amended by inserting before section 30 the following heading and sections:- "PART V-PROVISIONS AFFECTING SECONDARY MORTGAGE MARKET 38. Approval of standard trust deeds . (1) Where the Commissioner's approval is sought to a trust deed that is in or is substantially in a standard form approved by the Commissioner and the application for the Commissioner's approval is supported by a statutory declaration under the Oaths Act 1867-1981 to the effect that- the trust deed is in the standard form; or the trust deed is substantially in the standard form, and stating that the form of trust deed is appropriate to the scheme proposed to be operated pursuant to the trust deed and, in a case where the trust deed is declared to be substantially in a standard form, truly stating with reasonable particularity the variations from the standard form, the Commissioner may approve of the trust deed for the purposes of this Act in reliance on the statutory declaration and without checking the contents of the trust deed. (2) Where the Commissioner has approved a trust deed pursuant to the authority conferred by subsection (1), neither

Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 1667 the Crown, the Commissioner nor any officer or employee of the Commissioner shall incur any liability for loss claimed by any person to have been thereby occasioned to him. 39. Restriction on variation of controlled interest rates. Where- (a) the rate of interest payable to or chargeable by a mortgagee under a mortgage that has been assigned to a trustee for the purposes of a trust deed duly approved by the Commissioner and that constitutes (wholly or in part) security for secondary mortgage market securities issued under a scheme to which the trust deed relates is a rate that is variable; and (b) in relation to the mortgagee to whom the mortgage was originally given, the rate of interest was limited or controlled by law, neither the trustee nor any mortgagee under the mortgage subsequent to the trustee shall make a variation in the rate of interest such that, had the variation been made by the mortgagee to whom the mortgage was originally given, the resultant rate of interest would not have been a permissible rate having regard to the limitation or control imposed by law in relation to the mortgagee to whom the mortgage was originally given. 40. Trustee to report default. The trustee under a trust deed duly approved by the Commissioner for the purposes of this Act who becomes aware- (a) of a default in complying with any provision of the trust deed made by any person; or (b) of any other prescribed matter, shall forthwith furnish to the Commissioner a report in writing in respect thereof. 41. Exclusion of Money Lenders Act. (1) A person registered under this Act who carries on activity such that, but for the provisions of this subsection, he would by reason thereof be a mortgage broker within the meaning of the Money Lenders Act 1916-1979 shall not be such a mortgage broker to the extent that- (a) he carries on that activity; or (b) he advertises or announces himself or holds himself out as carrying on that activity, with a view to the operation of a scheme that provides for the issue by a registered issuer of secondary mortgage market securities, being a scheme to which a trust deed duly approved by the

1668 Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 Commissioner relates or will relate and the provisions of sections 14A to 14N of that Act do not apply to him in those circumstances. (2) Section 4A of the Money Lenders Act 1916-1979 does not apply in relation to a mortgage committed to the control of a trustee under a trust deed pursuant to which secondary mortgage market securities are or are to be issued and against which mortgage the rights or entitlements of a holder of the securities are or are to be secured or may be exercised.". 22. Repeal of ss. 30, 31 and 32 and new ss . 42 and 43 in lieu. The Principal Act is amended by repealing sections 30, 31, and 32 and substituting the following sections:- "42. Certain instruments exempt from stamp duty . (1) If upon production to him of an instrument referred to in this subsection the Commissioner of Stamp Duties is satisfied that- (a) the instrument is a conveyance or transfer of a mortgage to a trustee in accordance with the terms of a trust deed duly approved by the Commissioner for Corporate Affairs pursuant to which secondary mortgage market securities are or are to be issued and that the trust deed is for no other purpose; or (b) the instrument is a conveyance or transfer from a trustee under a trust deed such as is referred to in paragraph (a) of a mortgage held by him in accordance with the terms of the trust deed to a person who in relation to the mortgage is the manager of mortgages and that the trust deed is for no other purpose than that referred to in paragraph (a); or (c) the instrument is a conveyance or transfer to a trustee under a trust deed such as is referred to in paragraph (a) of a security ancillary or incidental to a mortgage that is the subject of a conveyance or transfer such as is referred to in paragraph (a) the first-mentioned conveyance or transfer being one in accordance with the terms of the trust deed and that the trust deed is for no other purpose than that referred to in paragraph (a); or (d) the instrument is a conveyance or transfer from a trustee under a trust deed such as is referred to in paragraph (a) of a security ancillary or incidental to a mortgage that is the subject of a conveyance or transfer such as is referred to in paragraph (b) to a person who in relation to the mortgage is the manager of mortgages, the first-mentioned conveyance or transfer being one in accordance with the terms of

Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 1669 the trust deed and that the trust deed is for no other purpose than that referred to in paragraph (a); or (e) the instrument is a guarantee, letter of credit or other instrument given or made solely to satisfy liquidity requirements of this Act in relation to secondary mortgage market securities and the covenant concerning liquidity in a trust deed such as is referred to in paragraph (a) and that the trust deed is for no other purpose than that referred to in paragraph (a); or (f) the instrument is a trust deed such as is referred to in paragraph (a) and is for no other purpose than that referred to in paragraph (a), the instrument is exempt from stamp duty under the Stamp Act1894-1985. (2) If an instrument is- a secondary mortgage market security; or a conveyance or transfer of a secondary mortgage market security, it is exempt from stamp duty under the Stamp Act 1894-1985. 43. Exclusion of certain provisions of StampAct. (1) The provisions of 3 l c and 3l D of the Stamp Act 1894-1985 do not apply in respect of sales or purchases of secondary mortgage market securities. (2) The sale, purchase, discounting or acquisition of- (a) a mortgage that, in consequence, is conveyed or transferred to a trustee under a trust deed duly approved by the Commissioner for Corporate Affairs pursuant to which secondary mortgage market securities are or are to be issued where the trust deed is for no other purpose; or (b) a secondary mortgage market security, shall not be construed to be a transaction that constitutes a loan or discount transaction to which sections 35 to 35H (inclusive) of the Stamp Act 1894-1985 apply. (3) The provisions of section 68.E of the Stamp Act 1894- 1985 do not apply to a trustee under a trust deed duly approved by the Commissioner for Corporate Affairs pursuant to which secondary mortgage market securities are or are to be issued, in respect of debentures being such securities issued pursuant to the trust deed where the trust deed is for no other purpose. (4) A scheme, provided for by a trust deed duly approved by the Commissioner for Corporate Affairs, for the issue of

16 /u Mortgages (Secondary Market)Act Amendment Act (No. 2) 1985, No. 107 secondary mortgage market securities is not a unit trust scheme within the meaning of section 56B of the Stamp Act 1894-1985.". 23. Amendment of s. 34. Person may not manage certain mortgages unless registered . Section 34 of the Principal Act is amended by omitting the words "there are or are to be issued marketable securities to which section 27 (1) applies or will apply" and substituting the words "secondary mortgage market securities are or are to be issued".. 24. New ss. 46 and 47 . The Principal Act is amended by inserting before the heading "PART IV- PROCURATION FEES" the following sections:- "46 . Protection of trustee etc. against i ncorrect certification. A person who invests in the purchase of a secondary mortgage market security certified as required by section 37 to be a security in which a trustee may invest trust funds (whatever terms may be therein used) moneys held by him under a fiduciary relationship borne by him (as a trustee or otherwise) to any other person or persons shall not incur any liability as for a breach of that relationship or for loss incurred on the investment, by reason that the marketable security is not what it is so certified to be. 47. Offence of falsely representing marketable securities. A person shall not- (a) issue an instrument that purports to be a secondary mortgage market security; or (b) hold out an instrument, issued by him or any other person, to be a secondary mortgage market security, unless the provisions of this Act that are to be complied with in respect of a marketable security, if it is to be a secondary mortgage market security, have been complied with in all respects in respect of that instrument. Penalty: $50 000 or two years' imprisonment or both.". 25. Repeal of s. 35 and new s. 48 in lieu . The Principal Act is amended by repealing section 35 and the heading immediately preceding the section and substituting the following heading and section:- " PART VI-PROCURATION FEES 48. Payment of procuration fees. Notwithstanding the provisions of any Act that restrict the right of any person providing finance to demand, receive or accept a fee, commission or other amount in connexion with the provision of finance, a person registered under this Act is authorised to demand, receive and accept in accordance with this Act a fee, commission or other amount in respect of negotiating on behalf of a client a loan or credit to be secured by means of a first legal mortgage on land or land and improvements thereon, being a mortgage

Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 1671 the value of which will not exceed at the time it is given 90 per centum of the value of the land or land and improvements on which it is secured.". 26. Amendment of s. 36. Restriction on right to procuration fee. Section 36 of the Principal Act is amended- (a) in subsection (1), by- (i) omitting the words " registered finance-mortgage broker" and substituting the words "person registered under this Act"; (ii) omitting from paragraph (a) the words "as a finance-mortgage broker"; (iii) inserting after the word "appointment" in paragraph (c) the words "specifies the period for which it is to continue and"; (iv) omitting from paragraph (c) the word "terms" and substituting the word "term"; (b) by omitting subsection (2) and substituting the following subsection:- "(2) In respect of each transaction consisting in the negotiation of a loan or credit on behalf of a client there shall be but one fee, commission or other amount, authorized by section 48 payable to a person registered under this Act. Where two or more persons registered under this Act engage in the one transaction the fee, commission or other amount so payable shall be shared by them."; (c) in subsection (3), by- (i) omitting the words "registered finance-mortgage broker" and substituting the words "person registered under this Act"; (ii) omitting the expression "35" and substituting the expression "48"; (d) in subsection (4), by- (i) omitting the words "registered finance-mortgage broker" and substituting the words "person registered under this Act"; (ii) omitting the expression "35" and substituting the expression "48"

1672 Mortgages (Secondary Market)Act Amendment Act (No. 2) 1985, No. 107 27. Amendment of s. 37 . Expenses recoverable by broker . Section 37 of the Principal Act is amended by- (a) omitting from the note appearing in and at the beginning of the section the word "broker" and substituting the words ` registered person"; (b) omitting the words "registered finance-mortgage broker" and substituting the words "person registered under this Act"; (c) omitting the expression "36" and substituting the expression "49"; 28. Amendment of s. 38. Fees etc. paid in advance into trust accounts. Section 38 of the Principal Act is amended- (a) in subsection (1), by- (i) omitting the words "registered finance-mortgage broker" where they first occur and substituting the words "person registered under this Act"; 9 (ii) omitting the words "the registered finance-mortgage broker" and substituting the word "him"; (b) in subsection (2), by- (i) omitting the words "registered finance-mortgage broker shall not withdraw" and substituting the words "person shall not pay out"; (ii) omitting from paragraph (b) the words "the broker" and substituting the word "him"; (c) in subsection (3), by- (i) omitting the word "withdrawn" where it twice occurs and substituting in each case the words "paid out"; (ii) omitting the words "registered finance-mortgage broker" and substituting the words "person registered under this Act". (d) in subsection (4), by omitting paragraph (b) and substituting the following paragraph:- "(b) the person who negotiated the loan or credit has a notification from the lender that the loan or credit is available upon the terms specified in the written engagement or appointment of that person to act in respect of the negotiation or upon such other terms as the borrower has specified in writing."; (e) in subsection (5), by- (i) omitting the words "registered finance-mortgage broker" and substituting the words "person registered under this Act"; (ii) omitting the word "withdrawn" and substituting the words "paid out"; (iii) omitting the word "broker" where it occurs in paragraph (a) and substituting the words "registered person"; (iv) omitting the word "broker" where it firstly occurs in paragraph (b) and substituting the words "registered person' ; (v) omitting the words "the broker" where they secondly occur in paragraph (b) and substituting the word "him".

Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 1673 29. Amendment of s. 39 . Retention of fee dependent on loan or credit for which broker engaged . Section 39 of the Principal Act is amended by- (a) omitting the word "broker" from the note appearing in and at l;ie beginning of the section and substituting the words " registered t,ers"n„; (b) omitting the words "registered finance-mortgage broker" and substituting the words "person registered under this Act". 30. Amendment of s. 40 . Refund order where fees unlawfully obtained . Section 40 of the Principal Act is amended in subsection (1) by- (a) omitting the words "registered finance-mortgage broker" where they firstly occur and substituting the words "person registered under this Act"; (b) omitting the expression "36" where it twice occurs and substituting in each case the expression "49"; (c) omitting the expression "39" and substituting the expression "52"; (d) omitting the words "the registered finance-mortgage broker" and substituting the word "him". 31. Renumbering certain sections . A section of the Principal Act numbered in the first column of the following Table is renumbered as indicated in the second column of the Table:- Section as presently numbered S. 18 19 20 21 22 23 24 25 26 26A 33 TABLE Section as renumbered S. 19 20 21 22 23 24 25 26 27 28 44

1674 Mortgages (Secondary Market) Act Amendment Act (No. 2) 1985, No. 107 TABLE-continued Section as presently numbered 34 36 37 38 39 40 41 42 43 Section as renumbered 45 49 50 51 52 53 54 55 56 32. Amendment of certain expressions . An expression identified in the first column of the following Table as occurring in or before a section (as renumbered by section 31) of the Principal Act is amended as indicated in the second column of the Table:- TABLE Existing expression "24" occurring in section 23 (3) "22" occurring in section 25 "PART V" occurring before section 54 Amended expression "25" "23" "PART VII"