Mortgage Brokering – News you need, volume 5

In this issue

• Welcome
• Supervising the mortgage broker sector
• You can expose wrongdoing safely
• Protecting the public and deterring bad behavior
• Attention mortgage professionals: Compliance blitz coming
• Act fast: Deadlines approaching
• Taking personal responsibility to protect your sector
• Mortgage administrators must better protect investors’ funds—FSRA's findings
• Mortgage Brokerages need better compliance practices when placing borrowers with related Mortgage Investment Corporation lenders
• Better compliance needed to protect consumers when recommending private mortgages
• Further compliance needed for brokerages working with NQSMIs
• Detecting and preventing mortgage fraud
• Stay in the loop

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In this climate of rising interest rates and high inflation, the job of our mortgage professionals is more important than ever. Your sound advice and product recommendations help ensure borrowers and investors get the products that are right for them and their families. As your regulator we want to ensure consumers are protected and that the sector’s reputation is not tarnished by a few people who break the rules. We have made a lot of progress over the summer and I encourage you to take a few minutes and read further.

Learn more about our whistle-bower program, new enforcement database and 2023-2024 mortgage brokering supervision plan which sets out our priorities for this fiscal year.

Get in touch

If you have feedback about our newsletter, including topics you would like to see covered, please send us a note at [email protected].

Thank you for your continuous engagement and helpful feedback as we continue to develop a fair, safe and vibrant mortgage brokering sector.

Antoinette Leung
Head, Financial Institutions and Mortgage Brokerage Conduct, FSRA

We are releasing our annual Mortgage Brokering Sector Supervision Plan which will help consumers receive mortgage recommendations suitable for their needs, ensure investors and lenders have confidence that mortgage administrators are protecting the investments and funds in their care. It will also help industry better understand FSRA’s expectations and identify areas of improvement.

Learn more about our new Supervision Plan.

If you see suspected misconduct within FSRA’s regulated sectors, you now have the ability to report it anonymously through FSRA’s whistle-blower program. By reporting those who break the law, you can help maintain high standards of conduct and consumer protection in FSRA’s regulated sectors. Be a part of the solution to ensure a safe, fair and vibrant financial services market in Ontario.

Learn more about our whistle-blower program.

All of FSRA’s enforcement actions and warning notices are now available for anyone to see on our new enforcement database. By transparently communicating about those who do not follow the law or regulatory requirements FSRA will encourage high business standards and deter misconduct within the sectors it regulates.

Learn more about our new enforcement database.

Mortgage professionals can help inform consumers by accurately calculating and disclosing the annual percentage rate of borrowing (APR). FSRA’s recent examinations have uncovered cases where the APR has been calculated and disclosed incorrectly. Based on our findings, we are planning a compliance blitz in fiscal 2024-2025.

Learn more about helping your clients make an informed decision about their mortgage.

Brokers, principal brokers and level 2 agents wishing to continuing dealing in private mortgages are reminded of the following deadlines:

• October 31, 2023 – deadline to pass the Private Mortgages Course Challenge Exam
• March 31, 2024 – deadline to complete the Private Mortgages Course

Learn more about FSRA’s licensing and education requirements.

Mortgage professionals have a legal and moral obligation to report misconduct, terminations and other suitability concerns to FSRA. This approach helps protect consumers and uphold market integrity.

Learn more about your reporting responsibilities.

In the fall of 2022, we examined a sample of mortgage administrators’ practices and noted areas needing improvement. We encourage professionals in this sector to take steps to ensure their practices are aligned with FSRA’s expectations.

Learn more about FSRA’s expectations for protecting consumers and investors.

As part of our supervision efforts, we have now completed targeted examinations on fifteen brokerages who recommend to consumers private mortgages from a related Mortgage Investment Corporation. As a result of this specific examination project’s findings, we are implementing a monitoring program on eight identified mortgage brokerages to run until the end of this year to support improved compliance.

Learn more about protecting consumers who use private mortgages.

FSRA reviewed 101 private mortgage transactions between April 1, 2022 and March 31, 2023 and found that about 65% had missing, incomplete or inconsistent documentation of suitability assessment and rationale. The consequences of failing to properly document the suitability assessment can be severe.

Learn more documenting suitability for consumers who use private mortgages.

The purpose of the NQSMI Investor Class Determination Project was to assess the mortgage brokering industry’s understanding and compliance with FSRA’s NQSMI Supervision Framework. We found the sector needs to better understand compliance requirements when working with NQSMIs.

Learn more about NQSMI compliance requirements.

FSRA is releasing final guidance that captures key obligations and standards of practice under the Mortgage Brokerages, Lenders and Administrators Act, 2006 (“MBLAA”) and its regulations, as well as common industry practices, aimed at combating mortgage fraud. The guidance sets out sector requirements to conduct business in a manner that does not facilitate dishonesty, fraud or any other illegal conduct.

Learn more about detecting and preventing mortgage fraud.