ID
2021-024

Type
Policy
Sector
Mortgage Brokering
Status
Public comment closed
Date
Comment Due Date

The Financial Services Regulatory Authority of Ontario (FSRA) is committed to deterring deceptive and fraudulent practices in the mortgage brokering sector. These efforts will help maintain a strong and sustainable mortgage market where consumers and lenders are protected.

FSRA is now consulting on proposed Interpretation and Information Guidance to help licensed mortgage professionals comply with Ontario laws and regulations as they apply to mortgage fraud. It includes a checklist of steps to help prevent fraud that they should follow. The proposed guidance is our Interpretation of legal requirements under the Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA).

Once effective, this Guidance replaces Bulletin No. M-01/16 regarding mortgage fraud prevention requirements. FSRA will consider compliance with the obligations outlined in this Guidance, along with adherence to the Mortgage Broker Regulators’ Council of Canada Code of Conduct, as factors in determining licensing suitability.

Thank you for your feedback on FSRA’s Proposed Guidance on Preventing and Detecting Mortgage Fraud. This consultation is now closed. The consultation feedback received will help to inform our final approach. Subscribe to our mailing list to receive updates on FSRA news.

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Sector Comment Date posted
Credit Unions and Caisses Populaires
[2021-024] Bernard Brun - Desjardins
On behalf of the Desjardins Ontario Credit Union (DOCU), the Desjardins Group (“Desjardins”) welcomes the opportunity to comment on the proposed Guidance to prevent and detect mortgage fraud. We thank you for giving us the opportunity to provide feedback and look forward to continuing our collaborative relationship with FSRA to better serve our members and clients.
Mortgage Brokering
[2021-024] André Hannoush - Appraisal Institute of Canada
Mortgage Brokering
[2021-024] Samantha Gale - Canadian Private Lenders Association
Mortgage Brokering
[2021-024] Faye Walsh - The Mortgage Source Inc
I consider the biggest hurdle in combating mortgage fraud to be the very narrow categorization of types of mortgage fraud. As it stands, mortgage fraud is categorized as either "Fraud For Shelter" or "Fraud For Profit". There is a third category that has not been formally identified, but I believe it is easily the most prevalent in our industry: "Fraud For Enrichment of Mortgage Originator." The perpetrators are funding huge volume of mortgages using fraudulent income documents, forged leases, etc, (sometimes for unwitting clients), simply because they can, and they want the commission. We get paid very well for what we do and for dishonest originators, the prospect of several thousands of dollars in commission, accolades, and industry recognition is too enticing to resist. Very few lenders will do more than "cut off" the mortgage broker/mortgage agent from doing business with them, choosing not to report to FSRA, or even the Broker of Record. Instead, the dishonest actor moves on to the next unsuspecting lender and continues to fund the fraudulent mortgages and collect commissions.

Not identifying "Fraud For Enrichment of Mortgage Originator" as a third "category" of mortgage fraud is a glaring omission, and until that is recognized, acknowledged, and punished with substantive penalties, loss of license, criminal referral, etc we cannot take FSRA's efforts to combat mortgage fraud in our industry seriously.

Mortgage Brokering
[2021-024] naval gupta - navkam's financial group corp.
I have been licenses as mortgage agent since 2005 but may not have sold much myself since i am full time accountant and my duty is to guide tax clients properly whether they trying to break mortgage or buy new one. Fundamentally govt at each level need to work together which seems that it will never happen as the officials have no desire or guts to do that and all the decisions they make is based on whose lobby is strong or just complaint based and doing that they dolling out millions of dollars for wrong reasons. First suggestion-- for first time buyers if they have 5% down payment and good credit, let them buy and approve them upto 500-700k because they are the ones who paying almost 2000-2500 in monthly rent any way.
For any higher price or lower price and not first timers, they have to have min 10% down and qualified based on how much they have been paying in rent or so to approve them not just based on pay stubs/job letter and whether singles person trying to buy or a family. As a principal residence, priority should be given to first time buyers and others based on their trading history like how many times they buy and sell where no body may be keeping track.
No foreign investments into residential housing unless they want to buy the whole apt building or commercial buildings etc but no residential homes should be allowed to be purchased by those investors and even local investors should not be allowed more than say 4 houses or apts as we have seen people owning 30-35 houses and renting them out and taking oxygen from the system and who is suffering people who really need to have a roof end of the day, hard working individuals who do not have access to any tricks or worse they do not even get proper advice/risk assessment and they are the ones paying blind bidding price of anywhere from 50-even 250k on top of that since they really need a house to start their life. If there is any chance to sit with decision makers from all levels of Govt and they really want to do something good at ground level, then we can fix these fraud and all issues since these ones might have been or have been created by not having common sense logical approach to the issues from all levels including lenders and agents along with some very greedy sellers/buyers who just using the loop holes in the system to go ahead. when will all levels of governments will talk to each other in a common sense and practical way. thanks.
Mortgage Brokering
[2021-024] Kamal Saha - WFG Insurance agency of Canada Inc
I am glad to know that from now and going forward mortgage broker/mortgage agents and the related business will be be regulated by FSRAO like we are regulated by the same regulatory body. Otherwise it would be very difficult to control housing price and related housig market. As we previously seen Govt imposed many stress test but it didn't work to control the housing price. Mortgage is approved by the underwriter's hand (in the bank or other financial institutions) and their practice need to be regulated too.. Randomly audit work need to be done in this aspect to make the market perfection. As well any home buyer (first time or multiple home buyer) need to show proof that they have sufficient real income and that income was declared in CRA (at least last 2 yrs earned income) to buy their expected house. Many thanks to FSRAO for letting me & sharing my comment on this new regulation.
Mortgage Brokering
[2021-024] Harmel Johal
1. FSRA's Anti-Fraud Resources for Industry DOES NOT include any link to actually report fraud. Mortgage Agents and Brokers frequently witness mortgage fraud being committed by some entities. However, FSRA (as was FSCO) stonewalls any attempts to report fraud. There is no mechanism set up for mortgage fraud reporting by the industry/registrants. Quite frankly, it is very frustrating when you witness fraud happening, but you can't do anything about it.
So all these exercises of creating checklists, releasing bulletins, and drafting regulations seem to be for academic purposes mostly.

2. Secondly, most of the mortgage fraud is presently routed through chartered banks at the branch level. Most of the agents and brokers circumvent FSRA by taking their files directly to specific bank employees (mortgage officers or account managers) who are providing fraudulent paperwork to their underwriters for approvals. These banks and their employees are not regulated by FSRA. Unless FSRA finds a way to communicate with OSFI and works with it to combat fraud, it is going to be a wasted effort.
Mortgage Brokering
[2021-024] Surender Tandal - TDL Mortgages
It will be highly appreciated if Banks, CRA, and FSRA can work together with True facts.
All fraud mortgage providers should be caught and stripped of their licenses forever and they should not be able to get back any regulated license in the Future in Canada.
It needs clean sweep action from FSRA with the help of Banks, CRA, to remove these individuals from the mortgage industry.
Mortgage Brokering
[2021-024] Freda Watch
Hello FSRA,

Fraud prevention education to brokers is one item, but ineffective if there are no consequences for committing fraud. Working for a national lender as a fraud investigator, my opinion is:

First, the largest impact would be investigation and reporting frauds. FSRA has the worst reputation nationwide for lack of action, but has the highest number of mortgage brokers, the largest volume in the country and the highest instances of uninvestigated fraud. For example, the recent Ontario fraud ring with almost 30 confirmed fake employers, dozens of brokers directly tied to the fake employers and also providing fake bank statements. FSRA was called about it and the response was "we'll look into it" but the person didn't ask for any information or documentation to support the investigation, which was completed by the fraud teams at almost a dozen lenders who were willing to provide a mountain of evidence.

Second, an anonymous tip web-form for mortgage fraud. I personally reported a very large fraud (10's of millions) for a very large outspoken broker a few years ago. The fear of repercussion was very high. The broker said, to our faces, go ahead and report it with a smile. The nonchalance, to me, meant he knew there would be no repercussions. Turns out he was correct.

Overall, the appearance is there are no repercussions for known fraudsters, even with plenty of evidence. Speaking to others in the industry and at other regulators, FSRA's inaction is seen as condoning. The biggest impact FSRA could have in fraud prevention is taking action.

Freda
Mortgage Brokering
[2021-024] Phil Weir - DLC Canuck Mortgage Group
Mortgage Fraud
My main comment is the licensing process - a 1 week course - is inadequate. We have people from all walks of life - getting mortgage agent licenses - with the average home now in excess of $1 million in the GTA - there should be more education - we do 6-10 weeks education once licensed and closely supervise new agents - 1st 5 files- education is key - there has to be something put in place to ensure - truck drivers or uber drivers that have become agents have some sort of supervision etc.....
To get a Mortgage Brokers license- you can get this with being an agent 3 yrs now - but may have never done a mortgage but passed the course - there should be additional criteria - such as - processed 100 mortgages over minimum 3 yrs with volume north of 20 million.
It really is a concern - and i do not think a Realtor should be a Mortgage agent and vice versa - also - i do not think you can be in this profession part time either

Phil Weir
President
DLC Canuck Mortgage Group
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