2019 Mortgage brokerages and administrators annual information return report
The 2019 Mortgage Brokerages and Administrators Annual Information Return (AIR) Report provides an overall view on business activities in the mortgage brokering sector during the 2019 calendar year. FSRA collects the report data through the AIR.
Mortgage brokering sector licensees can use the report to obtain an overview of the mortgage brokering market in Ontario. The report contains:
- data insights
- highlights of market segments that FSRA is monitoring
- Information on compliance with the Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA) by mortgage brokerages and administrators.
FSRA uses the reported data to monitor new trends, inform and respond to identified risk indicators, and develop data-driven strategic policy. This data assists FSRA to appropriately determine risk assessment criteria and proactively enhance its supervision tools.
Key findings and FSRA actions
The 2019 AIR filing shows an increase in the private lending sphere. Approximately 55% of total mortgage transactions involved lenders other than financial institutions such as banks, trust and insurance companies, and credit unions, a 3% increase compared to 2018. This trend is expected to continue, considering the 2020 financial market disruptions due to the COVID-19 pandemic. These findings support FSRA’s proposed 2021-2022 supervision focus on private lending in general and predatory lending in particular.
Conflicts of interest
It is also noted that approximately 32% of mortgage transactions funded by non-individual private lenders1 were related to or affiliated with the mortgage brokerage serving as the intermediary in the transaction. FSRA reminds brokerages of their obligation to disclose any potential conflicts of interest to borrowers. FSRA assesses brokerages’ processes for disclosing and managing conflicts of interest as part of its examinations.
Non-qualified syndicated mortgage investments
While the number of non-qualified syndicated mortgage investment (NQSMI) mortgages has decreased by 2.2% compared to 2018 AIR data, the total dollar value of these transactions has increased by 5.2% to $8.9B, with an average transaction size of $6.2M.
Comparing this number to the data from Disclosure Forms 3.2, filed under section 6.3 of the FSRA Fee Rule, supports FSRA’s anticipation that more sophisticated investors are taking part in these higher-risk transactions and investing a higher amount.
FSRA will continue its real-time supervision of NQSMIs until the transfer of oversight of certain SMI transactions to the Ontario Securities Commission, which is scheduled to take effect on July 1, 2021.
1 Based on the names of the top three private lenders used reported by mortgage brokerages.