Mortgage Brokering Stakeholder Advisory Committee (SAC) meeting with FSRA Board of Directors
Summary of the May 4, 2023 Meeting
(25 Sheppard Avenue West and virtually via Teams)
Stakeholder Advisory Committee members:
William Jandrisits, Normera Capital Partners
Nick Kyprianou, River Rock Mortgage Investment Corporation
Kevin Lonsdale, Canadian National Association of Real Estate Appraisers
Shawn Stillman, Mortgage Outlet Inc
John Harry, Thompson Harry Realty Advisors Inc
Joe Pinheiro, Mortgage Professionals Canada
Susan Redmayne, First National Financial LP
Lauren van den Berg, Mortgage Professionals Canada (MPC)
Joseph White, Real Estate and Mortgage Institute of Canada
Akber Abbas, 8Twelve Mortgage Corporation
David Sutherland, Kingston Mortgage Solutions / Mortgage Alliance Canada
Gregory Banfield, Home Ownership Alternatives
FSRA Board members:
Joanne De Laurentiis, Chair of the Board
Kathy Bouey, Director
Joseph Iannicelli, Director
Brent Zorgdrager, Director
Dexter John, Director
Larry Ritchie, Director
FSRA management:
Mark White, Chief Executive Officer
Huston Loke, Executive Vice Present, Mark Conduct
Joel Gorlick, Director, Policy - Market Conduct
Antoinette Leung, Head, Financial Institutions and Mortgage Brokerage Conduct
Wendy Horrobin, Head, Licensing and Risk Assessment
Rocca D’Angela, Senior Manager, Mortgage Brokering Policy
Jordan Solway, Executive Vice President, Legal and Enforcement
Heather Greenberg, Corporate Secretary and Deputy General Counsel
Jennie Hodgson, Senior Manager, Mortgage Broker Conduct
Nadiatou Fagbemi, Senior Manager, Mortgage Broker Conduct, Special Situations
General comments
The SAC members applauded FSRA’s outcomes- and principles-based approach and collaboration with industry. They noted the trends and recommendations below for FSRA’s consideration.
Enhanced regulatory action is required to combat the rising amount and sophistication of fraud in the mortgage brokering sector.
The SAC members recommended that FSRA communicate its enforcement actions more widely to raise awareness of the consequences of misconduct, more clearly communicate the information FSRA requires to take regulatory action, continue to engage with the sector in order to uncover potential consumer harm issues early, and promote FSRA’s whistleblower program to obtain important information about potential risks in the marketplace. As fraud may involve a number of parties outside of FSRA’s purview, SAC members emphasized that FSRA must continue its collaboration with various authorities.
Enhanced education is required to prepare mortgage professionals to make suitable mortgage product recommendations based on the client’s overall needs and circumstances.
Members suggested that additional licensing education to help mortgage professionals better assess the financial/investment needs of clients at various life stages should be required, since understanding a client’s overall financial situation is critical in recommending the right product amidst the rising complexity of products, economic uncertainty and real estate market volatility. Members also suggested FSRA consider the benefits of partnering with providers of financial planner/advisor designations for such courses and having post-secondary schools provide the licensing courses. They also noted that the licensing education should include a course/module on commercial mortgages.
Greater clarity for consumers regarding the permitted activities for Agent Level 1 and Agent Level 2 is required.
Tiered licensing helps ensure targeted education and obligations of mortgage professionals. However, FSRA may wish to consider additional communication to educate consumers about what activities the various licence categories (agent level 1, agent level 2 and broker) are permitted to carry out and how they may work together.
As regulators become more sophisticated and active, they must ensure that policy outcomes do not impose unnecessary regulatory burden on market participants.
Members noted that risk-based regulation should allow for differentiated levels of regulatory burden based on the industry participants’ activities and associated risk profiles (e.g., for those brokerages that do not provide traditional intermediary services to consumers).
The commercial mortgage sector is experiencing greater difficulty than the residential mortgage sector.
SAC members noted that performance of certain commercial properties, in particular office space, have not improved since the pandemic, which will impact the performance of mortgages funding these properties. Lenders that have high concentration of such commercial mortgages will face higher liquidity risk.