FSRA Mortgage Brokering Stakeholder Advisory Committee meeting with the Board of Directors

Summary of the meeting of May 21, 2024
25 Sheppard Avenue West and virtually via Teams

Stakeholder Advisory Committee members present:

Ali Zaidi, RateShop Inc.
David Sutherland, Kingston Mortgage Solutions / Mortgage Alliance Canada
Gregory Banfield, Home Ownership Alternatives
Joe Pinheiro, DLCG Mortgage
John Harry, Thompson Harry Realty Advisors Inc.
Joseph White, Real Estate and Mortgage Institute of Canada Inc.
Kevin Lonsdale, Canadian National Association of Real Estate Appraisers
Lauren van den Berg, Mortgage Professionals Canada
Nick Kyprianou, River Rock Mortgage Investment Corporation
Shawn Stillman, Mortgage Outlet Inc
Sophie Lamontagne, Appraisal Institute of Canada
Susan Redmayne, First National Financial LP
William Jandrisits, Normera Capital Partners

SAC regrets:

Akber Abbas, 8 Twelve Mortgage Corporation
Eli Dadouch, Firm Capital

Board members present:

Joanne De Laurentiis, Chair
Ali Salahuddin
Brent Zorgdrager
Dexter John
Joseph Ianicelli
Kathryn Bouey
Lucie Tedesco
Peggy McCallum
Rob Wellstood
Stewart Lyons

Ministry of Finance representative present:

Monica Liang, Senior Policy Advisor

Management members present:

Antoinette Leung, Head, Financial Institutions and Mortgage Brokerage Conduct
Cheryl Szutu, Senior Manager, Mortgage Broker Conduct
Chris Zolis, Head, Forensic Analysis and Investigations, Legal and Enforcement
Daniel Padro, Head, Policy – Core Regulatory (A)
Elissa Sinha, Director, Litigation and Enforcement and Deputy General Counsel
Gina Stephens, Director, Mortgage Brokering Conduct
Jason Harris, Director, Legal for Policy and Rule Making and Deputy General Counsel
Jelena Pejic, Head, Licensing and Risk Assessment (A)
Jennie Hodgson, Senior Manager, Mortgage Broker Conduct
Nadiatou Fagbemi, Senior Manager, Mortgage Broker Conduct
Rocca D’Angela, Senior Manager, Mortgage Brokering Policy

FSRA leadership:

Mark White, Chief Executive Officer
Andrew Fung, Executive Vice President, Pensions
Glen Padassery, Executive Vice President, Policy
Huston Loke, Executive Vice President, Market Conduct
Jordan Solway, Executive Vice President, Legal and Enforcement
Judy Pfeifer, Chief Public Affairs Officer
Mehrdad Rastan, Executive Vice President, Credit Union and Insurance Prudential
Paul Reid, Chief Financial Officer
Stephen Power, Executive Vice President, Corporate Services

FSRA Corporate Secretary Office:

Danelle Brown, Corporate Secretary and Deputy General Counsel

Summary:

  • The Board Chair opened up the meeting and welcomed the attendees.
  • FSRA’s Market Conduct Executive Vice President opened up the discussion with an overview of the FSRA’s supervisory examinations, guidance documents (e.g., regarding good conduct and the suitability of mortgage recommendations) and consumer education campaign regarding private mortgages.

Key themes:

Optimism about the real estate and mortgage markets is mixed.

  • Higher interest rates and home prices have negatively impacted housing affordability and the demand for mortgages. While these markets now seem to be improving, with increased activity in anticipation of interest rate cuts in the near term, concern remains for borrowers who may not be able to afford to renew their mortgages at the current rates.
  • The commercial real estate market continues to be difficult, with some developers liquidating projects.
  • Further tightening of underwriting practices at traditional lenders will lead to increased reliance on private mortgages by consumers.

Income verification through CRA should help deter mortgage fraud.

  • The SAC members welcome the federal government’s commitment to explore income verification through the Canada Revenue Agency (CRA) and view it as an important step in combatting mortgage fraud.

Appraisals should accurately reflect current values.

  • Private mortgage lenders, who fund mortgages primarily based on the value of the property, note that appraisals must accurately reflect current property values in order for them to proceed with a mortgage. Brokers and agents should not influence the appraisal process.

FSRA should continue to issue guidance and taking appropriate enforcement action.

  • SAC members complimented FSRA and its work – e.g., supervision of qualified syndicated mortgages, enhanced education for licensees transacting in private mortgages, enforcement actions and guidance documents. They noted the sector is still adjusting to principles-based regulation and benefits from examples/scenarios of how to comply with various requirements.
  • SAC members also noted that there should be an education requirement in order to become a mortgage administrator.

Regulators should continue to work towards consistent requirements, including continuing education.

  • As the complexity and interjurisdictional nature of mortgage transactions increases, regulators are becoming important resources for conducting business, in terms of providing answers to how to comply with requirements in their jurisdictions and ensuring consistent requirements across jurisdictions. For example, regulators should consider reciprocal recognition of continuing education (CE) courses across jurisdictions.

A differentiated licensing class should be considered for mortgage lenders or differentiated requirements for brokerages that do not deal with retail consumers.

  • Streamlined regulatory requirements would be less burdensome on mortgage lenders or brokerages who do not deal with retail consumers as they must currently be licensed as, and fulfill all the regulatory obligations of, a mortgage brokerage.