FSRA's new licensing classes webinar for mortgage agents and brokers (November 15, 2022)

Jelena Pejic
00:10     Good morning. Thank you for joining us. We'll get started in just a few minutes as we wait for everybody to join.

Jelena Pejic
00:55     Good morning. Thank you all for joining us. We'll wait just a few more minutes and wait until everyone joins. A few more people trickling in.

Jelena Pejic
02:01     Good morning. Thank you for joining this morning's webinar. I'm Jelena Pejic, Senior Manager, Licensing Compliance. And I'm joined by Wendy Horrobin, Head of Licensing and Risk Assessment with FSRA. We'll be sharing with you today the new licensing classes and education requirements for mortgage agents and brokers. Before we begin, it's important to acknowledge the land we are on is the traditional territory of many nations, including the Mississaugas of the Credit, the Anishnabeg, the Chippewa, the Haudenosaunee, and the Wendat peoples, and is now home to many diverse First Nations, Inuit and Métis people. We acknowledge that Toronto is covered by Treaty 13 with the Mississaugas of the Credit and the Williams Treaties signed with multiple Mississaugas and Chippewa bands. Now for some housekeeping. We are on Microsoft Teams live events. As an attendee, your audio and video have been automatically disabled. If you have any questions, you can enter them at any time during the presentation using the Q&A icon which looks like a small speech bubble with a question mark inside, located at the top right-hand side of your screen. We will be addressing questions at the end of the presentation. A copy of the recording, transcript, and today's presentation deck will be posted to FSRA's website in the weeks following the event. I hope that you find today's webinar informative. So let's begin. Today we'll be covering the background of the new requirements, and then we'll dive into the details. We'll talk about the new licensing classes, the new education requirements, we'll spend some time talking about how to upgrade a license given the new licensing classes, and finally talk about the transition requirements that will apply to anybody who currently holds a mortgage agent or mortgage broker license in Ontario. We'll wrap up today's presentation with information on key dates and resources available to you. To start things off, I'll pass it over to Wendy. Over to you.

Wendy Horrobin
04:05     Thank you very much, Jelena. And thank you all for attending our licensing classes webinar. We're thrilled with such an amazing turnout and hope that you get a lot out of today's session. Before we really get into the important content today, I wanted to remind everyone as to how we got here. The Mortgage Brokers and Lenders Act is required to be reviewed regularly, and the most recent reviews began in 2019. And one of the government recommendations was that licensing better reflect actual business practices, primarily the use of private lenders. That recommendation has led to-- oh. Next slide, please. That recommendation has led to outcomes related to enhanced education, better consumer protection, and of course, these lead to enhanced confidence in the mortgage brokering industry. Stay on this one. Today Jelena is going to tell you about the new licensing classes, new education requirements for private lending. And next slide. And by the end of the webinar today, you can expect that you will understand the changes for the upcoming renewal cycle, know what it is that you need to do to maintain your agent or broker license, and finally where you need to go if you require more information post today's session. With that, I'll pass it back to Jelena and we'll begin.

Jelena Pejic
05:50     Thank you, Wendy. All right. Let's get into the details. So we'll start with the new licensing classes. As Wendy mentioned, moving forward, there will be three licensing classes. A level 1 mortgage agent license, a level 2 mortgage agent license, and a mortgage broker license. The level 1 mortgage agent license is the new class which will restrict agents with only dealing in mortgages where the lender is a financial institution, and we'll talk a little bit more about that definition in just a moment. The level 2 mortgage agent license will be the graduated agent license which will allow the agent to deal in mortgages where it is any type of lender. And finally, the third license is the existing mortgage broker license. That remains in place. So the mortgage broker will continue to be able to transact in mortgages with any type of lender and they'll also have the responsibility of supervising agents. Next slide, please.

Jelena Pejic
06:45     So we talked about financial institutions and that mortgage agent level 1 will only be able to transact in mortgages where the lenders a financial institution. A financial institution is defined under the legislation and it does include entities such as banks, credit unions, retail corporations, and insurance companies as well. Level 1 agents, in addition to level 2 agents and brokers will also be able to transact in mortgages where the financial institution is an approved financial institution by the CMHC under the National Housing Act. And the CMHC does list the lenders on their website, and we will share that link with you. Next slide. As we know, there's many different types of lenders in the mortgage sector. So any lender that falls outside of the definition of financial institution that we just spoke about will be a lender that only level 2 agents and brokers can transact with. This includes lenders, such as syndicates, private individuals, or mortgage investment companies. To be clear, a level 1 agent will not be able to deal and trade in mortgages where the lender is one of these types of lenders or a lender that falls outside of that definition of a financial institution. Next slide.

Jelena Pejic
08:00     You may be wondering how a level 1 agent can then transition into a level 2 agent and where they can obtain that on-the-job experience. So the new requirements do allow for job shadowing by a level 1 agent. So a level 1 agent will be able to oversee or participate in a transaction with a level 2 agent and a broker solely for training purposes. It's important that the level 1 agent must not hold out or represent to any client that they're licensed or authorized to deal in such transactions. And that the level 2 mortgage agent or the broker, whoever's handling that transaction, is the one who remains accountable to the consumer. Next slide. So now we'll talk a little bit about the new education requirements. So the new education requirements is the Private Lending Education Program. The Private Lending Education Program is in two parts, and you'll need to complete one or the other. The first one is a Private Lending Course, and the second one is a Challenge Exam. Before we dive into the details of those two items, I wanted to highlight that the Private Lending Education Program must be completed by all level two agents and brokers, but before they renew their license in 2024. So that means you have just over a year to have this completed. It's important to note that if you do not complete that private lending education before your renewal in 2024, your license will be transitioned to a level 1 agent. Next slide.

Jelena Pejic
09:28     So, let's talk a little bit about the difference between the Private Lending Course and the Challenge Exam. The Private Lending Course includes a course and an exam. So it will be very similar to the makeup of the mortgage agent course that many of you have taken, in addition to the mortgage broker course as well. The course itself will become available in 2023, and FSRA will be posting that information on our website in terms of who the approved course providers are. The Challenge Exam is only available to level 2 agents and brokers who have more than five years of experience. So this is something that's been put in place, and it only includes an exam. So it's somebody who feels that they have sufficient education, experience in the private lending space. They've also been licensed for more than five years. And as such, they feel they can go directly to the exam. The Challenge Exam, similarly to the course, will become available in early 2023. We will be posting that information about the approved providers. And the Challenge Exam will only be able to be attempted once. So if you are unsuccessful in passing the Challenge Exam, you will need to complete the Private Lending course. And another item to note on the Challenge Exam is that it will only be available until October 31st, 2023. The reason for this is to allow time for anybody who may not pass the Challenge Exam to have sufficient time to complete the Private Lending Course before it's time to renew your license and to avoid having that license transmission to a level 1 agent. As a reminder, all level 2 agents or brokers will need to complete either one or the other of the two options you see on the screen before they renew their license in 2024. Next slide, please.

Jelena Pejic
11:12     Now I'll talk a little bit about how to upgrade a license given the new licensing classes. So the new licensing classes, as we talked about, have three different components. The requirements to obtain an entry-level license will remain the same. So someone will need to complete the mortgage agent program, they'll need to have a sponsoring brokerage, and they'll need to demonstrate that they're suitable to be licensed. When they apply and if their license is approved, they will obtain the level 1 agent license. It's important to note that that level 1 agent license will be restricted in terms of activities. So they can only conduct-- they can transact in mortgages where the lender is a financial institution. Now, after one year, they can then apply to become a level 2 agent. So they'll need 12 months of experience as a level 1 agent, and they'll need to have completed that private lending education course. And then finally, to become a broker, they will need 24 months' experience as a level 2 agent and to complete the existing broker education program. So it's important to note that how to upgrade your license is going to change, and it's important to be aware of the experience requirements as well as the new education requirements here. Next slide.

Jelena Pejic
12:28     Now, we'll spend some time talking about the transition requirements and how this might apply to those of you who are currently licensed. So for the transition, it will impact anybody who's an active agent or broker, including those who are principal brokers. It will also apply to anybody whose license may have expired any time since March 31st, 2022, all the way to March 31st, 2024. Next slide. So the transition has been split up into three categories. I'll start with the first category at the top of the screen. The first category is any agent who has less than one year of continuous licensing. This means that they've likely applied for their license within the last few months. Currently, they have an agent license, and come transition, they will obtain a level 1 agent license. As of April 1st, they will only be able to transact in mortgages where the lender is a financial institution. The second category is those agents and brokers with one to five years of licensing experience. If they currently hold an agent license, that individual will have the ability to transition to either an agent level 1 license or an agent level 2 license come April 1st. If they're a broker at the moment, they will continue to maintain their broker license upon renewing. It's important to note for the agents that they will have the choice. So if they want to remain an agent level 1 and only conduct transactions where the lenders a financial institution, they may do that. Or alternatively, they can choose the agent level 2 license which would allow them to transact in mortgages with all types of lenders. Anybody who does select the agent level 2 license or if you are a broker, you will need to complete that Private Lending Education Program by 2024. So within the next year, you will need to have that education completed. The third category is agents and brokers with more than five years of continuous licensing experience. Similarly, to the last category, if you currently hold an agent license and you've been licensed for more than five years, you will have the opportunity to either obtain the level 1 or level 2 license at transition. For those that are currently brokers, you will continue to maintain your broker license. The level 2 agent and the brokers, as we mentioned before, will need to complete the Private Lending Education Program by 2024, but this group will also have the opportunity to attempt the Challenge Exam if they so choose. As a reminder, the Challenge Exam is only available until October 31st, 2023. So if you are looking to take advantage of that option, once the information is available, we do encourage you to start that. Next slide.

Jelena Pejic
15:11     Now, you may be wondering when is this all going to happen and how? So in the upcoming renewal cycle in 2023, just a few months from now, your principal broker or your brokerage will be able to select your license type when they start your renewal application. For those individuals who qualify for either the agent 1 or the agent 2, it's important to have that conversation with your brokerage ahead of time so you know which license you'll be selecting come renewal. FSRA will be sharing more information about the changes in licensing link as we get closer to the renewal date. And now there will also be some changes as of April 1st, purely from a systems perspective. So new applicants who will be coming in as of April 1st will be applying for the level 1 agent license as we spoke about. In addition, anybody looking to upgrade their license after April 1st, 2023, will be upgrading based on the new licensing classes. So that means that if you're currently a level 1 agent, you'll be applying for a level 2 agent. And similarly, if you're a level 2 agent, your upgrade application will be to obtain a broker license. Next slide.

Jelena Pejic
16:17     Okay. Well, we're nearing the end of the presentation here. We wanted to share some key dates and resources with you. Next slide. So, the key dates. In early 2023 is when the private lending course and Challenge Exam will become available. FSRA will be posting the information about the providers on its website, and we will communicate that with you. In February and March in 2023, we'll go through our regular annual renewal cycle. This is where all agents will be moving into either agent level 1 and agent level 2. And brokers, including principal brokers, will be maintaining their broker license. As of April 1st, 2023, those new licenses will come into force, and you will see that change also reflected on the public registry. As 2023 moves on, you'll be working on your Private Lending Education Program. And for those of you who have been licensed five years or more and are looking to attempt the Challenge Exam, it's important for you to be mindful of that date on the screen in the middle. October 31st, 2023, will be the deadline to complete the Challenge Exam. As we move through 2023 and into 2024, 2024 February and March is when we'll go through, once again, the annual renewal cycle. And so all level 1, level 2 agents, and brokers will be renewing their license. It's at this point that we will be validating to ensure that any level 2 agents and broker have successfully passed the Private Lending Education Program. And if they have not, you will still be able to renew your license, but you will be transitioned to a level 1 agent. So it's imperative that you do have that completed well ahead of that deadline to avoid those types of transitions. Finally, March 31st, 2024, it is always the last day of the renewal cycle and also the deadline to complete that Private Mortgages Course in order to maintain your level 2 agent or broker license. But definitely, I encourage you to have that completed well ahead of that March 31st deadline. Next slide.

Jelena Pejic
18:18     Let's recap some next steps. So it's important for you as an agent or a broker to understand the new licensing classes and education requirements. You also need to confirm what you need to do to maintain your agent or broker license. So that might mean speaking with your principal broker to make the determination of whether you'll be renewing as an agent level 1 or agent level 2. It may also mean understanding when you'll need to complete that Private Lending Education Program. And finally, understanding where you can obtain more information. And I'll cover that off in the next slide. So some resources available to you. FSRA has published guidance on these requirements, and so we do encourage everybody to review the guidance in full. It does go in detail on all the different aspects that I've talked about today. In addition, we've set up a dedicated webpage for these updates. And so you can note that down there. It is fsrao.ca/newmortgagelicensing. This will become your hub for information related to the new licensing classes and requirements. We will be posting as we get closer to the date, key milestones, key information for you in order to help you through this transition.

Jelena Pejic
19:31     I want to thank you all for listening to my presentation today, and we'll move into some questions now. We're so pleased to see so many of you on the call. We have just over 1,000 people who have joined us today, and certainly lots of questions coming in. If you do have an individual circumstance that you've posted in the chat, we will be taking that back, and we'll reach out to you, but we do encourage you as well to contact FSRA directly to talk about any individual circumstances. Any questions we cannot take today, we will post on our website at a later date and we'll let you know once that's done. So let's take a look at the questions that have been coming in. So one of the common questions that I see is how many times can I take the Challenge Exam? So the Challenge Exam can only be attempted once. If you're unsuccessful in completing the Challenge Exam, you will need to take the Private Mortgages Course. I also want to highlight that it's not necessary to take the Challenge Exam if you're not comfortable. So if you are eligible to take the Challenge Exam, you still have the choice of taking either the Challenge Exam or the Private Mortgages Course.

Jelena Pejic
20:37     Along the same lines related to the course, when will the exam or course be available? Who are the course providers? How much will it cost? And then some more questions. Will the exam be virtual and will there be materials? So these are all very good questions related to the upcoming course and the exam. As FSRA’s working right now through accrediting the course providers, we'll be posting the information once that process is completed. So certainly, be on the lookout for communication from FSRA related to the new course and the exam, and hopefully, we'll be able to answer all those questions in the coming months. Another question we have related to the course. Can I take the course or Challenge Exam before my 2023 renewal? What happens then? So, as I mentioned, the approved courses aren't yet posted. As soon as they are posted, you can absolutely get started on completing them. Now, it's important to note that for the 2023 renewal, there is no need to complete the course or the exam. You'll be able to renew your license and you will move into the new licensing classes come 2023. Will then go into a transition year. So all through 2023 and up until the 2024 renewal, you'll maintain that new license class and you'll be working on your education. It's in 2024, when you renew your license, that you'll need to ensure that that exam is completed so that you can renew and maintain that license.

Jelena Pejic
22:03     Another question we have is about new agents. So if we have a new agent that applies in January 2024, will they have to take the private lending course? So this is likely somebody who's looking to recruit somebody new. So then the requirements for a new entrant have not changed. That means that they will need to complete only the mortgage agent course, they'll need to have a sponsoring brokerage, and they'll need to demonstrate that they're suitable to be licensed in order to obtain the mortgage agent level 1 license. They won't need to complete the private lending course until such time that they're ready and have met the requirements to upgrade their license to the level 2. Another question, just switching gears a little bit is about the fees. So what are the costs for the different license classes? So the fees remain the same. To renew a license, it will be $841, whether you're an agent level 1, agent level 2, or a broker. And to apply for a new license, it will remain at $941, being prorated through the year, depending when you're applying. FSRA’s fees are set under FSRA’s Fee Rule. And so if there are any changes to the fees, it's important to be on the lookout for consultation by FSRA on the Fee Rule.

Jelena Pejic
23:23     Another question is about the public registry. We've got lots of great questions coming in. So what will the public registry look like and how will I be able to advertise? So the public registry will be updated to reflect the new license classes. So, as of April 1, 2023, you will see that everybody either has an agent level 1 license, agent level two license, or a broker. And in terms of advertising, you'll need to hold out in the type of license that you currently have. So, as of April 1st, if you only have an agent level 1 license, you can only advertise as an agent level 1 license. Likewise, if you are a broker, you'll use the mortgage broker title. Are there any changes to the mortgage administrator license? So, based on the new licensing requirements here, these only apply to mortgage agents and mortgage brokers. They will, of course, impact their brokerages and will also have an effect on lenders who deal with mortgage agents and brokerages. But talking about the mortgage administrator license, there is no change at this time.

Jelena Pejic
24:34     To be eligible for the Challenge Exam, do you need to be licensed in Ontario for five years, or can it be any province? It's a great question. And so, in order to be eligible to attempt the Challenge Exam, it is five years of continuous licensing experience in Ontario. If I have been an agent for four years, but then a broker for one year, does that count as the five years to qualify for the Challenge Exam? It's a great question, and yes, it does. So your licensing experience does include any continuous licensing experience as either a mortgage agent or a mortgage broker. It's important to note that gaps are not considered continuous licensing. So we do count continuous licensing as any period where you had a gap less than two years, and there can only be one gap.

Jelena Pejic
25:28     And then let's just take one more question, and then we can certainly take the rest back. So can a level 1 agent co-broker a private mortgage with a level 2 or broker and earn a commission? So, as we spoke about, the level 1 agent is not authorized to transact in mortgages where the lender is not a financial institution. So it's important that the level 1 agent is only acting in a job shadowing capacity and nothing further. We do encourage you to speak with your brokerage with any specific circumstances. And certainly, if your brokerage has any questions, they can come to FSRA. So I still see lots of questions coming in. As I mentioned, we have over 1,000 people on the line today. And it's great that so many of you have been able to spend some time with us today. So I want to thank you all for taking the time and I hope that you did find the session helpful.

Jelena Pejic
26:23     We recognize that these changes are going to have a large impact on your profession, so it's important that you do take responsibility of understanding the new licensing classes and the new education requirements. Please take the time to review the resources that we've shared today and speak to your brokerage if you have any other questions. As a reminder, we will be posting the recording of this webinar and we will also post the responses to questions, including the ones that I have answered, as well as the ones we were not able to get to today. As always, you can contact FSRA if you do have any questions. Thank you once again and wishing you all a great day.