Mortgage Brokering – News you need, volume 4

In this issue


Antoinette Leung, Head, Financial Institutions and Mortgage Brokerage Conduct

I would like to begin FSRA’s spring 2023 mortgage brokering newsletter by wishing everyone a happy New Year. May it bring you health, happiness and success in your personal and professional lives.

As you may know, new licensing requirements come into force on April 1, 2023. This will improve the level of skills and training of brokers and agents arranging private mortgages, which are more complex.

Brokers and agents who are currently licensed have one year to transition to the new requirements. We recognize this is a big change. To support you through this transition, FSRA has published Information and Resources that include answers to common questions and details about the new requirements.

We also held two webinars attended by over 1,300 people. All materials from the webinars, including the full recording, transcript, presentation materials, and additional Q&As are now posted on FSRA’s website.

You will also find an article in this newsletter which includes key dates and instructions outlining what you need to do.

Other timely topics in this issue include updates on our supervision activities, such as reviews on private and reverse mortgages. We also highlight our key upcoming regulatory initiative, which is mortgage product suitability guidance

As always, thank you to everyone for your continued efforts in ensuring a strong and vibrant financial services market in Ontario.

If you have questions about our supervision plan, newsletter or other publications, please feel free to reach out to the Mortgage Brokering Conduct team at [email protected].

Antoinette Leung
Head, Financial Institutions and Mortgage Brokerage Conduct, FSRA

New licensing requirements being implemented on April 1 for Mortgage Agents and Brokers

Effective April 1, 2023, new licence classes, experience and education requirements are taking affect for individuals seeking a mortgage agent or broker licence in Ontario.

The new requirements will help ensure consumers and investors receive appropriate mortgage advice and product recommendations when dealing with private mortgages.

Key Dates

Available now: Private Mortgages Course and Challenge Exam providers
February 1 to March 31, 2023: Agents and brokers renew their licence
April 1, 2023: New licensing classes come into force
October 31, 2023: Deadline to complete the Challenge Exam
February 1 to March 31, 2024: Level 1 & level 2 agents and brokers renew their licence
March 31, 2024: Deadline to complete the Private Mortgages Course

Approved Private Mortgage Course and Challenge Exam providers

Read more about new licensing requirements being implemented on April 1 for mortgage agents and brokers

Further Compliance Needed for Many Brokerages Placing Clients in Non-qualified Syndicated Mortgages

In Q2 2022, FSRA noted gaps in mortgage brokerages’ processes to determine investors' Permitted Client (PC) status before they were placed in non-qualified syndicated mortgages (NQSMI). These findings came from a review of mortgage brokerages’ policies and processes to assess their understanding and alignment with the NQSMI Supervision Framework. FSRA advised mortgage brokerages to address any noted gaps and ensure their policies and procedures were updated and sufficiently fulsome.

Read the full article about compliance for brokerages placing clients in NQSMIs

Mortgage brokerages must enhance policies and procedures for reverse mortgage brokering

Reverse mortgages carry product-specific risks and may not be suitable for everyone. Consumers should have all the information they need before deciding if they want to get this product

FSRA sought to ensure that financially vulnerable consumers receive adequate support from the brokerage, broker, or agent they are working with to prevent potential misconduct in the brokering of their reverse mortgages.

Read more about mortgage brokerages enhancing policies and procedures for reverse mortgages

Attention Mortgage Professionals: You Need a Licence for That

FSRA is sending a reminder to mortgage agents and brokers in Ontario about the importance of renewing your license.

Licensing helps ensure mortgage professionals are well-equipped to offer consumers suitable products. In addition, licensing requirements such as mandatory errors and omissions insurance help ensure that consumers have confidence that recourse options are available if something should go wrong.

For reference, a mortgage agent or broker licence connected to a brokerage licence is required for arranging mortgages, renewing mortgages, refinancing with consumers’ current lenders and switching lenders.

Read the full article to learn more about key definitions which should help establish a common understanding around licensing

Show your work: documenting that a mortgage is suitable for your client

As a mortgage agent or broker, are you confident that your clients are getting the right mortgage and you have the documentation to prove it?

Recently, FSRA reviewed the borrower side of 63 private mortgage transactions and found that agents and brokers are not always appropriately documenting suitability assessments. These practices are inconsistent with the spirit of consumer protection expressed in regulatory requirements.

FSRA observed processes at brokerages which helped agents and brokers collect information which informed suitability assessments. However, these processes did not necessarily help document the rationale for product recommendations. If a process is not documented, licensees cannot demonstrate compliance.

We believe agents and brokers can and must do better.

Read more about documenting suitability assessments

FSRA Reviewing Naming Requirements for Mortgage Sector

FSRA is reviewing the Mortgage Brokerages, Lenders and Administrators Act, 2006 (MBLAA) requirements to determine whether they can be interpreted to allow mortgage brokerages, brokers and agents to use more than one trade / team name as the authorized name to conduct business. If the use of multiple trade / team names is allowed, FSRA will consider the conditions for use of multiple trade / team names by licensees.

Currently, some licensees (agents, brokers and/or brokerages) are using names other than their licensed name in their public materials or advertisements.

This practice may lead to a lack of clarity for consumers, licensees and FSRA as well as a lack of accountability by the licensed brokerage.

Check FSRA’s website for current requirements around using names

Regulators to Issue Mortgage Product Suitability Guidance to Better Protect Consumers

To help mortgage brokers and agents provide their clients with recommendations for a suitable mortgage or investment in a mortgage, the Mortgage Broker Regulators’ Council of Canada (MBRCC) is developing principles for conducting mortgage suitability assessments.

Together with the MBRCC initiative, FSRA will issue Guidance adopting the MBRCC principles for conducting mortgage suitability assessments and setting out FSRA’s expectations on what reasonable steps brokers and agents should take to ensure the suitability of their mortgage recommendations.

Read more about mortgage product suitability