Your sector news: syndicated mortgages, preventing fraud and more

November 23, 2017

 

Mortgage Broker e-Newsletter - Issue #29

 

In its fall economic statement on November 14, 2017, the Ontario government reiterated its plans to transfer regulatory responsibilities for the oversight of syndicated mortgage investments from FSCO to the Ontario Securities Commission (OSC). This is consistent with how syndicated mortgage investments are regulated in other provinces. FSCO is an active member of the transfer working group, which consists of representatives from FSCO, the OSC and the Ministry of Finance.

 

Prior to the transfer, the government stated it would strengthen protections for syndicated mortgage investors by creating new regulations that establish investment limits, expand requirements for mortgage brokerages to ensure investors are aware of the potential risks, and require mortgage brokerages to document suitability assessments.

 

In order to implement these interim measures, the transfer working group drafted proposed amendments to the Mortgage Brokerages: Standards of Practice Regulation (O. Reg. 188/08), under the Mortgage Brokerages, Lenders and Administrators Act, 2006. The Ministry of Finance posted these draft amendments  on the Regulatory Registry [New Window] for consultation. Consultation closed on October 13, 2017. Feedback is under review and next steps are being validated.

 

FSCO will keep you updated on your obligations as information becomes available. In the meantime, please refer to these additional resources on FSCO’s website:

 

Law society issues warning notice to lawyers regarding syndicated mortgages

 

The Law Society of Upper Canada (LSUC) has issued a public warning notice to alert lawyers to potential pitfalls when acting for clients on syndicated mortgage investments and to highlight lawyers’ obligations in dealing with syndicated mortgages.


In the notice dated October 24, 2017, the ​LSUC said it had “become aware of instances in the marketplace where individuals have sustained significant financial loss by investing their savings in syndicated mortgage investments in which Ontario lawyers have played a role”. You can read the full notice on LSUC’s website.

 

Continuing education is mandatory for licence renewal – enrol today!

 

By law, all mortgage brokers (including principal brokers) and agents in Ontario must complete an approved continuing education (CE) course before they can renew their licence by March 31, 2018. Enrol now to avoid the last-minute rush.

 

Proposed fee increases for mortgage brokering sector

 

The government has proposed fee increases for the mortgage brokering sector due to the increased costs of regulating the sector. The Ministry of Finance has posted these proposals on the Regulatory Registry[New Window] for consultation. The deadline to make a submission is December 18, 2017. FSCO will also be holding information sessions; if you are interested in participating, please send an email to marketconduct@fsco.gov.on.ca by December 1, 2017.

 

FSCO takes late filing of Annual Information Return (AIR) seriously

 

All Ontario-licensed mortgage brokerages and administrators are required to submit their AIR by March 31 each year. This past March, 95.6 per cent of mortgage brokerages and 90.2 per cent of mortgage administrators completed their AIR filing on time.

 

FSCO reserves the right to take enforcement action against licensees who fail to file their AIR. To view all public enforcement notices, refer to FSCO's Enforcement Activities - Mortgage Brokering Sector web page.

 

Forged signatures – Not you? Don’t sign!

 

You may have heard in recent news the case of a mortgage broker forging client signatures for products the client did not know about or agree to. Without the client’s knowledge, the agent would take out additional mortgages in the client’s name and as a result, the client would default on those loans.

 

Be aware that forging signatures and other related actions are illegal and can result in criminal charges, in addition to the revocation or suspension of your licence. To help protect your clients and yourself, here’s a helpful checklist on preventing mortgage fraud.

 

Also note: FSCO will not consider a client's signature on disclosure documents, on its own, as sufficient proof the client was adequately informed about the mortgage and its risks. It is important that you keep records of all disclosure information you provide to your clients ― this includes details of client discussions. FSCO may look for these to ensure you are meeting this obligation, among your other obligations, during its on-site examinations.

 
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