1. Why are these amendments to the Standards of Practice regulations being implemented now?
Ontario is implementing these regulation amendments to ensure licensees are proactively involved in detecting and preventing mortgage fraud. The amendments respond to the Report to the Minister on the Five-Year Review of the MBLAA which recommended updating the Standards of Practice regulations to strengthen measures against fraud. The amendments to Ontario Regulations 187/08, 188/08 and 189/08 came into effect on January 1, 2016.
2. Will the regulation amendments impact private mortgage lending and/or investing in syndicated mortgage investments?
The amendments to Ontario Regulations 187/08, 188/08 and 189/08 are intended to better protect those who do private mortgage lending and/or invest in syndicated mortgage investments. For example:
- Licensees are now prohibited from doing or omitting to do anything where they ought to know they are being used to facilitate fraud;
- Mortgage brokerages are required to take reasonable steps to verify a borrower's legal authority to mortgage a property; and
- The brokerage's duty to inform the lender if they have to reason to doubt the accuracy of a borrower's application, or a borrower's legal authority to mortgage a property, will continue after the borrower enters into a mortgage agreement.
3. What is FSCO doing to ensure mortgage brokers and agents know about these regulation amendments?
On October 29, 2015, FSCO started communicating about these regulation amendments to all mortgage brokerages, brokers, agents and administrators in Ontario. In addition, information about the regulation amendments is part of the continuing education course that all mortgage brokers and agents must successfully complete in order to be able to renew their licences as of March 31, 2016.
4. Does FSCO suggest best practices that mortgage brokers and agents can incorporate in their work to implement the regulation amendments?
FSCO's Checklist on Detecting and Preventing Mortgage Fraud includes best practices that involve applying the requirements in these regulation amendments.
5. The regulation amendments require a brokerage to act if it suspects fraud. How should a mortgage broker or agent know when to act?
Mortgage brokers and agents should consult their mortgage brokerage's principal broker for guidance.