Mortgage Brokers & Agents Lawyer

Mortgage brokerages, brokers, agents, and administrators are regulated by the Financial Services Regulatory Authority of Ontario (“FSRA”). FSRA administers the Mortgage Brokerages, Lenders and Administrators Act, 2006 (“MBLAA”) and its regulations to encourage high standards, foster competition, and encourage innovation.

Burokas Law serves mortgage brokerages, brokers, agents, and administrators to assist them with all their dealings with FSRA, specifically:

· Advice and advocacy when applying for a licence or renewal;

· Compliance audits and mentorship;

· Appealing proposals to refuse, refuse to renew, attach conditions, suspend, and revoke, to the Financial           Services Tribunal;

· Appealing administrative penalties and compliance orders;

· Advice and advocacy during FSRA investigations;

· Appealing decisions of the Financial Services Tribunal to Divisional Court, and;

· Defending criminal and regulatory charges in Provincial and Superior Court.

Licensing

With mortgages, FSRA issues four types of licences: brokerage, broker, agent, and administrator. 

Brokerage Licence

A Brokerage licence allows a corporation, partnerships or sole proprietorship to:

· solicit a person or entity to borrow or lend money on the security of real property; 

· provide information about a prospective borrower to a prospective mortgage lender;

· asses a prospective borrower on behalf of a prospective mortgage lender;

· negotiate or arrange a mortgage on behalf of another person or entity, or attempt to do so;

· solicit another person or entity to buy, sell or exchange mortgages;

· buy, sell or exchange mortgages on behalf of another person or entity;

· buying, sell, or exchanging mortgages on the person’s or entity’s own behalf, and;

· lend money on security of real property.

Licensing Requirements 

Corporations, partnerships, and sole proprietors must satisfy the following requirements for a licence:

· incorporated (corporations), formed (partnerships), residing (sole proprietors), in Canada with an Ontario mailing address;

· have errors and omissions insurance covering frauds sufficient to pay a minimum of $500,000 in respect of any one occurrence and $1,000,000 in respect of all occurrences in a 365 period, and;

· designate an eligible principal broker.

The CEO of FSRA may refuse, refuse to renew, suspend, or revoke a brokerage licence if he/she believes on reasonable grounds that the business is not suitable to be licensed having regard to:

· whether the business cannot reasonably be expected to be financially responsible in the conduct of its  business, having regard to its financial position;

· whether the past conduct of a director/officer’s, partner’s, or proprietor’s past conduct affords reasonable grounds for belief that the business of the corporation will not be carried on in accordance with the law and with integrity and honesty;

· whether the business is carrying on activities that contravene or will contravene the MBLAA or its regulations if licensed;

· whether a director/officer, partner, or proprietor has made a false statement or has provided false information to the CEO of FSRA with respect to an application, and;

· such other matters as the CEO of FSRA considers appropriate.

A brokerage requires at least one licensed broker to deal on its behalf or else it will remain suspended until it does.

Standards of Practice

Licensed Brokerages must adhere to comprehensive Standards of Practice related to public and customer relations, disclosure of information on particular transactions, payments, and management of the brokerage. Failure to adhere to these standards is an offence under the MBLAA.

Broker and Agent Licence

A broker or agent licence allows individuals to do the following, if acting on behalf of a mortgage brokerage:

· solicit a person or entity to borrow or lend money on the security of real property; 

· provide information about a prospective borrower to a prospective mortgage lender;

· asses a prospective borrower on behalf of a prospective mortgage lender;

· negotiate or arrange a mortgage on behalf of another person or entity, or attempting to do so;

· solicit another person or entity to buy, sell or exchange mortgages, and;

· buy, sell or exchange mortgages on behalf of another person or entity.

Licensing Requirements

A prospective broker or agent must meet the following criteria to be eligible for a licence:

· be at least 18 years old and resident of Canada with a mailing address in Ontario;

· be authorized by a licensed brokerage to deal or trade in mortgages on its behalf;

· successfully complete an approved educational program for mortgage agents (Agents: within 2 years of applying)

· be licensed as a mortgage agent for at lest 24 of the 36 months immediately preceding the application (brokers only);

· successfully complete an approved educational program for mortgage brokers within three years before applying (brokers only), and;

· passing broker exam within three years before applying for a licence. 

The CEO of FSRA may refuse, refuse to renew, suspend, or revoke a broker or agent licence if he/she believes on reasonable grounds that the business is not suitable to be licensed having regard to:

· whether the individual’s past conduct affords reasonable grounds for belief that he or she will not deal or trade in mortgages in accordance with law and with integrity and honesty;

· whether the individual is carrying on activities that contravene or will contravene the MBLAA or its regulations if licensed;

· whether the individual made a false statement or provided false information to the CEO of FSRA with respect to an application, and;

· such other matters as the CEO of FSRA considers appropriate.

A licensed broker or agent is required to have an employment or agent relationship with a brokerage. If they do not, or that brokerage’s licence becomes suspended, the broker’s or agent’s licence will also be suspended.  

Standards of Practice

Licensed Brokers and Agents have their own Standards of Practice related to: ensuring their brokerages compliance, dishonesty and fraud, renumeration, disclosure, and public relations. Violation of these standards is an offence under the MBLAA.

Administrator’s Licence

An administrator’s licence allows a corporation, partnership, or sole proprietorship to receive payments from a borrower under a mortgage and remit it to the lender.

Licensing Requirements 

A corporation, partnership, or sole proprietorship is eligible for a mortgage administrator’s licence if it satisfies the following requirements:

· incorporated (corporations), formed (partnerships), or resident (proprietorships), in Canada with an Ontario mailing address;

· has errors and omissions insurance covering frauds sufficient to pay a minimum of $500,000 in respect of any one occurrence and $1,000,000 in respect of all occurrences in a 365 day period, and;

· has a financial guarantee in an amount equal to $25,000 of either unimpaired working capital or another form acceptable to the CEO of FSRA.

The CEO of FSRA can refuse, refuse to renew, suspend, or revoke a mortgage administrator’s licence if it has reasonable grounds to believe the business is not suitable to be licensed having regard to:

· whether the business cannot reasonably be expected to be financially responsible in the conduct of business, having regard to its financial position;

· whether the past conduct of a director/officer, partner, or proprietor (as the case may be), affords reasonable grounds for belief that the business of the corporation will not be carried on in accordance with the law and with integrity and honesty;

· whether the business is carrying on activities that contravene or will contravene the MBLAA or its regulations, if the business is licensed;

· whether the director/officer, partner, or proprietor (as the case may be) has made a false statement or has provided false information to the CEO of FSRA in relation to an application for a licence, and;

· any other matters the CEO of FSRA considers appropriate.

Like Brokerages, Brokers, and Agents, Mortgage Administrators have their own Standards of Practice rules related to public and customer relations, fees, disclosure on transactions, and trust funds among many others. Violation of a standard is an offence under the MBLAA. 

Proposals

If the CEO of FSRA wishes to refuse, refuse to renew, impose conditions without consent, suspend, or revoke a licence, he/she must issue a “proposal” outlining in writing the reasons for the course of action. Applicants and licences may appeal this action to a hearing before the Financial Services Tribunal (the “Tribunal”)- an independent adjudicative body- within 15 days of receiving the proposal. The Tribunal can accept or reject the proposal, impose conditions on a licence, or substitute the CEO’s opinion for its own.

Proceedings at the Tribunal

Before participating in a hearing, the parties will often have a pre-hearing conference to identify and simplify issues, agree on acts, discuss resolution, determine hearing length, and discuss the creation of a disclosure plan. This plan outlines a timetable of when relevant documents will be disclosed to the opposing side in preparation for the hearing.

Hearings can be held in person, in writing, or electronically via telephone or videoconference. Both parties at a hearing have the opportunity to make submissions and present written, oral, and expert evidence, and challenge the opposing side’s evidence.

Investigation and Enforcement

Inquires and Examinations

FSRA staff may inquire and examine the business and activities of a both licensees and non-licensees to ensure compliance with the MBLAA and its regulations. In doing so, designated FSRA staff may enter business premises and examine relevant documents and records; require persons to answer questions; order the production of documentation, and; remove such documents for examination and copying.

Compliance Order

If the CEO of FSRA is of the opinion that an individual or business is not complying with, or is conducting itself/oneself in a way that might reasonably result in a state of affairs that would not comply with the MBLAA, he/she may issue a proposal to order the person or entity to stop or perform necessary remedial actions. A recipient may appeal such a proposal in a similar manner to other proposals. 

Administrative Penalties

In order to promote compliance and prevent undue economic benefit, the CEO of FSRA may also impose administrative penalties on individuals and business that he/she is satisfied is not complying with a requirement of the MBLAA. Like other administrative actions, the CEO must issue a proposal (unless a “summary” administrative penalty) outlining details of the alleged contravention and a proposed penalty. A recipient may also appeal this decision to the tribunal.

The maximum penalty is $25,000 for each contravention of the MBLAA related to a brokerage or administrator activity and $10,000 for each contravention related to a broker or agent activity.

Offences

FSRA may also lay regulatory charges related to a variety of alleged conduct related to:

· providing false/deceptive information;

· obstructing FSRA staff in the performance of their duties;

· making reprisals against employees for assisting FSRA in good faith;

· dealing, trading, lending, or administering in mortgages without the required licence;

· using a title without the required licence, and;

· failing to comply with an applicable standard of practice;

Officers, directors, and “directing individuals” who directed, authorized, assented to, acquiesced, or participated in the commission or omission related to their business committing an offence also commits an offence. 

Offences are heard in Provincial Offences Court, a branch of the Ontario Court of Justice. Defending charges usually involves a series of court appearances, reviewing disclosure, bargaining with FSRA’s prosecutors, and possibly a trial if the matter cannot be resolved.

If found guilty, individuals are liable to a fine up to $100,000 and 1 year in prison. Corporations are liable to a fine up to $200,000. A conviction under the MBLAA will prejudice a business’s or individual’s ability to practice in the mortgage industry.