Homebuyers’ increasing reliance on private mortgage lenders is flagged as a concern in the in-progress review of Ontario’s Mortgage Brokerages, Lenders and Administrators Act (MBLAA).The Act mandates the re-examination of mortgage practices at five-year intervals, and the Ontario government is inviting public input that could help inform future regulations or amendments.
For now, no new legislation is in the works, but a discussion paper posted on the provincial regulatory registry poses various questions related to consumer protection, professional conduct and administrative processes. It also delves into the emergence of new technologies, potential pitfalls for vulnerable consumers and associated needs for vigilance.
Specifically related to private mortgage lenders, the discussion paper asks how brokerages can better ensure both the appropriateness of mortgage products and borrowers’ understanding of what transactions will entail. It also asks what the Financial Services Regulatory Authority (FSRA) of Ontario can do to enhance public knowledge about the private mortgage market.
Other questions address: minimum insurance thresholds; potential compulsory use of multi-factor authentication; licensees’ required disclosures to the FSRA; and a sufficient hiatus period before a revoked license can be reinstated. Meanwhile, mortgage administrators are seen to be potentially more exposed to conflict of interest with a recent uptick in insolvencies, underpinning questions about possible additional oversight measures.
“Given the evolution of the mortgage sector landscape, the complexities of mortgage transactions, and the long-term financial implications for borrowers and investors/lenders, an enhanced level of sector professionalism is crucial to fostering confidence and reliability,” the discussion paper states.
Feedback can be submitted until June 24. As of September 2023, the MLBBA governs 1,244 mortgage brokerages, 3,133 mortgage brokers, 15,907 mortgage agents and 260 mortgage administrators, which, as a group, brokered about 341,000 mortgages collectively worth more than $193 billion in 2022.
“We are reaching out to ensure that Ontario’s mortgage broker legislation reflects the needs and expectations of the sector and those who rely on the products and services it provides,” says Stephen Crawford, Member of Provincial Parliament and parliamentary assistant to the Minister of Finance, who is leading the review.
