The mortgage market is governed similarly to other parts of the economy. A provincial regulator is in place in each province to regulate mortgage brokers and mortgage activity. These regulatory bodies enable broad control of a dynamic sector and guarantee that mortgage brokers are abiding by provincial mortgage regulations.
It is crucial to conduct thorough research on potential mortgage brokerages and/or independently functioning mortgage brokers to see whether they are reputable and operating in accordance with provincial regulatory standards. Verification involves getting in touch with the provincial agency that licenses all mortgage brokers and agents.
Do Mortgage Brokers Have to Be Licensed?
The Mortgage Brokerages, Lenders and Administrators Act, which was implemented in 2006, requires all Ontario-based companies and individuals who engage in mortgage brokering operations to hold a license and register with the provincial authority in charge of regulating the province’s mortgage market.
The Financial Services Regulatory Authority is the provincial agency in Ontario that regulates the mortgage industry (FSRA).
The overall goal of the FSRA, like that of the other provincial regulators, is to uphold public confidence in the mortgage industry while also protecting the public interest. To legally conduct business in this Province, every mortgage broker based in Ontario must register and obtain a license from FSRA.
Individuals can view the specifics of all licensed Ontario-based brokers when using FSRA services. You can learn more about the broker or agent you’re looking into by simply visiting the FSRA’s Mortgage Brokerages, Administrators, Mortgage Agents, and Mortgage Brokers Licensed in Ontario search page on the FSRA website.
As of September 30, 2016, there were 10, 893 licensed mortgage agents and 2,681 licensed mortgage brokers, according to FSRA.
Investigating which Ontario-based mortgage agent you might want to engage with can be aided by knowing that the FSRA has the power to carry out investigations and file complaints. It is important to know whether a mortgage holder has a valid license as well as whether they have ever been disciplined, suspended, or are subject to restrictions or conditions.
Inquire further with FSRA to find out if the broker in question may work for a financial institution (mortgage brokers working with a bank do not need to be licensed) or to find out if they are under a different license if the broker you have encountered does not appear on FSRA’s list of licensed Ontario mortgage agents.
Any broker who is not licensed or who does not fit into one of the other categories—for example, being hired by a bank—may be the subject of an investigation by the FSRA. Actions for enforcement may be taken.
Signs to Look Out When Structuring a Mortgage Loan
What behaviors should you watch out for when meeting with a possible mortgage broker? When negotiating mortgage arrangements, certain guidelines and a certain format are followed. You will be asked to fill out the proper papers and forms, and these documents must be signed.
A trustworthy mortgage company will typically have a broker who will serve as the primary compliance officer, supervise the mortgage personnel, and hold them accountable. If any of the following are present, one should be extremely suspicious:
- Too little communication: Your broker should be available to answer any inquiries and address any concerns as well as explain each step to you.
- Documentation that is not accurate: Your mortgage broker must be 100% accurate and not “play around” with the numbers when listing assets, employment details, salary, and other pertinent information. These signed documents are regarded as legal documents.
- Absence of legal disclosure: Under Ontario law, mortgage agents must tell clients specific things, including how they will participate in the mortgage process and the costs they will incur. In front of your broker, you must read and sign these disclosure documents.
- Suspicious mortgage terms: when negotiating mortgage loans, it is important to be wary of any terms that seem too good to be true. Be cautious if the mortgage’s terms don’t seem logical or don’t seem to be very feasible.
- Lack of a written contract: you must have a written mortgage contract, as these agreements are always made in writing. A Lender Commitment Letter as well as the pertinent disclosure documents must be signed. Under the mortgage laws of Ontario, your broker is not authorized to orally offer you a mortgage loan.