Ontario’s Proposed Overhaul of the Mortgage Lending and Broker Regime

Every five years, an appointed Panel reviews the operation of the Mortgage Brokerages, Lenders and Administrators Act and its Regulations to make any necessary recommendations for change.

The Ministry of Finance has now released the Panel’s Report which is entitled Protecting and Modernizing Ontario’s Mortgage Broker Industry. The recommendations (set out below) are meant to create greater accessibility to the housing market for current and aspiring homeowners, streamline the framework for brokers and lenders, and increase consumer protection and anti-money laundering oversight.

PART 1: Reducing Burden and Increasing Access for Homeowners, Lenders, and Investors

  1. Reducing Red Tape for Commercial Mortgage Transactions
  2. Reducing Regulatory Burden by Establishing New Classes of Licensing
  3. Reducing Regulatory Burden in Guidance, Bulletins and Forms
  4. Maintaining Current Licensing Exemptions

PART 2: Strengthening Consumer Protection and Anti-Money Laundering Oversight

  1. Raising and Streamlining Educational and Professional Standards for Agents and Brokers
  2. Incentivising Registration for Private Lenders
  3. Strengthening the Administrative Monetary Penalty Framework

If accepted, the newly created Financial Services Regulatory Authority of Ontario, which governs mortgage brokers, insurance, credit unions, loan and trust companies and pensions will play a key role in executing any accepted recommendations in the Report.

The impact of such changes will substantially alter the mortgage brokering/lending regime and incite new duties for legal professionals who work in this area. Stay tuned to see how Ontario chooses to implement these recommendations.